I posted the webinar I presented on new California employment laws 2016. From the energy level of my voice, I think I need to modify my New Years’ resolution to drink more caffeine, not less. In the event you want just a quick summary, and not view the webinar, here you go.
As of January 1, 2016, California’s minimum wage is $10.00 per hour. The overtime rate for an employee paid minimum wage is therefore $15.00 per hour – except, please note, if the employee receives other “variable compensation” – piece rate, commissions, nondiscretionary bonuses. If that is the case, the overtime rate must be calculated based on the regular rate inclusive of these additional payments.
Since the minimum wage for nonexempt employees has been raised to $10.00 per hour, the minimum annual salary requirement for properly classified exempt employees under the administrative and executive exemption is $41,600 per year.
For properly classified employees under the computer software professional exemption, the annual cost of living increase means that such employees must make at least $41.85 per hour or $87,185.13 per year. As before, this is only an exemption from the overtime rules. These employees must still be provided the opportunity to take meal and rest breaks.
Employers that pay employees on a “piece rate” basis must pay such employees separately for (a) rest and recovery periods and (b) “nonproductive time.”
(New Labor Code section 226.2). Employers must pay for rest and recovery periods at an hourly rate no less than the greater of either the applicable minimum wage or the employee’s average hourly wage for all time worked (exclusive of break time) during the workweek. Under this new law, “nonproductive time” is “time under the employer’s control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis.” Nonproductive time must be paid as an hourly rate of at least minimum wage – paid by actual records or the employer’s “reasonable estimate.”
In addition to paying these periods separately – that may previously have been “included” in the piece rate – the paystubs need to be updated to include:
• Total hours of compensable rest and recovery periods
• Rate of compensation for rest and recovery periods
• Total hours of “other nonproductive time”
• Rate of compensation for “other nonproductive time”
• Gross wages paid for both rest/recovery periods and nonproductive time
One way to potentially satisfy the sticky “other nonproductive time” requirement is by paying minimum wage for all hours worked in addition to piece rate.
Finally, the new law provides a “safe harbor” for employers who, by December 15, 2016, fully compensate their affected employees for all under-compensated or uncompensated rest periods, recovery periods, or unproductive time between July 1, 2012 and December 31, 2015.
There is another “safe harbor” rule this year. Employers have a “right to cure” paystub violations that fail to show the inclusive dates of the pay period, and/or the name and address of the legal employer. Employers may correct these very technical violations of the Labor Code by providing each affected employee a “fully compliant, itemized wage statement . . . for each pay period for the three-year period prior the date of the written notice” required for a PAGA claim. An employer may cure such violations once in a 12-month period if the employer takes action within 33 days of notice of a violation. Of note, this “safe harbor” only affects “Private Attorney General Act” (“PAGA”) penalties; it does not provide any protections from an employee’s ability to seek statutory penalties. But any steps an employer can take to reduce potential liability is helpful. I previously wrote a blog post on this, in case you want more information.
The ability of workers who work an “Alternative Workweek Schedule” to waive the second meal period had been in doubt due to a rogue court ruling early last year. The legislature clarified that everyone’s interpretations – including the Labor Commissioner’s – was correct. As before, an employee may voluntarily elect to waive the second meal period if the waiver is in writing and states that the employee understands she may revoke the waiver at any time.
The Labor Commissioner’s powers have expanded (again). The Labor Commissioner can now enforce local minimum wage laws – like those that govern employees in San Jose, San Francisco and Oakland. Before, the employee had to file at claim directly with the municipality. The Labor Commissioner also has specific authority to issue citations against employers who fail to indemnify employees for employment-related expenses. The Labor Commissioner’s enforcement powers have also increased – the DLSE can act as a judgment creditor and file liens on real estate, levy an employer’s property, or impose a stop order on an employer’ business to assist in the collection of unpaid wage judgments. And the hearing officer of a wage claim will hear and rule on whether an employer, or individuals acting on behalf of employers, who violate any provision regulating minimum wages or hours and days of work may be held liable as the employer for such violation.
The Legislature clarified that cheerleaders performing for California-based professional sports teams are employees and not independent contractors. This may not seem as if it is relevant to many employers, but it is a good reminder to review who your company is paying as a contractor and if that classification is correct.
In an earlier blogpost, I talked about the new gender equity pay law. Here’s a quick summary: California employers are subject to a new equal pay law that will create a much stricter standard for gender pay equity.
The new law prohibits an employer from paying employees of one sex lower than employees of the opposite sex for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”
Before the amendment, an employee had to demonstrate that he or she was not being paid at the same rate as someone of the opposite sex at the same establishment for “equal work.” The “same establishment” has been deleted, and the employee need only show he or she is not being paid at the same rate for “substantially similar work.” In other words, the employees need not be in the same exact job or the same geographic location.
If a wage differential exists between employees of the opposite sex, the law will allow employers to demonstrate the purpose of any difference that is based on:
• a seniority system;
• a merit system;
• a system that measures earnings by quality or quantity of production; or
• some other bona fide factor other than sex such as education, training, or experience.
If an employer tries to justify a pay differential under this law as a “bona fide factor other than sex”, it must show that the factor is not based on or derived from a sex-based differential in compensation, is job-related with respect to the position in question, and is consistent with a business necessity.
“Business necessity” is defined as an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This exception will not apply if the employee can show that an alternative practice exists that would serve the same business purpose without producing the wage differential.
An employee may seek to enforce an unequal pay claim with California’s Labor Commissioner or through a civil lawsuit. An employee who is successful can recover the pay differential plus an additional equal amount as liquidated damages. Employees who file lawsuits can also recover interest, litigation costs, and attorneys’ fees.
The new law also bars employers from prohibiting employees from disclosing their own wages to others, discussing their wages, or inquiring about the wages of another employee.
Discrimination protections were expanded. First, employers cannot retaliate against employees who request a religious or disability accommodation, regardless of whether the accommodation is granted. And, second, employers cannot retaliate against an employee who is a family member of a person who has, or is perceived to have, engaged in protected activities, such as complaints about working conditions, pay, harassment, or whistleblowing.
Lastly (for today’s post, at least), employers may not use E-Verify to check the employment authorization status of an employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds.