New business laws from 2024

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The 2024 legislative session touched on a wide array of business topics. The new laws do not affect all businesses, but are nonetheless worth every business owner’s attention, as they may shape you conduct business in California in the future. In particular, California continues to pass legislation aimed at protecting consumer’s privacy rights.

Contents

AB 2908 — Shareholders’ meetings

Remote communication

What the law currently requires

Existing law, the General Corporation Law, authorizes corporations not governed by other specified state laws to conduct a meeting of shareholders by electronic transmission by and to the corporation, electronic video screen communication, conference telephone, or other means of remote communication if the corporation implements reasonable measures to provide shareholders and proxyholders a reasonable opportunity to participate and vote, among other conditions.

Existing law authorizes a corporation to conduct a meeting by means of electronic communication in the absence of consent of all shareholders, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.

Existing law regulates the formation and operation of a nonprofit public benefit corporation, nonprofit mutual benefit corporation, nonprofit religious corporation, or cooperative corporation. Existing law also authorizes these corporations to conduct a meeting by means of electronic communication in the absence of consent from all members, on or before December 31, 2025, if the meeting includes a live audiovisual feed for the duration of the meeting.

How the bill changes the law

This bill would delete the December 31, 2025 deadlines in each of these provisions, thereby making them operative indefinitely.

Action items

None recommended. The bill is self-explanatory.

AB 1900 — Consumer refunds

Nondisclosure agreements

What the law currently requires

Existing law generally regulates the formation and enforcement of contracts, and also regulates consumer refunds specific to certain industries and under specified circumstances.

How the bill changes the law

This bill would make a provision in a contract or agreement that prohibits a consumer from publishing or making statements about the business as a condition of receiving a refund or other consideration or thing of value contrary to public policy and void and unenforceable.

The bill adds Civil Code section 1748.50 which provides: “any provision in a contract or agreement that prohibits a consumer from publishing or making statements about the business as a condition of receiving a partial or complete refund or other consideration or thing of value is contrary to public policy and shall be void and unenforceable.”

Action items

As a result of this bill, businesses cannot enforce a provision in their contracts with consumers that refunds are not available if the consumer publishes or makes a statement about the business. However, while the bill explicitly applies to “business,” the bill does not provide a definition as to what types of entities or activities qualify as a “business,” creating ambiguity as to whether this new law applies to certain entities. Nor does the law define or explain what is involved in “making a statement about the business.” These ambiguities will likely result in litigation and, perhaps, subsequent clarifying amendments to the new statute.

In the interim, businesses should remove all conditions on any contract or agreement they provide to customers that seek to disincentivize or punish the customer for publishing bad reviews about their business.

AB 2227 — Unemployment insurance

Violations

What the law currently requires

Existing law requires the Employment Development Department to implement and administer the unemployment insurance program in this state and provides for the payment of unemployment compensation benefits to eligible individuals who are unemployed through no fault of their own.

Existing law makes it a violation to, among other things, willfully make a false statement or representation to obtain, increase, reduce, or defeat any benefit or payment under the specified provisions administered by the department.

Existing law requires that the place of trial for specified violations of unemployment insurance laws be in the county of residence or principal place of business of the defendant or defendants, or in any county where the defendant or defendants were transacting business that resulted in the alleged offenses.

Existing law requires the trial to be held in the County of Sacramento if the defendant has no residence or principal place of business in this state.

How the bill changes the law

This bill would additionally require that the place of the trial be in any county where any money or property from the alleged offenses was obtained, and would require that the place of the trial be in the County of Sacramento if no other prescribed counties are applicable. The bill would delete the requirement that the trial be held in the County of Sacramento if the defendant has no residence or principal place of business in this state.

Action items

None recommended. The bill merely relates to the proper venue for unemployment insurance claims.

AB 3286 — California Consumer Privacy Act of 2018

Monetary thresholds: grants

What the law currently requires

The California Consumer Privacy Act of 2018 (“CCPA”) grants to a consumer various rights with respect to personal information, as defined, that is collected by a business, including the right to request that a business delete personal information about the consumer that the business has collected from the consumer. The California Privacy Rights Act of 2020, an initiative measure approved by the voters as Proposition 24 at the November 3, 2020 amended, added to, and reenacted the CCPA.

The CCPA establishes the California Privacy Protection Agency (“CPPA”) with full administrative power, authority, and jurisdiction to implement and enforce the CCPA. The CCPA imposes certain responsibilities on the Attorney General, including adjusting the monetary thresholds of specified code sections in January of every odd-numbered year to reflect any increase in the Consumer Price Index.

How the bill changes the law

This bill would remove that responsibility from the Attorney General and would instead require the CPPA to determine and apply the percentage change in the Consumer Price Index for the monetary thresholds.

Action items

None recommended.

SB 1103 — Tenancy of commercial real properties

Agreements: building operating costs.

What the law currently requires

  1. Existing law requires a landlord of a residential dwelling to give notice to the tenant a certain number of days before the effective date of a rent increase depending on the amount of the increase.
  2. Existing law requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean, in the course of entering into specified agreements, to deliver to the other party a translation of the agreement in the language in which it was negotiated, as specified. Existing law authorizes a person to rescind an agreement if the agreement does not comply with that translation requirement, as specified. Existing law creates an exemption from the translation requirement for specified agreements if the other party negotiates the terms through the other party’s own interpreter. Under existing law, both the translation requirement and the interpreter exemption apply to a tenancy agreement covering a dwelling unit normally occupied as a residence.
  3. Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that party’s intention to terminate the tenancy. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if a tenant or resident has resided in the dwelling for less than one year, as specified.
  4. Existing law applicable to commercial leases and nonresidential tenancies of real property prohibits a landlord from demanding a payment as a condition of initiating, continuing, or renewing a lease or rental agreement, unless the amount of the payment is stated in a written lease or rental agreement. Existing law specifies that these provisions do not prohibit a landlord from increasing a tenant’s rent for nonresidential real property in order to recover building operating costs incurred on behalf of the tenant, if the right to rent, the method of calculating the increase, and the period of time covered by the increase is stated in the lease or rental agreement.

How the bill changes the law

Senate Bill 1103 is a new law that changes how commercial leases work in California. Specifically, it aims to protect small business tenants but, at the same time, it creates new problems for property owners that may negatively impact small business tenants.

  1. This bill applies the notice requirement to leases of commercial real property by a “qualified commercial tenant.” The bill defines “qualified commercial tenant” as a tenant of commercial real property that “is a microenterprise, a restaurant with fewer than 10 employees, or a nonprofit organization with fewer than 20 employees.” A microenterprise means “a sole proprietorship, partnership, limited liability company, or corporation that meets both of the following requirements: (1) has five or fewer employees, including the owner, who may be part time or full time; and (2) generally lacks sufficient access to loans, equity, or other financial capital.

    The bill specifies, in all leases for commercial real property by a qualified commercial tenant, that a rent increase would not be effective until the notice period required by these provisions has expired. The bill also specifies that a violation of these provisions does not entitle a qualified commercial tenant to civil penalties. The bill requires a landlord of a commercial real property to include information on these provisions in the notice.
  2. This bill applies the translation requirement, but not the interpreter exemption, to a tenancy agreement covering a nonresidential-zoned commercial space entered into between a landlord and a qualified commercial tenant on or after January 1, 2025. The bill only authorizes the tenant to rescind the agreement for noncompliance with the translation requirement.
  3. This bill generally applies the renewal provisions to a hiring of commercial real property hired by a qualified commercial tenant. The bill would require a landlord of a commercial real property to include information on these provisions in the notice.
  4. This bill prohibits a landlord of a commercial real property from charging a qualified commercial tenant a fee to recover building operating costs unless specified conditions are met, including, among other things, that the costs are allocated proportionately per tenant and the qualified commercial tenant is provided supporting documentation. The bill allows a qualified commercial tenant to raise a violation of this provision as an affirmative defense in an action to recover possession based on a failure to pay the fee. The bill makes a landlord of a commercial real property who violates this provision liable to a qualified commercial tenant for specified damages, and would authorize the district attorney, city attorney, or county counsel, as specified, to seek injunctive relief.

Action items

Owners of commercial properties who lease space to small businesses will need to comply with the new laws. The bill’s impact not only impacts a property owner’s bottom line, but it creates more work for landlords and property managers who lease commercial space to “qualified commercial tenants.” In particular, as a result of the bill:

  • More Work: Property managers must do more paperwork, leaving less time for managing properties.
  • Higher Costs: Landlords may face higher costs because they cannot pass on as many expenses to tenants, affecting budgets and maintenance.
  • Strained Relationships: As landlords face higher costs and administrative burdens, they might become less flexible or more cautious in their dealings with tenants, potentially creating tension and reducing collaboration between the two parties. Property managers would be on the frontlines of those conversations.
  • Contract Changes: Landlords and property managers will need to adjust contracts to meet the new rules, which could add complexity and risks.

AB 1824 — California Consumer Privacy Act of 2018

Opt-out right: mergers

What the law currently requires

The California Consumer Privacy Act of 2018 (“CCPA”) grants consumers various rights with respect to personal information that is collected or sold by a business, including the right to “opt out” by directing a business that sells or shares personal information about the consumer to third parties not to sell or share the consumer’s personal information. The California Privacy Rights Act of 2020, approved by the voters as Proposition 24 at the November 3, 2020, statewide general election, amended, added to, and reenacted the CCPA.

How the bill changes the law

This bill requires a business to which another business transfers the personal information of a consumer as an asset that is part of a merger, acquisition, bankruptcy, or other transaction in which the transferee assumes control of all or part of the transferor to comply with a consumer’s opt out direction to the transferor.

Action items

Large mergers can place demands on in-house privacy counsel or other counsel attending the process. Clarifying the privacy requirements in a merger will allow for a smoother transition and a clear path for a dealer to follow to remain compliant. Be sure to consult with your privacy counsel if you are embarking on a merger to be sure data transfers are compliant with the new law.

AB 2337 — Workers’ compensation

Electronic signatures

What the law currently requires

Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of the employee’s employment. Existing law establishes a Workers’ Compensation Appeals Board (“WCAB”) and sets forth various proceedings that are required to be brought forth before the WCAB. Existing law provides that the WCAB is vested with full power, authority, and jurisdiction to try and determine finally all the matters specified in those proceedings subject only to the review by the courts.

Existing law, as it pertains to a workers’ compensation system, requires every compromise and release agreement to be in writing and duly executed, signed by the employee or other beneficiary, and attested by two disinterested witnesses or acknowledged before a notary public.

How the bill changes the law

This bill would define “signature” for purposes of a proceeding before the WCAB to include an electronic signature. This bill would authorize the above-described signature requirement to be satisfied by an electronic signature and would authorize the above-described acknowledgment requirement to be satisfied by electronic signature provided an electronic record includes specified information.

Action items

None. The bill is self-explanatory. Going forward, “wet” signatures are no longer required for purposes of proceedings before the WCAB.

AB 347 — Household product safety

Toxic substances: testing and enforcement

What the law currently provides

Existing law prohibits juvenile products, textile articles, and food packaging that contain specified levels of perfluoroalkyl and polyfluoroalkyl substances (“PFAS”) from being distributed, sold, or offered for sale in the state. For purposes of restricting the use of PFAS, existing law defines “juvenile product” to mean a product designed for use by infants and children under 12 years of age, including, but not limited to, specified products.

How the bill changes the law

The bill limits “juvenile products” to the following: a baby or toddler foam pillow, bassinet, bedside sleeper, booster seat, changing pad, child restraint system for use in motor vehicles and aircraft, co-sleeper, crib mattress, floor playmat, highchair, highchair pad, infant bouncer, infant carrier, infant seat, infant sleep positioner, infant swing, infant travel bed, infant walker, nap cot, nursing pad, nursing pillow, playmat, playpen, play yard, polyurethane foam mat, pad, or pillow, portable foam nap mat, portable infant sleeper, portable hook-on chair, soft-sided portable crib, stroller, and toddler mattress.

In addition This bill requires the Department of Toxic Substances Control (“DTSC”), on or before January 1, 2029, to adopt regulations for the enforcement of those prohibitions on the use of PFAS, and, on and after July 1, 2030, to enforce and ensure compliance with those provisions and regulations, as provided.

The bill requires manufacturers of the covered products, on or before July 1, 2029, to register with DTSC, to pay a registration fee to the department, and to provide a statement of compliance certifying compliance with the applicable prohibitions on the use of PFAS to the department, as specified.

The bill authorizes DTSC to test products and to rely on third-party testing to determine compliance with prohibitions on the use of PFAS. The bill requires DTSC to issue a notice of violation for a product in violation of the prohibitions on the use of PFAS.

The bill authorizes DTSC to assess an administrative penalty (not less for $10,000) for the first violation of these prohibitions and would authorize it to seek an injunction to restrain a person or entity from violating these prohibitions.

The bill requires DTSC, on or before July 1, 2033, to submit a report to the Legislature regarding its compliance and enforcement activities performed pursuant to these provisions.

Action items

PFAS, also known as “forever chemicals” are, as the nickname implies, long lasting chemicals, components of which break down very slowly over time. PFAS are almost impossible to avoid. They are found in our homes, our offices, our supermarkets—practically everywhere. Since there is medical literature supporting the claims that exposure to PFAS can cause a variety of illnesses, there is a real concern that PFAS will become the next “asbestos” for purposes to toxic tort litigation.

Chemical companies that manufacture and supply PFAS should expect to be named in multi-party litigation by persons claimed to be injured by exposure to PFAS.

This bill is California’s attempt to regulate its citizens’ exposure to PFAS. Fortunately, the bill does not include a “private enforcer” provision which allows private citizens to bring claims against manufacturers on behalf of the state. We have seen the abuse of the “private enforcer” provision in California’s Proposition 65 by “bounty hunter” lawyers who, more or less, extort companies to settle Proposition 65 claims. Hopefully, the PFAS statutes will not be amended to include such provision.

Read the rest of our New Laws from 2024 series: