The New Year is here.  In California, that means a new set of employment laws with which employers must become familiar and deal with.  While there are too many to mention in this short Advisor, the new laws that we feel are most relevant to our clients are listed below.  If you have any questions about additional, new California employment laws, or about this Advisor, please don’t hesitate to contact me or another attorney in our Employment Practice Group.

MINIMUM WAGE 2016

 This first law is actually not “new,” but rather has new implications.  The $10 state-wide minimum wage

[1] that hit us on January 1, 2016, will complicate things even more than the last increase.  It has implication beyond just those employees earning minimum wage.  Employers must now:

  • Pay more hourly wages. As in 2014, the increase in minimum wage will increase what employers must pay for both regular and overtime wages.
  • Pay more in salary. To maintain salary-exempt status for administrative, executive, and professional employees, employers must now pay a higher minimum salary (calculated at two times the current minimum wage). The salary minimum will thus increase from $37,440 to $41,600.
  • Pay more in commissions. To maintain overtime-exempt status for commissioned salespeople (in retail and service establishments, with the threshold calculated as 1.5 times the current minimum wage), employers must now pay a higher minimum earnings threshold—$15.01 per hour—and over one-half of that amount must consist of commissions.  Therefore, commissions might have to be increased accordingly.
  • Notify Employees. Under the Wage Theft Prevention Act, employers must notify non-exempt employees in writing of any changes to their new rate of pay within seven calendar days from the time of the change (i.e., by January 7, 2016).

Some of these implications are fairly apparent. However, the new minimum wage has more subtle implications as well.  This increase also has the potential to increase sick pay payments, non-productive time payments (see new piece rate law below), and meal and lodging credits.

 California Fair Pay Act

Effective January 1, 2016, the California Fair Pay Act, which commentators have called the nation’s most aggressive equal pay law, will require employers with California-based employees to increase their vigilance to avoid discriminating in pay and benefits based on gender. The Fair Pay Act expands upon existing state and federal laws that prohibit gender-based pay discrimination.

The Fair Pay Act permits the direct comparison of pay of employees of different genders who work in different locations, even if they do not hold the same or substantially equal jobs. If workers are engaged in “substantially similar work, when viewed as a composite of skill, effort and responsibility, and performed under similar working conditions,” their pay and benefits must be the same. If not, the employer must demonstrate that pay differences are based on seniority, merit, quality or quantity of production, or on a bona fide factor other than gender (such as education, experience, or training, and is job-related and consistent with business necessity).

Piece Rate

 Effective January 1, 2016, employers must pay “piece-rate” employees for rest and recovery periods (and all other periods of “nonproductive” time) separately from (and in addition to) their piece-rate compensation. Specifically, employers will need to pay the following rates for rest and recovery periods and “other nonproductive time”:

  • Rest and recovery periods. Employers must pay a piece-rate employee for rest and recovery periods at an average hourly rate that is determined by dividing the employee’s total compensation for the workweek (not including compensation for rest and recovery periods and overtime premiums) by the total hours worked during the workweek (again, not including rest and recovery periods).
  • Other nonproductive time. Employers must pay piece-rate employees for other nonproductive time at a rate that is no less than the minimum wage.

These new provisions, as well as the remainder of California’s new laws, will be difficult to navigate.  Please do not hesitate to contact us with of any employment law questions in 2016.

Trevor D. Large, Partner

DISCLAIMER:  This Advisor is one of a series of business, real estate, employment, estate planning and tax Advisors prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution of this Advisor.

[1] Some California cities have local minimum wages laws that are higher than $10.00/hr.