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In the new year, California HR departments will tackle a wide array of issues, including revisions to the state’s complicated paid-sick-leave law, and an ambitious new law that aims to fight gender pay discrimination.
Other predominant issues in 2016 include minimum-wage increases and the proper classification of workers. These were among the topics discussed at a seminar in Los Angeles earlier this month, one of a series presented by the California Chamber of Commerce in January.
At the seminar, two speakers from the chamber reviewed key laws and cases, and discussed best practices for employers.
Gender Pay Equity
In response to the ongoing problem of the gender wage gap, California last year enacted the Fair Pay Act, Senate Bill (S.B.) 358. Author of the bill Sen. Hannah-Beth Jackson, D-Santa Barbara, said that it will strengthen California law by requiring equal pay for “substantially similar” work. Under the new legislation, any pay differential must be justified by seniority, merit, quantity or quality of production, or a “bona fide factor other than sex.” The bona fide factor must be job-related and based on business necessity.
Under the Fair Pay Act, employers can’t prohibit workers from discussing their wages, according to Erika Frank, the chamber’s general counsel and vice president of legal affairs. But employers also aren’t required to disclose that information, she added. The law includes new protections against discrimination and retaliation. Also, companies must maintain relevant records for three years.
The Fair Pay Act took effect on Jan. 1. To ensure compliance, it’s a good idea for businesses to audit their payroll practices. If an employer plans to do an audit, it should do so with the help of a lawyer, according to Frank.
Paid Sick Leave
California’s paid-sick-leave law, Assembly Bill (A.B.) 1522, generally requires employees be allowed at least 24 hours or three days of leave annually. To address concerns and confusion, the state amended the law last year by passing A.B. 304.
In one change, employers now have greater leeway regarding the accrual method of providing leave. Under the accrual method in A.B. 1522, an employee earns one hour of paid leave for every 30 hours worked.
With the revisions, companies have additional accrual options:
Under the amended law, there are two approaches for calculating paid sick leave for nonexempt employees, according to Erika Pickles, the chamber’s employment law counsel. The two options are:
For exempt employees, sick-leave pay must be calculated in the same way it’s determined for other types of paid leave, Pickles said.
A.B. 304 also includes other clarifications, and the California Labor Commissioner has issued guidance to provide the most up-to-date information.
The issue of whether some employees are being misclassified as independent contractors has been a huge topic of debate, with Frank citing the legal battle over Uber’s drivers as an example.
This issue has been receiving greater scrutiny from the federal government, Frank emphasized. In July, U.S. Department of Labor Administrator David Weil issued guidance stating that most workers are employees under the definitions in the Fair Labor Standards Act. According to the guidance, employers should use an “economic realities” analysis to help determine proper classification.
On Jan. 1, California’s minimum wage rose to $10 an hour. It’s the second increase arising from A.B. 10, which passed in 2013. As Frank noted, the increase also affects the minimum salary provided to exempt employees.
At the federal level, final overtime rules are expected this summer. President Barack Obama has proposed raising the salary threshold for exemption to $50,440 annually—higher than the current level under California law. The aim is to increase the number of people eligible for overtime.
Meanwhile, California businesses should keep track of local ordinances that raise the minimum wage, Frank said.
Other 2016 Laws
Among the other major laws taking effect this year are ones pertaining to:
Significant Legal Cases
Key employment disputes from 2015 include those about:
Toni Vranjes is a freelance business writer in San Pedro, Calif.
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