The legislature passed many new employment laws or tinkered with old ones. Below are a three of the most significant changes.
MINIMUM WAGE INCREASE
In California, the minimum wage will increase to $10.50 per hour on January 1, 2017 for employers who have more than 25 employees. The people of San Diego passed a ballot proposition in June that increased the minimum wage to $10.50 per hour and will further increase it to $11.50 per hour on January 1, 2017. Workers get the highest minimum wage rate among federal, state, or local minimum wage laws.
The Federal Minimum Wage will not change for now, but one aspect of it might. On December 1, 2016, the minimum salary for exempt employees was scheduled to increase to $47,476.00 per year. That is more than double the old federal minimum salary requirement and is higher than most state minimum salary requirements. However, a judge in Texas recently ruled that the law would NOT go into effect on December 1. It might go into effect later; however, the judge may permanently bar the change. Either way, the judge’s ruling will probably get appealed.
The minimum salary in California will increase to $43,680.00 for exempt employees on January 1, but only for employees who work for employers who employ more than 25 employees. Why does the state minimum salary distinguish between employers who employ more or less than 25 employees?
The answer is the way in which the minimum wage works in California. The minimum salary in California is twice the state minimum wage times the number of hours a full- time worker, at 40 hours per week, works in a year. In other words, the number of hours the state presumes a full-time worker to work in a year is 2080 hours. Two Thousand Eighty hours times $21 per hour (twice the $10.50 state minimum wage for employers who employ 26 or more employees) equals $43,680.00. As of January 1, that will be the minimum salary for exempt employees who work for an employer who employs at least 26 employees. The state minimum wage for all other employees (those who work for an employer who employs fewer than 26 workers) is $10 per hour. Thus, for employers who employ 25 or fewer employees, the minimum annual salary for exempt workers is $41,600.00 (2 x $10/hour x 2080 hours) or $800.00 per week.
The California minimum wage rate will increase every year through 2023. The scheduled increases are below:
For employers who employ at least 26 employees:
- On January 1, 2017, the minimum wage will increase to $10.50 per hour.
- On January 1, 2018, the minimum wage will increase to $11 per hour.
- On January 1, 2019, the minimum wage will increase to $12 per hour.
- On January 1, 2020, the minimum wage will increase to $13 per hour.
- On January 1, 2021, the minimum wage will increase to $14 per hour.
- On January 1, 2022, the minimum wage will increase to $15 per hour.
For employers who employ 25 or fewer employees:
- On January 1, 2018, the minimum wage will increase to $10.50 per hour.
- On January 1, 2019, the minimum wage will increase to $11 per hour.
- On January 1, 2020, the minimum wage will increase to $12 per hour.
- On January 1, 2021, the minimum wage will increase to $13 per hour.
- On January 1, 2022, the minimum wage will increase to $14 per hour.
- On January 1, 2023, the minimum wage will increase to $15 per hour.
The minimum yearly salary for exempt employees will increase by twice the minimum wage times 2080 hours. The governor has the ability to delay implementation of the above minimum wage schedules.
FAIR PAY ACT
In 2015, California amended Labor Code §1197.5 to prevent employers from retaliating against employees who make Fair Pay Act claims. That law also made it easier for employees to prove unequal gender pay. On January 1, 2017, the law will now allow employees to make Fair Pay Act claims based on differences in pay between employees of different races and ethnicities as well as gender. In addition, past salary levels cannot justify lower pay.
CHOICE OF LAW AND FORUM SELECTION CLAUSES
California Labor Code §925 was passed this year and will go into effect on January 1, 2017. It prevents employment contracts from forcing California workers to bring their claims outside of California when they live and work in California. It also prevents employers from forcing employees to be governed by the law of another state. Out of state employers who hire California workers to perform work in California will not be allowed to use handbook provisions or employment contract provisions to force California workers to bring claims out of state and under another state’s laws. Often, the employment laws of another state favor the employer. Of course, trying to litigate in a different state significantly burdens most California workers. In contrast, Labor Code §925 will allow California employees to file claims in California under California law.