This article is Part 1 of a two-part series providing an overview of new federal and California employment laws.
Several new laws taking effect in 2017 will affect how California employers do business. This two-part article summarizes key changes that employers can expect and suggests ways to comply. Unless otherwise noted, these laws will take effect on January 1, 2017.
California Minimum Wage – SB 3
On April 4, 2016, Governor Jerry Brown signed into law legislation that will gradually increase California’s minimum wage to $15.00 per hour for all employees by January 1, 2023. The law includes two schedules, phasing-in the increase for large and small employers (26+ and 25 or fewer employees, respectively).
Effective January 1, 2017, the minimum wage for “large employers” will increase from $10.00 to $10.50 per hour. On January 1, 2018, the wage will increase to $11.00 per hour, and then will increase $1.00 per hour annually until the minimum wage reaches $15.00 per hour in 2022.
For small employers, the first minimum wage increase will take effect on January 1, 2018, from $10.00 to $10.50 per hour. On January 1, 2019, the minimum wage will increase to $11.00 per hour, and then increase $1.00 per year until the minimum wage reaches $15.00 per hour in 2023. If economic conditions warrant, the governor may delay the implementation of the minimum wage for up to two years.
Local Minimum Wage Ordinances
More than 20 cities and counties across California have adopted their own minimum wage ordinances. These local laws differ in various ways from the state minimum wage law: from who is a covered employee or employer, to when increases occur, to the amount of those hikes. A $15.00 per hour minimum wage will occur more quickly in cities like Berkeley and San Francisco (2018), San Diego (2020), and Los Angeles (2020 and 2021 for large and small employers, respectively).
Minimum Wage Violations – AB 2899
AB 2899 requires employers that challenge in court the Labor Commissioner’s finding of unpaid wages to post a bond with the Labor Commissioner in the amount of unpaid wages. The Labor Commissioner will retain the bond during the court proceedings. If the employer loses its appeal and still fails to comply with the Labor Commissioner’s orders, the bond’s proceeds are paid to the unpaid employee(s). The cost of the bonds and procedural requirements will deter employers from fighting in court the Labor Commissioner’s orders.
“White Collar” Salary Hike Blocked
The United States Department of Labor announced a new minimum salary for exempt, white collar (administrative, executive, and professional) employees under the federal Fair Labor Standards Act. The minimum would have increased from $23,660 to $47,476 per year, effective December 1, 2016. But a federal district court blocked the new rule, deciding the Department of Labor did not have the authority to increase the minimum salary requirement, effectively reinstating the $23,660 minimum salary. For California employers, however, the minimum salary requirement remains two times the state’s minimum wage. Effective January 1, the minimum salary for California white-collar employees is $41,600 or $43,680 per year, for small and large employers, respectively.
Overtime for Agricultural Workers – AB 1066
AB 1066 will bring the overtime rules applicable to agricultural workers in line with most other industries. The law phases-in overtime pay so that, ultimately, agricultural workers will earn overtime for work over eight hours in a workday and 40 hours in a workweek.
Similar to the state’s minimum wage ordinance, large and small employers are given a different timetable for implementing these changes. Beginning January 1, 2019, for large agricultural employers, and January 1, 2022, for small agricultural employers, workers will be eligible to earn overtime for hours worked in excess of 9.5 hours per workday and 55 hours per workweek. In the following years, the number of hours worked to earn overtime will gradually decrease by 0.5 hours per day and 5 hours per week, until eventually reaching eight hours in a workday and 40 hours in a workweek in 2022 and 2025.
Overtime for “Personal Attendants” Extended – SB 1015
Effective January 1, 2014, AB 241 required employers to pay “personal attendants” and other domestic-work employees overtime for work over nine hours in a workday and 45 hours in a workweek. These overtime requirements were set to expire on January 1, 2017, but SB 1015 deletes the expiration date and continues overtime for personal attendants indefinitely.
California Fair Pay Act Expanded – AB 1676 and SB 1063
AB 1676 prohibits employers from relying solely on an applicant or employee’s prior salary to justify discrepancies in pay between male and female employees. The law does not prevent employers from taking prior salary into consideration – it simply prevents employers from basing a salary determination entirely on the employee’s prior salary.
SB 1063 prohibits employers from paying employees at wage rates less than rates paid to employees of another race or ethnicity for “substantially similar work.” This law expands last year’s Equal Pay law amendments, which applied only to pay discrimination based on sex.
Single-User Restrooms – AB 1732
Effective March 1, 2017, AB 1732 requires all single-user toilet facilities in any business establishment, place of public accommodation, or state or local government agency to be identified for use by all genders. Single-user restrooms have no more than one toilet and one urinal, and can be locked from the inside by the user. This law has no effect on multi-user restrooms, which may continue to be labeled as “Men” and “Women.”