In this episode of The Workplace podcast, CalChamber employment law expert Matthew Roberts and CalChamber’s vice president of employment law, Bianca Saad, discuss the new California employment laws that took effect on January 1, 2023.
New State Minimum Wage
As of January 1, the state minimum wage is now $15.50 per hour for all employers regardless of size. Saad notes that this change from the initial phase-in schedule is due to the increase in inflation. Inflation exceeding 7% has triggered an increase in minimum wage that is now universal for all employers. It is important to note that this affects not just nonexempt hourly employees but also exempt employees.
Increase for Exempt Employees
Saad describes the “white collar exemption” and the two tests that exempt employees must meet. The first test is to look at what they are doing and if they meet the proper classification. The second test is how much money they are making, which requires exempt employees to earn a minimum of two times the state minimum wage. This would bring the minimum salary for exempt employees to $64,480 per year as of January 1.
Roberts comments that this is a common question the CalChamber Helpline receives. It’s important for employers to remember this second part of the test, the minimum salary requirement. The Labor Commissioner views exemptions on a workweek-by-workweek basis, so you lose the exemption for every workweek you don’t have it.
Local Ordinances for Minimum Wage
Saad then explains that there also are local ordinance minimum wages in California, some of which are not on a January 1 increase schedule. She says there are about 20 localities that increased their minimum wage as of the new year, often at a rate much higher than the state rate. The remaining localities then do their increases on a July schedule, so those changes will be seen mid-year. This is critical for employers to pay attention to, if they have employees working at least two hours in any workweek from that locality, then they need to pay that locality’s minimum wage.
Roberts illustrates this using the example of the CalChamber which is headquartered in Sacramento. If the CalChamber had a remote worker in Cupertino, for example, it does not matter where the headquarters is; that employee is covered by the Cupertino local ordinance.
SB 1162 — Pay Scale Publication and Reporting
January 1, 2023, also sees new laws take effect including SB 1162, which requires employers to do two things: pay scale publication and disclosure, and pay data reporting.
Pay Scale Publication and Disclosure
Pay scale publication and disclosure, Saad explains, requires all employers to provide hourly or salary wage scales to employees for their current position upon request by the employee. This also needs to be provided to an applicant for a position upon request. Saad points out that this is obviously broad and somewhat ambiguous as far as how wide the scale ought to be, but under the law it should be whatever the employer would reasonably pay for that position.
Saad goes on to explain that employers with 15 or more employees also need to publish the hourly or salary wage scales on their job recruitment postings. There is also a record keeping component of the new law, which requires employers to keep records of the job titles and wage histories for each employee during their employment, plus three years after their employment ends.
Pay Data Reporting
The pay data reporting aspect of SB 1162 updated a law that already required employees with 100 or more employees nationwide to report the pay data for employees who work at California establishments, in-person or remotely. The update to the law adds additional reporting requirements, requiring employers to report on the median and the mean pay for each job category for each combination of race, ethnicity and sex. This report, which used to be due on March 31 of every year, is now due on the second Wednesday of May. Saad also points out that for employers who use at least 100 workers from labor contractors (like staffing agencies), those workers must be included in those reports.
Saad shares that the California Civil Rights Department, formerly known as the Department of Fair Employment and Housing (DFEH), maintains helpful resources on how to create and submit these reports.
Leaves of Absence — Bereavement Leave
Leaves of absence laws have also changed again in 2023. Bereavement leave now requires employers with five or more employees to provide up to five days of leave to employees who have a qualifying family member pass away. However, the employee has to have been employed for at least 30 calendar days at the time they take the leave.
Qualifying Family Member
Saad then explains a “qualifying family member” is a spouse, child, parent, sibling, grandparent, grandchild, domestic partner or parent-in-law, all of which are defined by the Fair Employment and Housing Act. This term also is used for other leaves, including: paid sick, military, California Family Rights Act (CFRA) and federal Family and Medical Leave Act (FMLA) leave.
Employers have the ability to request documentation for the new bereavement leave, which must be provided within 30 days of the commencement of the leave. Appropriate documentation includes a death certificate, published obituary, burial or memorial services from a funeral home or a mortuary, etc.
Roberts asks if employers must pay for the leave to be taken. Saad adds that the statute states that the bereavement leave can be unpaid and that employees are able to use vacation, paid time off (PTO), sick leave or some other paid time off to get paid during that time.
Saad also notes that the five days of bereavement leave is per qualifying family member that passes away; there is no annual limit. Roberts comments that the leave must be taken within 90 days of the qualifying event; once the 90 days pass, the employee is no longer entitled to the leave.
Roberts asks about the new “designated person” addition to the list of qualifying family members that California added to the CFRA, California’s version of FMLA. Saad explains that the “designated person” differs based on what law is being discussed.
For CFRA, a designated person is any individual related by blood whose association with the employee is the equivalent of a family relationship. For CFRA, an employee can now take up to 12 weeks of leave to care for anyone who is a designated person. However, under paid sick leave, a designated person is just a person identified by the employee at the time the employee requests leave.
Saad clarifies that there are limits to this paid sick leave. An employer under the law can limit the “designated person” to be the same individual for each leave year under each law, to prevent an employee from taking leave to care for a neighbor, and then taking leave to care for an aunt, etc. within the same year.
Reminder to Update Employee Handbooks
With all these new and updated laws for the new year, Roberts reminds employers to update their employee handbooks. Although employee handbooks are not required by law, Saad points out, they are a best practice. An employee handbook serves as a central location for all your HR policies.
The new year is also a great time to review other policies like vacation, holiday, rest and meal breaks, etc. Handbooks are great resources to refer to, especially for employers handling performance and disciplinary issues.
Saad shares that the CalChamber’s Employee Handbook Creator is a great place to start to quickly create a handbook. It makes the process simple with a handbook “wizard” allowing employers to answer questions about the number of employees, then dropping in the types of policies that are recommended or mandatory.
Saad says that no matter how the employee handbook is created, it is important to have it reviewed by legal counsel before distributing it to employees.
Updated 2023 Posters
Roberts says that the new year also means new posters. There are 18 employment posters that all employers must post; about half of them have been updated for 2023. Employers can go to each government agency to collect all required posters, or for convenience they can utilize the CalChamber’s all-in-one poster that combines all these into a single giant sheet.
If employees are working 100% remotely, employers must make sure they are getting these notices to the employees, whether in the form of an all-in-one poster or sending each notice separately. If an employee is on a hybrid schedule, coming into the worksite a few days a week, they are covered by the posters at the worksite.
Those are a few compliance tips to start off the new year. Happy 2023!
CalChamber’s free Your Guide to 2023 California Employment Laws white paper is now available for nonmembers to download (CalChamber members can access the 2023 white paper here). Not a member? See what a CalChamber membership can do for you.