Every January, employers must become familiar with new employment laws that have been passed at the state and local level. Below is a brief summary of some of the most relevant, in my opinion. Should you have questions about any of these new requirements, please contact any member of our Labor and Employment Practice Group for guidance. Good luck in 2017!
Minimum Wage: By 2022, California’s mandatory minimum hourly wage will be $15 for businesses with more than 25 employees. To get there, starting Jan. 1, 2017, minimum hourly pay rose from $10 to $10.50. There is no state-mandated increase in hourly wages in 2017 for businesses that employ 25 or fewer workers. In 2018, however, such businesses must pay workers $10.50 per hour.
Some municipalities have gone further than state law requires. San Diego’s minimum wage jumped to $11.50 per hour, effective Jan. 1. On Oct. 1, Berkeley’s rate became $12.53 per hour and will rise to $13.75 an hour on Oct. 1, 2017. Los Angeles set a minimum hourly rate of $10.50 on July 1. It will become $12 per hour on July 1, 2017. Note that employees working even partially in these jurisdictions may be subject to these higher “minimum” wages during that work time.
Legalization of Marijuana: California voters passed Proposition 64, known as the Adult Use of Marijuana Act. It permits the “recreational” use of marijuana for adults 21 years old and over. Effective November 9, 2016, state law now allows adults to smoke or ingest marijuana in a private home, to possess small amounts of nonmedical marijuana, and to grow small amounts at home for personal use. Effective January 1, 2018, state law will also allow for the purchase and consumption of marijuana at a licensed business. Proposition 64 continues to prohibit smoking marijuana while driving a vehicle, smoking it in all public places, and anywhere that smoking tobacco is prohibited. Possession of marijuana on the grounds of a school, day care, or youth center while children are present is illegal. Marijuana, also, remains illegal under federal law, including for medical use, and the Trump administration could decide to undertake enforcement efforts not currently utilized.
Employers remain free to test workers for marijuana use before hiring them, or at any point during their employment if there is a reasonable suspicion of impairment. If employees test positive, businesses may still terminate their employment.
Elimination of Wage Disparities: Existing California law prohibits employers from paying employees at rates less than rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. This prohibition is codified at Labor Code Section 1197.5, which also provides exceptions based upon various factors, including a seniority system, a merit system, or any other “bona fide factor” other than sex, such as education, training, or experience.
New law, however, provides that an individual’s prior salary cannot, by itself, justify any disparity in compensation. Part of the rationale for this new legislation is an attempt to remove wage inequality based on upon potential historical discrimination. Reliance by an employer upon an individual’s prior salary to establish current wage rates could, arguably, perpetuate historical wage inequality.
Existing law was also expanded to prohibit employers from paying lower wages to employees of another race or ethnicity for substantially similar work. Employers are now required to affirmatively demonstrate that wage differentials are based on lawful, nondiscriminatory factors such as: (1) a seniority system; (2) a merit system; (3) a system that measures earnings by quantity or quality of production; or (4) a bona fide factor other than race or ethnicity.
These new laws re-emphasize to employers the importance of using objective factors in establishing wage rates, advancement, and other forms of remuneration.
Employees Can Void Forum Selection Contract Provisions: Some employers with multi-state operations have attempted to avoid the burdens of California employment law by selecting friendlier, out-of-state forums in certain employee agreements. Now, however, California law permits employees to void forum selection or choice of law clauses in most agreements with their employers that are entered into or after January 1, 2017. A California employee now has the unilateral right to void any contractual provision that forces him/her to adjudicate claims arising in California in any locale outside the state or deprives an employee of the substantive protection of California law.
An employee may only void the specific provision, however, not the entire agreement. Also, this right does not apply where the employee was represented by counsel in negotiating the terms of the agreement in which the offending clause is contained.
Trevor D. Large, Partner
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