The California Legislature and Courts have been busy in 2015, and employers should expect a host of new laws to take effect in 2016. It is imperative that employers make themselves aware of new requirements affecting their business, and act accordingly. Here are highlights of the more important changes taking place in 2016:
Minimum Wage Increase Effective January 1, 2016: On January 1, 2016, California’s minimum wage will increase to $10 per hour from the existing minimum wage of $9 per hour. This will also result in overtime and double pay increasing for minimum wage employees, as well as affect certain overtime exemptions for which an employee must be paid a certain multiplier of minimum wage.
Increased Enforcement Powers for Labor Commissioner: SB 970 authorizes the California Labor Commissioner to issue penalties and citations for overtime and minimum wage violations, as well as for violations of expense reimbursement provisions. How strongly the Labor Commissioner will act on this is currently unknown. Regardless, with misclassification of employees continuing to be a big issue, employers should ensure any exempt employees are truly exempt under the applicable Wage Orders.
Potential Personal Liability for Wage Violations: SB 588 provides that an “owner, director, officer or managing agent” of an employer may be held personally liable for violations of any provision regarding minimum wage or hours and days of work in any Wage Order. This law also allows the Labor Commissioner to issue a lien on an employer’s property for amounts owed to an employee pursuant to a judgment, including unpaid wages, penalties, and interest.
Piece-Rate Pay Must Separately Include Payment for Rest Periods: In what is a sea change regarding piece-rate compensation, AB 1513 requires employers to pay piece-rate employees for rest and recovery periods, as well as “other non-productive time” under the employer’s control, at minimum wage rates, separately from any piece-rate compensation. This has huge implications for employers in the agricultural, construction, and transportation industries. There is a “safe harbor” provision for employers: (1) who have not been sued regarding these issues prior to April 2014; (2) come into compliance with all of the obligations now required before the end of 2015; and (3) pay actual or liquidated damages by the end of 2016. Employers must meet these requirements by December 15, 2016, to take advantage of the safe-harbor.
Expanded Right to School Activities Leave: SB 579 provides additional situations in which an employee may lawfully take school activities leave. These situations now include: addressing of a child care provider emergency; a school emergency; finding, enrolling, and reenrolling a child in a school or with a child care provider. In addition, the definition of employees eligible for this leave is expanded to include employees who are stepparents, foster parents or stand in loco parentis to a child. The law also requires employers to permit employees to use sick leave for the purposes specified in the Healthy Workplaces, Healthy Families Act of 2014 and makes it unlawful for an employer to deny or retaliate against an employee for using sick leave for these purposes. Employers should be careful to ensure their employee handbooks and any personnel policies are updated, and individuals who handle HR are also educated on these changes.
Unlawful to Prevent Wage Disclosure/Discussion: Under SB 358 employers are prohibited from stopping employees from disclosing their own wages, discussing the wages of others, or inquiring as to other employees’ wages. The statute also provides for a cause of action against employers for discharging, discriminating, or retaliating against employees for exercising these rights.
Paid Sick Leave Clarifications: Last year most employers in California were obligated to begin providing paid sick leave. The Legislature has clarified the following issues with regard to that law: An employee must work for the same employer for 30 or more days after beginning employment to be eligible to use sick leave; employers are allowed to use alternative accrual methods from the ‘1 hour of sick leave for every 30 hours worked’ formula; employers with paid sick leave or time off plans that were in existence before January 1, 2015, are entitled to maintain such plans under certain circumstances.
For convenience of record-keeping we often advise employers to “front-load” employee sick leave. Regardless of which method employers choose, they should be certain it is disclosed to employees in the employment handbook or otherwise in writing (as well as any lawful ‘cap’ on usage). If not, employers are generally stuck with the statutory mandated accrual rate of one hour of sick pay for every 30 hours worked, which can result in a full-time employee potentially accruing more than 69 hours of paid sick leave per year and being allowed to carry that over to the next year.
Significant Changes to Equal Pay Act: Also part of SB 358, California’s “Fair Pay Act” significantly amends the Equal Pay Act. Employees who complain of unequal pay need to show they are being paid less than a member of the opposite sex who performs “substantially similar work”. This is an amorphous concept, and is a “composite of skill, effort, and responsibility, and is work performed under similar working conditions.” As a result of this new law, employers need to pay employees the same wage, even those employees with different job titles, if their jobs require “the same skill, effort, and responsibility, and are performed under similar working conditions”. This is not exactly a bright-line rule, and will undoubtedly engender litigation.
Employers can defend against claims of unequal pay by showing that the difference is based on: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or “a bona fide factor other than sex”, such as education, training, or experience. Many commentators are saying this is the “strictest” gender fair pay law in the nation, so employers should review their employee pay rates in light of this new law to ensure any discrepancies have a lawful basis.
*****The above laws are only a selection of the more important changes occurring starting 2016, and the highlights do not address all aspects of the applicable statutes. If you have questions on anything above, or related to any employment issue, please contact our office to discuss. *****