California's New Laws: A Legal Expert's Insight

In a recent Rebooting Capitalism podcast episode, Jennifer Harrity welcomed back Jonathan Storper, a partner at Hanson Bridgett law firm, to discuss several new laws that took effect on January 1st, 2024. These laws are poised to impact many business owners, and with the year in full swing, it’s the perfect time to revisit these legislative changes and their implications. Jonathan shared his expertise on these legislative changes, their implications, and what businesses need to do to stay compliant. Here’s a recap of Jennifer and Jonathan’s conversation and what you need to know.

Jonathan Storper: The Legal Maestro

Jonathan Storper is no stranger to the world of corporate law. Based in San Francisco, he’s a corporate transactions lawyer with a focus on mission-related companies like B Corps and benefit corporations. His work spans from startups to acquisitions, and he’s been a pivotal figure in drafting legislation for benefit corporations in California. With Hanson Bridgett LLP being the first law firm certified as a B Corp, Jonathan's credentials make him the perfect guest to decode these new laws.

The Corporate Transparency Act (CTA): Uncle Sam Wants to Know

The Corporate Transparency Act (CTA) is a federal law aimed at curbing money laundering and terrorist financing by requiring businesses to register their beneficial owners with the federal government. Jonathan explained that any corporation, LLC, limited partnership, or similar entity registered in the U.S. must comply. “The Federal Government estimates in the first year alone, 32.6 million companies will need to register.”

Failure to register can result in severe penalties, including fines up to $10,000 and even prison time. Jonathan emphasized, “This one has some teeth to it,” highlighting the law’s significant penalties for non-compliance. Jennifer and Jonathan stressed the importance of businesses understanding their obligations, especially those with complex ownership structures or significant control figures. The message is clear: don’t miss the registration deadlines, or it could cost you dearly. Jennifer noted, "If you're a woman, and you own a business that's going to fall into this, and you happen to change your name either through marriage or divorce, you got to keep an eye on this, because 30 days will go by in a flash."

The Anti-Greenwashing Law: Show Your Work

California's Voluntary Carbon Market Disclosure Act, affectionately dubbed the anti-greenwashing law, requires companies to be transparent about their carbon offset claims. Jonathan explained that businesses selling products marketed as carbon neutral or greenhouse gas emission offsets must disclose detailed information about their offset projects, including the protocols used, project types, and verification methods. “Backing up your claims with data is really key,” Jonathan noted, stressing the importance of proper documentation.

Jennifer highlighted the importance of this law in holding companies accountable for their environmental claims. "It's not just about buying offsets; it’s about proving their effectiveness and transparency," Jennifer explained. Companies need to show their work, much like a math teacher demands. Jennifer added, "If you have any questions on how to measure, how to look for quality offsets, or how to work without offsets, reach out to a sustainability consultant like me."

Minimum Wage Increases: Fair Pay for Hard Work

Two new laws aim to boost the minimum wage for fast food and healthcare workers. Jonathan detailed AB 1228, which sets a $20 per hour minimum wage for fast food workers at chains with at least 60 locations, starting April 1, 2024. Similarly, healthcare workers in facilities of varying sizes will see their minimum wage rise to $25 per hour over the next few years.

Jennifer lauded these changes, especially for healthcare workers who have been on the front lines during the COVID-19 pandemic. “Many of the folks that actually make minimum wage, say, in a hospital, are the janitorial staff, and those folks really put themselves on the line during COVID,” Jennifer noted. These wage increases are long overdue and a step toward fair compensation for essential workers.

Marijuana Use: Smoke at Home, You're in the Clear

California's new law, SB 700, protects employees from discrimination based on their off-duty cannabis use. Jonathan clarified that while employers can’t fire someone for legal marijuana use off the clock, this doesn’t mean employees can show up to work under the influence. Jennifer commented, "This does not mean that you can smoke before work, come into work, and still be stoned and work — that still will get you fired for sure." The law maintains a balance between personal freedom and workplace safety.

Mandatory Sick Leave: A Little More Breathing Room

The state has increased mandatory sick leave from three days to five days, or 40 hours. Jonathan and Jennifer agreed that this change is a positive step, particularly in light of the COVID-19 pandemic, giving employees more time to recover without sacrificing pay. Jonathan pointed out, "It's important for companies, smaller companies that may fluctuate, to keep track of their full-time employees."

Non-Compete Agreements: Know Your Rights

Two new twists on California’s existing non-compete laws were discussed. Firstly, employees forced to sign a non-compete agreement can now seek injunctive relief and damages. Secondly, employers must notify current and former employees that any non-compete agreements they signed are void by February 14, 2024. “I think that's going to be a surprise to a lot of employers,” Jonathan remarked, noting the tight deadline.

Looking Ahead: California Leading the Way

Jonathan and Jennifer concluded by discussing California’s role in setting legislative trends that often ripple across the nation. Whether it’s privacy laws or carbon disclosures, California’s forward-thinking approach frequently inspires other states and even federal regulations. Businesses should stay ahead of the curve by anticipating these changes and preparing for compliance.

These legislative changes are not just bureaucratic hurdles; they reflect broader societal shifts toward transparency, fairness, and environmental responsibility. So, whether you’re a fast-food chain, a healthcare facility, or a company navigating carbon offsets, it’s time to get your legal house in order. And remember, always consult with your legal counsel to ensure you’re on the right side of the law.

Click here to listen to the full interview.

?