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Top 5 New Laws in California for 2024

Happy New Year! Sorry that this post is coming in late. As always, January 1 brings with it a slate of new laws. My criteria here are: what I thought was interesting, what will impact my clients the most, and how broad the change will be in general. Unless otherwise stated, these laws went into effect on January 1, 2024.

And I have done the same for Texas here.

I'm going to start with an honorable mention: the federal Corporate Transparency Act. I've addressed the federal Corporate Transparency Act a few times before. Most entities formed on or after January 1, 2024 will have 90 days to report information related to their "beneficial owners" to the federal government. I recommend you review prior blog posts covering it here, here, and here.

5. Debtor Examination Changes (AB 1119)

California's AB 1119 adds requirements for judgment creditors to obtain debtor examinations. A debtor examination involves the judgment debtor answering questions under oath about their assets. In addition to other changes, as of January 1, 2024, the judgment debtor can file a notice that cancels the debtor examination. At that point, the judgment creditor will have to file a motion to get the examination back on calendar.

The idea is to protect low-income judgment debtors by adding an extra requirement to creditors. We will see if this has the intended effect in practice, or if it is just another (albeit slight) headache in attempting to enforce a duly-obtained judgment.

4. Accessory Dwelling Units (AB 976, AB 1033)

Existing California law allows homeowners to build accessory dwelling units ("ADUs"), but with a sunset provision (meaning local governments could prohibit their construction if existing law sunsets). AB 976 permanently extends existing law, and removes any owner-occupancy requirements. AB 1033 allows owners of ADUs to sell them independently from the rest of the property.

The goal is to increase housing, and thus making housing more affordable across the state.

3. Added Requirements for Contractors (AB 1121, AB 1204, AB 336)

Per AB 1121, "awarding authorities" (public project owners) must now submit a list of ineligible contractors to the Department of Industrial Relations annually. This will make it easier for local governments and entities to determine if contractors are able to bid on public contracts.

That's all very well, but the consumer protections don't end there. AB 1204 prohibits "specialty contractors" from entering into contracts for projects with more than one subcontractor with the same license classification unless certain conditions are met. The purpose is apparently to protect employees and laborers. This seems an unnecessary burden to that end. And AB 336 requires certain contractors to certify on their license renewal form the workers’ compensation classification codes endorsed on the licensee’s policy, and would prohibit renewal without that certification.

AB 1121 seems fair enough, but in general, California does not seem interested in making it easier to operate a construction business.

2. Affordable Housing Programs (SB 4, SB 423)

SB 4 provides a streamlined process for qualifying nonprofits and religious organizations to develop housing on their property. It also allows for contractors to be paid prevailing wage rates on certain qualifying projects. SB 423 extends existing law meant to streamline the approval of multifamily housing. SB 423 includes labor and environmental protections as well.

1. Noncompete Agreements Prohibited (SB 699/AB 1076)

Noncompete agreements are already disfavored in many jurisdictions (California and Texas included). However, they could still be enforced in certain scenarios. That does not appear to be the case anymore for employment contracts. In addition, employers who are party to a contract with a noncompete provision have until February 14, 2024 to inform their employees of the change in the law.

This is a dramatic change to California commercial law. No doubt this year will see a huge increase in lawsuits over this issue.

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