As we navigate through 2025, California employers are facing a landscape of significant benefits law changes that demand immediate attention and action. These legislative updates, effective January 1, 2025, impact everything from paid family leave policies to minimum wage requirements for workers with disabilities. At Post Insurance, we understand that staying compliant while managing costs is crucial for your business success.
Major Benefits Law Changes Taking Effect in 2025
Helpful Facts
- California’s Paid Family Leave no longer requires using vacation first starting 2025.
- Disabled workers must be paid at least minimum wage from January 2025.
- Driver’s license requirements in job ads are restricted unless essential.
- Pregnancy and freelance worker protections are expanded.
- Employers must update policies, audit wages, train staff, and document changes for compliance.
Paid Family Leave Program Transformation
One of the most impactful changes comes through Assembly Bill 2123, which fundamentally alters how California’s Paid Family Leave (PFL) program operates. Effective January 1, 2025, AB 2123 eliminates the ability of California employers to require their employees to use up to two weeks of accrued vacation time before they start receiving Paid Family Leave benefits.
This change means employees can now access PFL benefits immediately without being forced to exhaust their vacation time first. The PFL program provides wage replacement benefits to workers who need time off to:
- Care for a seriously ill child, spouse, parent, or domestic partner
- Bond with a new minor child
- Assist military family members under active-duty deployment
What This Means for Employers:
- Review and update your employee handbooks immediately
- Revise vacation and leave policies to reflect the new requirements
- Train HR staff on the updated PFL procedures
- Prepare for potential impacts in cities and counties where local ordinances may interact with increased benefit amounts
Ending Subminimum Wages for Workers with Disabilities
SB 639, enacted in 2021, fully takes effect in January 2025, ensuring workers with disabilities earn at least the standard minimum wage by ending new subminimum-wage licenses and phasing out existing licenses. This represents a significant shift for employers who have historically operated under special wage certificates.
Over 12,000 Californians with disabilities previously worked for less than minimum wage in segregated settings, with some workers earning less than $2 per hour. Beginning January 1, 2025, disabled workers must be paid at least the state’s minimum wage, with the subminimum wage being completely phased out.
Compliance Requirements:
- Employees with disabilities must now be paid at least the legal minimum wage or applicable local minimum wage ordinance, whichever is higher
- Employers with existing special wage certificates must transition to standard wage practices
- Develop pathways to integrated employment for workers with disabilities
Enhanced Hiring and Recruitment Regulations
SB 1100 introduces new restrictions on requiring a driver’s license in job postings, unless it is a bona fide occupational qualification. This change aims to reduce discriminatory hiring practices and expand employment opportunities.
Key Considerations:
- Review all job postings to ensure driver’s license requirements are genuinely necessary
- Document the business justification for any driver’s license requirements
- Train hiring managers on the new restrictions
Additional Employment Law Changes Affecting Benefits
Expanded Pregnancy and Childbirth Protections
Assembly Bill 2319 expands provisions of the California Dignity in Pregnancy and Childbirth Act, providing additional protections for pregnant employees and new parents. This expansion may affect your benefits administration and accommodation procedures.
Freelance Worker Protections
New legislation imposes minimum requirements relating to contracts entered into or renewed on or after January 1, 2025, between a hiring party and freelance workers, providing new protections against retaliation. While this primarily affects contract relationships, it may impact how you classify and provide benefits to certain workers.
Strategic Compliance Steps for California Employers
Immediate Action Items
- Policy Review and Updates
- Conduct a comprehensive review of employee handbooks
- Update vacation and leave policies to reflect PFL changes
- Revise job posting templates to comply with SB 1100
- Wage Structure Analysis
- Audit current wage practices for workers with disabilities
- Ensure all employees meet minimum wage requirements
- Plan for potential payroll increases
- Benefits Administration Updates
- Coordinate with your benefits administrator on PFL changes
- Review integration between state benefits and employer-provided benefits
- Update employee communication materials
Long-term Compliance Strategy
Training and Education
- Implement ongoing training for HR staff and managers
- Create awareness programs for employees about their rights
- Establish clear procedures for handling new benefit requests
Documentation and Record-keeping
- Maintain detailed records of policy changes and implementation dates
- Document business justifications for any driver’s license requirements
- Keep comprehensive records of disability accommodation processes
Take Action Today
The 2025 benefits law changes represent both challenges and opportunities for California employers. By taking proactive steps to ensure compliance and partnering with experienced insurance professionals, you can protect your business while supporting your employees.
Contact Post Insurance today to review your current coverage and discuss how these legal changes may impact your business. Our team of experts will help you develop a comprehensive strategy that addresses both compliance requirements and risk management needs.
Don’t wait until you face a claim or compliance issue. Let Post Insurance help you navigate California’s evolving employment landscape with confidence. With our smarter insurance solutions and decades of experience, we’ll ensure your business stays protected while you focus on what you do best.
How Can Post Insurance Help?
Providing “Smarter Insurance Since 1954,” Post Insurance is a third-generation insurance agency with expertise in benefits insurance of all types. Our Employee Benefits specialists will help you build a program tailored to your company’s needs, including Disability Insurance, Group Medical,Life Insurance, Voluntary Benefits, and more.
You may have been recommended to us by one of our many satisfied customers, or you may have searched online for “employee benefits near me.” However you found us, we’re happy to welcome you. If you have questions about an Employee Benefits Program or would like to receive a quote, please fill out our contact form or call 800.262.9998.