Money makes the world go around, and the New Year brings with it new laws pertaining to employee’s wages. Here is a handful that went into effect on January 1, 2016.
You undoubtedly already know that California’s minimum wage increased to $10.00/hr. for non-exempt (hourly) employees and to $20/hr. or $41,600 annually for exempt (salaried) employees (computer professionals have a higher rate). Hopefully, you also know that you were required to provide employees who received a rate increase with a written notice of the change within seven days of the effective date of the change. This could have been done on a paystub if employees were paid by January 7 or by a separate notice (such as the one available at www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf).
If you’re now panicking because you didn’t provide such notification, you’ll be happy to know about AB 1506, which cuts employers who are not very detail oriented some slack. Employers have long been required to provide certain information on paystubs, such as the dates of the pay period, the legal name and address of the employer, and that type of thing. California Labor Code 2698 has allowed employees to sue employers when the information on the paystub is not absolutely accurate (including, no joke, when employers have not included “Inc.” at the end of their company’s name). Since this labor code’s inception in 2004, employers have been hit with hundreds of thousands of claims for violations on paystubs like the previously mentioned one, which have cost them hundreds of thousands of dollars. The newly enacted AB 1506 requires that current and former employees notify employers about any paystub inaccuracies and give them an opportunity to fix them before suing. (Go to https://www.dir.ca.gov for an example of the information a paystub should have on it for an hourly employee). Despite the grace period, employers need to learn to get all of the details correct, because inaccuracies can only be fixed once in a 12-month period.
While AB 1506 makes it more difficult for employees to sue because of paystub inaccuracies, SB 358 – the Fair Pay Act makes it easier for employees to sue because of pay inconsistencies. An equal pay law in California is nothing new – one has been in existence since 1949 (Labor Code section 1197.5). However, Governor Brown’s recent modification of it has him declaring that it is now “the strongest equal pay law in the nation.” The law has always required that employers pay men and women the same amount for performing equal work under similar working conditions unless the employer can demonstrate that the pay difference is based upon: 1) a seniority system, 2) a merit system, 3) a system that measures earnings by quantity or quality of production, or 4) any bona fide factor other than sex. Among other things, the modification allows employees to ask each other how much money they make to determine whether they might have a basis for an equal pay claim, lowers the burden of proof for plaintiffs’ claims, and greatly increases the burden of proof for employers’ defenses. (See https://leginfo.legislature.ca.gov for more information). So, if you’ve had a “don’t ask, don’t tell policy” about wages for your employees, it’s time to get rid of it. You can still have one in your personal life.
If you employ piece-rate workers, AB 1513 requires, among other things, that you pay them a separate hourly wage for compensable time not spent on piece-rate work; and, if you’re garnishing an employee’s pay, SB 501 reduces the amount of money that can be garnished (this takes effect July 1).
These are just some of about 800 new laws that went into effect in California on January 1. If you’re an employer who wants to keep your money, best to learn about the ones that pertain to you.
