Seyfarth Synopsis: Employment-related cases pending before the California Supreme Court concern various questions that sometimes seem technical, but the answers they elicit will have big consequences. Questions raised by the current crop of cases include standing to sue, the availability of certain claims and remedies, federal preemption of California laws, what counts as compensable time, and—that perennial favorite—how to interpret the infernal PAGA statute.
We expect the California Supreme Court in 2019 to issue decisions addressing many important issues in private employment. Some topics easily warrant their own article or blog post, and will receive that treatment as the Supreme Court’s decisions emerge. But it’s not too soon to highlight some coming attractions.
Anti-SLAPP and Alleged Employer Motive
Is an employer’s anti-SLAPP motion to strike an employee’s suit affected by the employer’s alleged discriminatory motive? In Wilson v. Cable News Network, Inc., the Supreme Court has agreed to decide “whether an employee’s claims for discrimination, retaliation, wrongful termination, and defamation arise from protected activity for purposes of a special motion to strike,” and “what is the relevance of an allegation that the employer acted with a discriminatory or retaliatory motive?”
Application of CA Wage-Hour Law to Out-of-State Employers
Does California employment law apply to non-California residents who work in California on a transitory basis? In Ward v. United Airlines and Oman v. Delta Air Lines, the Supreme Court has accepted the Ninth Circuit’s request to address five questions:
(1) “Does California Labor Code section 226 apply to wage statements provided by an out-of-state employer to an employee who resides in California, receives pay in California, and pays California income tax on her wages, but who does not work principally in California or any other state?”
(2) Does the exemption in Wage Order 9 for collective bargaining agreements (CBA) under the Railway Labor Act bar a wage statement claim brought under California Labor Code section 226 by an employee who is covered by such a CBA?
(3) “Do California Labor Code sections 204 and 226 apply to wage payments and wage statements provided by an out-of-state employer to an employee who, in the relevant pay period, works in California only episodically and for less than a day at a time?”
(4) “Does California minimum wage law apply to all work performed in California for an out-of-state employer by an employee who works in California only episodically and for less than a day at a time?”
(5) “Does the Armenta/Gonzalez bar on averaging wages apply to a pay formula that generally awards credit for all hours on duty, but which, in certain situations resulting in higher pay, does not award credit for all hours on duty?
When is an arbitration remedy broad enough to preclude an employee’s resort to a Berman hearing? Under existing law, employers cannot necessarily compel employees to arbitrate wage claims unless and until employees have had the chance to bring those claims before the Labor Commissioner in a “Berman hearing.” In OTO, L.L.C. v. Kho, the Supreme Court has agreed to decide these issues:
“(1) Was the arbitration remedy at issue in this case sufficiently affordable and accessible within the meaning of Sonic-Calabasas A, Inc. v. Moreno (2013) … to require the company’s employees to forego the right to an administrative Berman hearing on wage claims?
(2) Did the employer waive its right to bypass the Berman hearing by waiting until the morning of that hearing, serving a demand for arbitration, and refusing to participate in the hearing?”
Does an employee engage in compensable work while waiting for the employer to inspect a bag the employee chose to bring to work? In Frlekin v. Apple, Inc., the Supreme Court has accepted the Ninth Circuit’s request to decide this issue: “Is time spent on the employer’s premises waiting for, and undergoing, required exit searches of packages or bags voluntarily brought to work purely for personal convenience by employees compensable as ‘hours worked’ within the meaning of California Industrial Welfare Commission Wage Order No. 7?”
Is walking to and from a time clock compensable hours worked? In Stoetzl v. State of California, the Supreme Court has agreed to decide this issue: “Does the definition of ‘hours worked’ found in the Industrial Wage Commission’s Wage Order 4, as opposed to the definition of that term found in the federal Labor Standards Act, constitute the controlling legal standard for determining the compensability of time that correctional employees spend after signing in for duty and before signing out but before they arrive at and after they leave their actual work posts within a correctional facility?”
Liability for Wage Payment
Preemption—By the FAA and the LMRA
Is a PAGA suit for unpaid wages immune from arbitration? In its 2014 Iskanian case, the California Supreme Court acknowledged that the Federal Arbitration Act (FAA) preempts state laws against class-action waivers in arbitration agreements, but also held that representative PAGA actions are not subject to mandatory arbitration. Now, in Lawson v. Z.B., N.A., the Supreme Court has decide to whether a representative action under PAGA, seeking recovery of individualized lost wages as civil penalties under Labor Code section 558, falls within the preemptive scope of the FAA.
Does federal labor law preempt a claim for termination wages? In Melendez v. San Francisco Baseball Associates, the Supreme Court has agreed to decide this issue: “Is plaintiffs’ statutory wage claim under Labor Code section 201 subject to mandatory arbitration pursuant to section 301 of the Labor Management Relations Act because it requires the interpretation of a collective bargaining agreement?”
Can an employee seeking unpaid wages use the tort of conversion? In Voris v. Lampert, the Supreme Court has agreed to decide this issue: “Is conversion of earned but unpaid wages a valid cause of action?”
Rest Breaks & Meal Periods
Rest breaks for ambulance attendants on 24-hours shifts. In Stewart v. San Luis Ambulance, Inc., the Supreme Court accepted the Ninth Circuit’s request to decide these issues: (1) “Under the California Labor Code and applicable regulations, is an employer of ambulance attendants working twenty-four hour shifts required to relieve attendants of all duties during rest breaks, including the duty to be available to respond to an emergency call if one arises during a rest period?: (2) “Under the California Labor Code and applicable regulations, may an employer of ambulance attendants working twenty-four hour shifts require attendants to be available to respond to emergency calls during their meal periods without a written agreement that contains an on-duty meal period revocation clause? If such a clause is required, will a general at-will employment clause satisfy this requirement?” (3) “Do violations of meal period regulations, which require payment of a ‘premium wage’ for each improper meal period, give rise to claims under sections 203 and 226 of the California Labor Code where the employer does not include the premium wage in the employee’s pay or pay statements during the course of the violations?”
Standing for PAGA Claims
Can a PAGA plaintiff settle his individual wage and hour claims and still pursue his PAGA action as an “aggrieved employee”? In Kim v. Reins International California, Inc., the Supreme Court has agreed to decide whether an employee bringing an action under PAGA loses standing to pursue representative claims as an “aggrieved employee” by dismissing his or her individual claims against the employer.
Workplace solution. Some of the issues raised by the above cases may seem relatively minor, technical, or limited to particular industries. Yet many a significant class action has turned upon issues no more monumental. We will keep our eyes and ears on the Court’s progress and keep readers updated with the latest developments.
Seyfarth Synopsis: While targeted social media ads may help employers find potential applicants with specific skill sets, inartfully crafted ads may open the door to discrimination claims, particularly in California.
Micro-Targeting May Open The Door To Discrimination Claims
What is micro-targeting, you ask? Remember when you looked up discount flights to Hawaii, and then for the next three weeks, all of your feeds taunted you with ads for more flights, hotels, surf lessons in Kauai and hula skirts? Well, it’s kind of like that.
Social media platforms collect virtually endless volumes of personal data. This practice enables increasingly intricate advertising algorithms to push out content to very specific demographics. Suppose your business wants to advertise to the select group of people who have expressed an interest in the Montessori method, or who juggle, or who space travel and live in three specific zip codes. Micro-targeting was made for you.
Micro-targeting has expanded into the employment context, with some potentially problematic implications. One class action pending in California federal court alleges that Facebook ads targeted to people within certain age ranges are discriminatory. Similar claims could crop up in seemingly innocuous situations if, for example, an employer targeted ads to fellow graduates of his alma mater, which happened to be an all-male prep school.
As a result, employers who recruit via social media should proceed with caution if their ads in any way target (or exclude) persons in a legally protected category.
Particular Risks for California Employers
Federal law prohibits discrimination based on race, color, national origin, sex, disability, age, citizenship status, and genetic information. Of course, California is a bit different. California extends its protections to prevent discrimination because of additional characteristics, including ancestry, marital status, sexual orientation, gender identity and expression, medical condition, political activities or affiliations, and military or veteran status. As a result, for example, an ad geared towards trying to recruit politically liberal or conservative candidates may raise peculiar legal issues in California.
Employers need to understand their recruitment practices, and decide whether micro-targeting can ever be the right approach for them. When employers decide to use targeted ads, they should do so with relevant employment laws in mind and take steps to minimize potential exposure. Because HR managers or marketing departments may not be aware of the additional sensitivities that arise when advertising in the employment context (particularly in California), additional training on this subject may be helpful.
If you have any questions regarding your workplace’s online recruitment practices, your favorite Seyfarth attorney is only few clicks away.
Seyfarth Synopsis: Agricultural employers have a hard row to hoe with the latest crop of legislation affecting overtime requirements in California. New requirements under Labor Code section 860 took effect when the rooster crowed on January 1, 2019. This law will phase in overtime pay requirements for agricultural employees covered by Wage Order 14.
Under federal law (the FLSA), “agricultural work” is exempt from the overtime rules, but in California the Industrial Welfare Commission’s Wage Order 14-2001 has entitled agricultural employees to daily overtime for hours worked in excess of ten hours in a day. Although California was thus outstanding in this field, it still did not mandate overtime protections for agricultural employees to the extent that it did for employees generally. Finding that situation udderly unacceptable, the Legislature in 2016 directed the Department of Industrial Relations to update the Wage Order so that agricultural workers will eventually be entitled to earn overtime moo-lah to the same extent as other non-exempt employees.
The phase-in process for the new law, summarized in the chart below, should alleviate some of the acres and pains it will undoubtedly cause. Starting in 2019, employers with 26 or more employees must pay overtime at 1.5 times the regular rate of pay for agricultural employees who work more than 9.5 hours per day or more than 55 hours per week. By January 1, 2022, the overtime triggers for agricultural employees will be on par with other California non-exempt employees, that is, 1.5 times the regular rate for work of more than 8 hours per day or 40 hours per week, and 2 times the regular rate for work of more than 12 hours per day. Employers with fewer than 26 employees have a more gradual phase-in process, which begins on January 1, 2022.
1.5x Reg. Rate
2x Reg. Rate
1.5x Reg. Rate
2x Reg. Rate
The new law does not change the definition of agricultural employees under Wage Order 14-2001, which applies to workers who bring home the bacon by engaging in the following activities:
Preparation, care and treatment of farm land, pipeline, or ditches;
The sowing and planting of any agricultural (generally, farm) or horticultural (generally, garden, orchard, or nursery) commodity;
The care of any agricultural or horticultural commodity;
The harvesting of any agricultural or horticultural commodity;
The assembly and storage of any agricultural or horticultural commodity;
The raising, feeding and management of livestock, fur bearing animals, poultry, fish, mollusks, and insects;
The harvesting of fish for commercial sale as defined by Section 45 of the Fish and Game Code;
The conservation, improvement or maintenance of such farm and its tools and equipment.
Workplace solution: Employers of agricultural employees covered by Wage Order 14-2001 should review their pay practices to ensure that they comply with the new law, but need not plow through these issues on their own. Seyfarth Shaw is outstanding in the field when it comes to wage and hour laws, and we are here to help employers navigate this maize until the cows come home.
Seyfarth Synopsis: When choosing a GPS location tracking app, California employers must consider several factors to see if the app unduly infringes on employee privacy. Let some references to popular music be your guide.
It’s As Easy As ABC
Today’s GPS technology makes it easy for employers to track the location of employees. And an employer need not be a smooth criminal to do so.
While it may just be human nature, many employers want to know where their employees are during work hours. Several companies offer GPS tracking apps and devices that enable employers to track employees—whether they travel to the corner of the sky or the heartbreak hotel. These programs can not only track the location of employees but also link this information to payroll and timesheet data. Employers might thus increase route efficiency in deliveries or streamline project management.
But before an employer says “I want to rock with you” to any of these companies, the employer should consider the legal implications of tracking employee locations.
The Law Is Not Black Or White
As noted in previous posts, an employer’s lawful ability to track employees hinges on whether the employer is infringing on employee privacy rights. Article I, Section I of the California Constitution states that “all people” have an inalienable right to privacy, and California peculiarly applies this constitutional protection to private employment.
While California law emphasizes privacy, the issue as it relates to tracking employee locations has not been heavily litigated. Thus, there is no specific roadmap for employers.
Moreno v. S.F. Bay Area Rapid Transit District, though not an employment case, provides guidance on how a GPS tracking system implicates personal privacy. In Moreno, the plaintiff claimed that a transit company violated her right to privacy through the tracking abilities of its cellphone app. The app tracked user location so that if a rider reported something amiss on the train, operators could identify where the suspicious activity was occurring.
Don’t Get Too Futuristic
Just as in Michael’s worst video—Scream—things can go terribly wrong if you try to get too futuristic. Employers should refrain from requiring employees to implant subcutaneous chips to track their whereabouts or other information. Requiring a chip implant is something that might appeal to every parent of a wayward teenager (is there any other kind?), but this measure in the employment context is expressly prohibited by statute, with steep fines for noncompliance.
Takeaways When Looking at the Man In The Mirror
If you are now saying to yourself, “I’m gonna make a change,” while reviewing your policies on GPS tracking, here are some factors to consider.
First, clearly disclose to employees that their location will be known to the employer during work hours, and require them to consent to tracking their location.
Second, in light of Moreno, consider these points, in addition to those outlined in our previous post:
Use a tracking program or software in an app format—Moreno was persuaded that the tracking app did not violate California Penal Code section 637.7, which makes unauthorized tracking a misdemeanor, because software, like an app, was not a physical “tracking device” within the meaning of the statue.
Use software that associates the employee’s location with an ID number rather than more personal information.
Provide employees notice that the app will track their location.
Require employees to consent to the app tracking their location.
Track locations only during work hours. Even if your people are workin’ day and night, make sure the app stops tracking locations during non-work hours, including breaks.
Workplace Solution: Because the issues surrounding this area of law are in flux, employers should be deliberate when enacting a GPS tracking policy and continually revisit it to maintain compliance. We will continue to monitor developments in this area and update our readers. In the meantime, if you have any questions, please contact your favorite Seyfarth attorney.
Seyfarth Synopsis: Plaintiffs’ lawyers routinely invoke Labor Code provisions to conduct pre-litigation discovery by seeking employment records. For employers that scramble to comply with these often burdensome demands, we offer some practical tips on how to utilize the protections the law provides for employers and for the (perhaps) unsuspecting employees on whose purported behalf the request is made.
Have you received a lawyer’s letter containing a seemingly endless list of employment records demanded on behalf of a current or former employee? If so, count yourself in the majority. It is now commonplace for plaintiffs’ attorneys to bombard employers with demands for employment records before they launch a legal action against the company. The letter may also list a long series of alleged statutory violations, in search of a quick settlement and a big pay day.
This blog highlights some protections that employers have and shares some creative ways to respond the next time you receive a pre-litigation document demand.
A Quick Recap of the Law
Labor Code §§ 1198.5 and 226 are the two statutes most commonly used to seek employment records. Section 1198.5 entitles an employee, former employee, or her representative (usually an attorney) to inspect or receive a copy of personnel records relating to the employee’s performance or any grievance concerning the employee. The DLSE’s non-exhaustive list of examples of covered documents includes these items: applications for employment, performance reviews, commendations, warnings, disciplinary actions, and complaints about the employee.
Section 226 entitles an employee or an employee’s representative to seek the employee’s wage statement records. Employers responding to a Section 226 request may provide “a computer-generated record” in lieu of actual wage statement copies, provided that record contains all nine specified items of information, such as all hourly rates, hours worked, gross wages earned, etc. And, as of January 1, 2019, employers must provide the employee a copy of the wage statements or computer-generated record upon request, rather than just providing an opportunity for an “inspection.”
Employer must provide responsive documents within certain time limits—personnel records within 30 days and wage statement records within 21 days. A failure to timely respond to these requests could lead to penalties, civil litigation, and, in some cases, criminal liabilities.
We’ve previously written an in-depth analysis of these provisions and how to comply with record requests under them.
Is There Anything I Can Do Before Producing the Records?
Before blindly complying with requests and producing all the responsive documents, employers should consider verifying the identity of the person seeking the records and whether the individual is truly entitled to obtain them. Sections 1198.5 and 226 both expressly permit a company to take “reasonable steps” to verify the identity of the employee or the representative seeking the employment records. Under Section 1198.5(e), the employer “may take reasonable steps to verify the identity of a current or former employee or his or her authorized representative.” Under Section 226(b), the employer “may take reasonable steps to ensure the identity of a current or former employee.”
Why Should I Seek Verification Before Producing the Records?
There are several reasons to implement a verification process:
Employment records often contain sensitive and private information, such as social security numbers, financial data, and contact information. With the burgeoning threat of identity theft, employers should be mindful about producing sensitive employment records to strangers who claim to be the employee or the employee’s representative.
Employment record requests often put companies in a time crunch to compile and respond. By seeking verification, the company develops a basis for an argument that it should have more time to gather the requested information and complete its review of responsive documents.
The verification process helps ensure there is an existing relationship between the attorney and the current or former employee and that the employee has authorized the attorney to get the records on her behalf.
The verification process forces the attorney making the demand to re-engage with the client. In some cases, the employee may develop a change of heart and no longer wish to sue the company. When that happens, the attorney who claims to represent the employee cannot complete the verification request, and the company may never hear back from the attorney (or the employee) again.
So the next time you receive a letter from an employment lawyer, consider taking a moment to consider the best approach for your response. Because each request should be examined and evaluated on a case-by-case basis, please make sure you seek proper legal advice from a qualified employment lawyer.
If you would like assistance or have questions about the strategies for responding to employment records requests, please contact the authors or your favorite Seyfarth attorney.
Seyfarth Synopsis: Recent California legislation, including laws banning questions about salary history and criminal convictions, has bought new interview jitters for employers. These new laws, along with the Fair Employment and Housing Act’s prohibitions against questions going to an applicant’s protected status, confirms the point that there is such a thing as a “bad interview question.” In this ever-changing legal landscape, it is important for California employers to know what they can and cannot ask candidates in a job interview.
Although Michael Scott’s fictional character in The Office would have us believe there is no such thing as a “bad question,” that expression holds less true in California today than ever. California’s legislative updates in the last year have made job interviews more perilous than ever for the unwary employer.
The Legislature has recently introduced prohibitions on salary history and criminal conviction questions for certain employers. What is more, the FEHA prohibits questions like Michael Scott’s zinger, “Why are you the way that you are?”—a question that could go to various protected statuses, such as race, national origin, sex, nationality, and gender.
While such restrictions seem straightforward, implementing them is not always a no-brainer. Indeed, according to one survey, one in five hiring managers admitted that they have asked a question in a job interview only to find out later that it was illegal to ask.
So if you are looking to recruit for a temporary role, or hiring to fill the next coveted regional manager role at Dunder Mifflin, certain interview questions can have you breaking a sweat in California in 2019:
Have You Ever Been Convicted of a Crime?
What used to be a common check-the-box question on employment applications is now illegal to ask before the employment offer stage. In late 2017, California joined several states in introducing “ban the box” laws to reduce barriers to applicants in the pre-hiring stage. Under AB 1008, California employers with more than five employees now must not
include on any job application questions that seek the disclosure of an applicant’s conviction history,
ask about or consider the conviction history of an applicant until he/she has received a conditional offer, or
consider, distribute, or disseminate information related to specified prior arrests, diversions, and convictions when conducting a conviction history background check.
San Francisco’s version of the “ban the box” legislation provides even greater protections to job candidates and includes stiff penalties for violations.
How Much Do You Currently Make?
With the passage of AB 168, effective January 1, 2018, California employers must not ask job applicants for “salary history information” or rely on that information in deciding whether to offer a job and how much to pay. But if the applicant voluntarily discloses salary history, the employer may consider or rely on that information in setting salary so long as prior salary is not the only factor justifying any disparity in pay.
Under recent legislation clarifying the scope of AB 168, employers can ask about an applicant’s salary expectations for the position.
Where Are You From?
The innocent icebreaker questions, “Where were you born?” or “Where are you from?” or “How long have you lived in the U.S.?” can land employers in hot water. Such questions, though seemingly offhanded, can be interpreted as questions about the applicant’s national origin.
Also, California’s Labor and Workforce Development Agency has made it clear that the state’s labor protections apply to all employees—regardless of their immigration status. Thus, you should stay clear of questions about a candidate’s citizenship (unless U.S. citizenship is a legal job requirement). You can, however, ask whether the applicant has a legal right to work in the United States, so long as you do not do so on a discriminatory basis.
When Did You Graduate High School?
Questions about a candidate’s age are prohibited under both California’s FEHA and the federal Age Discrimination in Employment Act. Thus, employers should stay away from questions that could reveal a candidate’s age, like “What year did you graduate high school?”
You may ask a candidate’s age, however, if the job has a minimum age requirement, for example, if it involves serving alcohol.
Are You Married?
Any questions related to parenthood or marital status are off limits. Prohibited questions include whether an applicant is married, pregnant, or plans to be in the future. Even the innocuous question, “What does your spouse do?” should be avoided as it could be seen as a round-about way of getting to the candidate’s marital status. It’s perfectly OK, though, to ask such questions after the candidate has been hired.
You may find yourself at an interview in the predicament Michael Scott describes best, “Sometimes I’ll start a sentence and I don’t even know where it’s going. I just hope I find it along the way.” Often people develop an easy rapport at an interview, making it hard to “unsay” questions—even illegal ones. Take note of the following guidelines to ace that next interview so you can indeed be the “World’s Best Boss.”
Read the fact sheet developed by California’s Department of Fair Employment and Housing, which offers guidance on questions employers can ask applicants.
To the extent feasible, prepare questions in advance, to help avoid drifting off into forbidden territory.
Train job interviewers and HR personnel on what interview questions are illegal and improper.
If you have any questions about this guidance or about illegal pre-hiring questions in California, feel free to contact your favorite Seyfarth attorney.
Seyfarth Synopsis: Though the election is over, politics continue to boil watercoolers in workplaces across California. So while employers presumably know that they must provide employees with time off to vote—we hope!—they also must recognize that their employees’ political rights are not confined to the polling place.
Employees Have a Broad Right To Engage in Political Activities
A peculiar California statute (section 1101 of the Labor Code) prohibits employers from making, adopting, or enforcing any rule, regulation, or policy that prevents employees from engaging in political activities or that tends to control their political activities or affiliations. The protected political activities are not limited to running for office or stumping for a candidate. Courts have interpreted “political activity” broadly to include non-partisan activities, including wearing symbolic armbands and associating with others to advance beliefs and ideals. Employers thus should avoid taking adverse actions against employees for participating in protected political activities.
Of course, political activities (whatever they may be) do not occur in a vacuum. Employees who engage in otherwise protected political activities may still be subject to discipline if their conduct violates legitimate employer policies. In such instances where an employee’s conduct provides a legitimate, non-political justification for disciplining an employee, employers may act, but should ensure that their personnel policies are applied evenly across the political spectrum.
One prominent California technology company was recently hit with a class action lawsuit accusing it of discriminating against employees with “perceived conservative political views, and activities,” after the company fired one of the class-action plaintiffs for “perpetuating gender stereotypes” in a written communication he had circulated internally within the company.
Businesses Cannot Coerce Their Employees Into Adopting Company Politics
In this era of corporate activism, it is seemingly more common than ever for businesses to stake out public positions on hot button subjects. They cannot, however, force employees to toe the company (political) line. California employers must not attempt to influence their employees’ political activities by threatening termination for voting the wrong way. Employers that choose to take a political stance must therefore provide their employees with space to differ.
What Can Happen to Businesses that Violate the Law?
The consequences for failing to follow these requirements can be severe. Employers may be liable for lost wages, damages for emotional distress, punitive damages, and a civil penalty of up to $10,000 for violations.
If you have any questions, contact the author or your favorite Seyfarth attorney.
Seyfarth Synopsis: With apologies to Dr. Seuss, we’ve penned an ode to the judicial chaos of the year just past, highlighted by three California Supreme Court decisions—Alvarado v. Dart Container Corp., Dynamex Operations v. Superior Court, and Troester v. Starbucks Corp.—all of which deviated from federal or common law norms to create more new cal-peculiar law that is friendly to plaintiffs and hostile to California business. Happy New Year!
The California Supremes, as we so often hear it,
rarely leave an employer in holiday spirit.
2018, alas, gave much more of the same,
placing employers behind in the game.
There were many new laws and decisions to weigh,
but here are just three to ruin management’s day:
At the beginning of March, to make business irate,
the Court changed how to figure the regular rate.
Flat-sum bonus calculation? Just tear it to shreds!
California proclaims, “We are not like the feds.”
Instead of dividing the bonus by all hours each week,
Seyfarth Synopsis: Effective January 1, 2019, California’s minimum hourly wage goes up to $12.00 for large employers, and many local minimum wages will go higher still. Don’t forget that the statewide change will affect salary thresholds for white collar exemptions, as well.
Effective January 1, as New Year’s bells toll, California’s minimum hourly wage will increase to $12.00 for employers of 26 or more, and $11.00 for employers of 25 or fewer.
This latest statewide adjustment is part of a series of adjustments mandated by a 2016 statute that, by 2020, will raise the statewide minimum wage to $15.00. The latest adjustment obviously increases what employers must pay for regular and overtime wages for employees currently earning the minimum. And the new, higher minimum wage also will automatically increase the threshold salary employers must pay to maintain salary-exempt status for administrative, executive, and professional employees: the threshold salary is twice the state minimum wage for a 40-hour week. The new annual salary minimum for large employers as of 2019 will thus rise to $49,920 (2 times $12/hour times 40 hours/week times 52 weeks/year).
In addition, to maintain overtime-exempt status for commissioned salespeople (in retail and service establishments, with the earnings threshold calculated as exceeding 1.5 times the current minimum wage), employers must now pay a higher earnings threshold—$18.01 per hour—and over one-half of the earnings must consist of commissions, so commissions might have to be increased accordingly.
And, of course, employers, under the Wage Theft Prevention Act, 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.
On top of the statewide change, the following California cities will be sending their own New Year’s greetings for minimum-wage earners:
Belmont: Employers who are subject to the Belmont Business License Tax or who maintain a facility in Belmont must pay—to each employee who performs at least two hours of work per week in Belmont—a minimum wage of $13.50. This requirement applies to both adult and minor employees.
Cupertino: Employers who are subject to the Cupertino Business License Tax or who maintain a facility in Cupertino must pay—to each employee who performs at least two hours of work per week in Cupertino—a minimum wage of $15.00. Covered employees are entitled to these rights regardless of immigration status.
El Cerrito: An employee who performs at least two hours of work in a particular workweek within the geographic limits of the City of El Cerrito must be paid a minimum wage of $15.00. This minimum wage applies regardless of the size of the employer, and applies to both part-time and full-time employees.
Los Altos: Employers who are subject to the Los Altos Business License Tax or who maintain a facility in Los Altos must pay—to each employee who performs at least two hours of work per week in Los Altos—a minimum wage of $15.00. This requirement applies to both adult and minor employees.
Mountain View: Employers who are subject to the Mountain View Business License Tax or who maintain a facility in Mountain View must pay—to each employee who performs at least two hours of work per week in Mountain View—a minimum wage of $15.65. This requirement applies to both adult and minor employees.
Oakland: Employers in the City of Oakland must pay a minimum wage of $13.80 to employees who perform at least two hours of work in a workweek within the geographic limits of the city. This requirement applies to both part-time and full-time employees.
Palo Alto: Employers in Palo Alto must pay a minimum wage of $15.00 to any employee who works two hours per week within Palo Alto.
Redwood City: Redwood City’s local minimum wage of $13.50 will apply to all business operating within the geographic boundaries of Redwood City and any employee working at least two hours per week.
Richmond: All employers in the City of Richmond must pay a minimum wage of $15.00 to employees who work at least two hours per week within the geographic boundaries of the city. This requirement applies to both minor and adult employees.
San Diego: Employers must pay all employees who perform at least two hours of work in one workweek within the geographic boundaries of the City of San Diego a minimum wage of $12.00. This requirement applies to both minor and adult employees.
San Jose: Employers who are subject to the San Jose Business License Tax or who maintain a facility in San Jose must pay—to each employee who performs at least two hours of work per week in San Jose—wages of not less than $15.00 per hour. This requirement applies to both minor and adult employees.
San Mateo: Employers who are subject to the City of San Mateo Business License Tax or who maintain a facility in the city must pay a minimum wage of $15.00. Tax-exempt nonprofit organizations must pay a minimum wage of $13.50. This requirement applies to adult and minor employees.
Santa Clara: Employers who are subject to the Santa Clara Business License Tax or who maintain a facility in Santa Clara must pay—to each employee who performs at least two hours of work per week in Santa Clara—a minimum wage of $15.00 per hour. This requirement applies to both minor and adult employees.
Sunnyvale: Employers who are subject to the Sunnyvale Business License Tax or who maintain a facility in Sunnyvale must pay—to each employee who performs at least two hours of work per week in Sunnyvale—a minimum wage of $15.65. This requirement applies to both adult and minor employees.
Below is a handy “at a glance” chart detailing these municipal increases.
Minimum Hourly Wage Effective January 1, 2019
Finally, still more cities (including Los Angeles and San Francisco) will impose higher minimum-wage requirements next July 1. Be sure to check this space in mid-2019 for those updates.
Seyfarth Synopsis: Members of the plaintiffs’ bar submit about 500 PAGA notices each month to California’s Labor and Workforce Development Agency. Each notice presages yet another PAGA lawsuit against yet another hapless California employer. But today we consider a new sort of PAGA-focused lawsuit. This recent [link: complaint filed last week] is not on behalf of a California law enforcement agency against some employer, but rather is on behalf of employers, and against a law enforcement official—California Attorney General Xavier Becerra. This lawsuit seeks injunctive and declaratory relief from PAGA because of the ways in which it violates the state and federal constitutions.
Filed by the California Business & Industrial Alliance (CABIA), this lawsuit is a counterpunch by aggrieved employers. CABIA, a trade organization of business executives and entrepreneurs, was formed as one business owner’s response to his personal experience with a PAGA lawsuit. That ordeal imposed a million dollar cost on his business, which has fewer than 200 employees. The ordeal also made the employer feel it had no choice but to comply literally with Labor Code provisions and thereby implement workplace changes (such as arbitrary times for meal periods) that were adverse to the interests of the employer’s workers.
Although the business owner settled that lawsuit, he remained disturbed by the hostile business and legal conditions that the California Legislature created in enacting PAGA. With likeminded business owners, he formed CABIA. Last week the organization sued.
The lawsuit, noting that PAGA lacks sufficient oversight from both the executive and the judicial branches of government, asserts that PAGA violates the constitutional separation of powers doctrine. CABIA contends that PAGA does not achieve its stated purpose to assist employees in righting workplace wrongs where the state lacks resources to do so itself. The lawsuit amply illustrates the point—well known to experienced employers—that PAGA primarily serves the interests of the plaintiffs’ bar, not the employees they nominally represent in court.
The 54-page complaint explains several ways in which PAGA runs afoul of both the California and United States Constitutions. The complaint explains that PAGA as enacted and as applied violates constitutional guarantees of procedural and substantive due process, as well as constitutional prohibitions against excessive fines and unusual punishments.
The lawsuit also cites the recent passage of AB1654, which exempts construction employers with certain collective bargaining agreements from PAGA lawsuits. Since it is unconstitutional to deny any person equal protection of the laws, the lawsuit contends that there is no basis to exempt one industry from the burdens that PAGA generally imposes on all employers.
However quixotic this lawsuit may seem (the California Supreme Court has already rejected constitutional challenges to PAGA), the lawsuit ably catalogs the many ways in which PAGA is unjust. Any employer that has had to defend itself in a PAGA lawsuit is familiar with the statute’s shocking procedural and substantive aspects. Regardless of whether CABIA’s lawsuit prevails, California employers should appreciate its efforts to be heard.