Employers Prepare to Face New Laws in California this January | DCR Workforce Blog

Employers Prepare to Face New Laws in California this January

new laws in california

On January 1, 2016, new labor laws in California are set to become effective. Some of them directly impact the employer-employee relationship, and need employers to revise their processes to be compliant with them.

Let us take a look at all these laws and their effects, and also see what the employers will need to prepare for:

Minimum Wage:

On January 1, 2016, California’s minimum wage will increase to $10 per hour from the existing minimum wage of $9 per hour.

  • The changes to minimum wages will have an impact on overtime pay. Work that qualifies for overtime wages (remember that how we define non-exempt workers is to be determined soon) will now merit a payment of $15 ($1.5 more than the current rate) for time and a half and $20 ($2 more than the current rate) for double time.
  • It is important to note that the proposed classification of exempt/non-exempt categories will be linked to their pay which has to be more than twice the state’s minimum wage and not linked to the ‘white-collar’ work being performed by them. This will increase the minimum salary requirements for exemptions to $41,600 annually from the current $37,440. However, computer software professionals are exempt only when they are paid more than $87,185.14 per year.
  • All employers will need to display a poster that displays the current official minimum wage and have their payrolls revised accordingly, provide information to the workers affected and document everything scrupulously.
  • Employers need to ensure that the wage statements are accurate in affecting the wage increase for all the workers, including those who are paid by the hour.

Equal and Fair Pay:

The State of California mandates equal pay, placing the burden of proof on the employer while making it legal for colleagues ask each other about their compensation details. Disparities citing education, training, merit, productivity or experience may be considered to be justified. Employers need to allow any discussion of prevailing wage structures even with a three year window for retrospection. They may have to review their pay policies and practices to ensure that pay is related to job role, among other things.

Individual Liability for Wage Violations:

We have talked about AB2074 which protects the right of employees to collect unpaid wages and liquidated damages from unscrupulous employers. The protections afforded by AB2074 are further extended by this law named ‘A Fair Day’s pay Act’ which protects employees from employers who change their names or hide their assets to make it difficult for employees to collect judgments. This bill allows the Labor Commissioner to hold the agent of the employer who acts on his behalf responsible in their personal capacity, for the violations. The commissioner may enforce a judgment against such a person’s property and accounts and may also seek payment from the successor employer, based on vaguely defined criteria to determine such liability of the business for the unpaid wages, as explained below:

  • The employees of the successor employer are engaged in substantially the same work in substantially the same working conditions under substantially the same supervisors,
  • The new entity has substantially the same production process or operations, produces substantially the same products or offers substantially the same services, and has substantially the same body of customers.

Like most laws, this law will not bother any bona fide employer but will curb anyone who wishes to make a fast buck by running a fly-by-night operation and vanishing without a trace.

Whistleblower Protections:

All of us are aware of why protections are necessary for whistleblowers; but California has advanced a step further to create protections for the relatives of a whistleblower employee who made a protected complaint too. Employers will need to exercise more caution when employing people related to each other and will need to keep them separate at the workplace and also document any adverse action against any of them to avoid further complications.

Amended Private Attorneys General Act of 2004 (PAGA):

Under the Labor Code, employers are required to provide specific information on their pay statements provided to its employees; with their wages, such as their gross and net wages, total hours worked and deductions. Till now, PAGA did not provide a cure period with respect to an employer’s failure to include any of this required information on the pay statements of its employees.

The amendment to the Act provides an employer with a limited right to cure a violation of failing to provide its employees with a wage statement containing the inclusive dates of the pay period and the name and address of the legal entity, that is the employer. A violation is considered to be cured once the employer provides a fully compliant, itemized wage statement to each aggrieved employee. Employers will need to be alert to correct any errors, as soon as they are brought to their attention.

Sick Leave:

Let us also discuss the provisions of California’s sick leave law which came into effect beginning July 1, 2015. Companies will need to have a written policy describing their plans to provide the mandatory benefit. If they plan to set any additional terms such as caps on maximum use, the employer must inform employees of those additional terms. In the absence of a written policy setting out clear terms, the employer will be required to use the statutory mandated accrual rate of one hour of sick pay for every 30 hours worked, enabling a full-time employee to accrue more than 69 hours of paid sick leave per year and be able to carry it over to the next year, and so on.

There is no doubt that California’s employment laws are once again setting the trend for the rest of the country in the protections they provide to workers. Staffing agencies which serve as the employers of record will also have to prepare for their effects and ensure that their contractual agreements with their clients incorporate the changed processes and put in safeguards to meet their effects.

What do you think of these new labor laws in California? Will they burden employers or protect employees more?

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.