California updates its employment laws annually, introducing new regulations and refining existing ones. While some laws apply broadly, others target specific industries or practices. This year, several important changes will impact businesses and employees alike. To ensure compliance and avoid penalties, employers must stay informed about these updates.
New Rules on Social Compliance Audits
Starting January 1, 2025, businesses that voluntarily conduct "social compliance audits" to examine child labor practices must post a report detailing the audit's findings on their website (Cal. Lab. Code §§ 1250; 1251). However, since this requirement applies specifically to companies engaged in social responsibility efforts, most businesses will not need to adjust their current policies.
Freelance Worker Protections
California continues to refine its independent contractor laws. As of January 1, 2025, the state now officially defines a "freelance worker" as a person or single-person organization acting as a bona fide independent contractor providing services valued at $250 or more. Under Cal. Bus. & Prof. Code §§ 18100, et seq., businesses must:
- Enter into written contracts with freelance workers and keep copies for at least four years.
- Pay a $1,000 penalty if they fail to provide a contract upon request.
- Pay double the agreed amount if they fail to meet payment terms on time.
Because of these new requirements, businesses that frequently hire freelancers must take extra precautions to maintain proper documentation and meet payment deadlines.
Driver's License Restrictions in Hiring
When screening job applicants, many employers use driver's licenses as a common form of identification. However, starting January 1, 2025, employers can no longer require applicants to possess a driver's license unless the job specifically involves driving (Cal. Gov. Code § 12940). This change aims to remove unnecessary hiring barriers, particularly for individuals who do not drive but are otherwise qualified for a position.
Major Changes to PAGA
Among all the 2025 employment law updates, the most significant changes affect the Private Attorneys General Act (PAGA). Business groups have long pushed for reforms, and the new provisions introduce several key improvements:
- Employers now have greater opportunities to remediate or cure violations, which can significantly reduce penalties.
- Swift action on Labor Code violations is more critical than ever. Addressing issues promptly—whether raised by employees, demand letters, or lawsuits—can help avoid prolonged disputes and costly litigation.
However, despite these reforms, challenges remain. PAGA claims often lack specific details because only an employee's attorney submits the notice, leaving employers with little information about the alleged violations. While the new law provides some relief, additional improvements may still be necessary to make the system more effective.
Staying Informed on Future Updates
Although this summary highlights the most notable changes, many other legal updates may impact businesses and employees. For a more detailed breakdown, legal publications provide comprehensive lists of California's 2025 employment law changes. These resources offer clear explanations, ensuring businesses can easily understand and implement necessary adjustments. You can find one such list here: Major Changes to California Employment Law: What Employers Need to Know for 2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
