Effective January 1, 2016, Melissa Whitehead 018_webCalifornia has increased its minimum wage from $9 per hour to $10 per hour. This is the second increase to the state minimum wage in the past year and a half. Remember, the obligation to pay minimum wage cannot be waived by any agreement, including collective bargaining agreements.

Employers must examine all pay practices that may be affected by the minimum wage increase – and there are almost certainly more practices that may be impacted than you may think! For example, in addition to increasing the pay of any employees being paid a minimum wage rate, employers should review the following pay practices, which may be affected by the minimum wage increase:

  • Overtime rates of pay: Employees who work for minimum wage and perform work that qualifies for overtime wages must now be paid $15 per hour for time and one-half (previously $13.50 per hour) or $20 per hour for double-time (previously $18 per hour).
  • Exempt/Nonexempt classifications: In California, exempt employees generally must (among other things) earn no less than twice the state minimum wage for a full time employee. This now means that employees must earn a salary of $41,600 per year (or $800 per week) to qualify as exempt employees (in addition to an examination of requirements).
  • Meal and lodging credits: Most of California’s Wage Orders allow employers to credit meals and lodging furnished by the employer toward the employer’s minimum wage obligation. The new credit amounts for meals and lodging are listed on the official Minimum Wage Order (MW-2014).
  • Commission issues: A commissioned employee can receive a sum of money that is intended as an advance, draw or guarantee against the employee’s expected commission earnings. In California, employers must pay these sums at least twice per month. If an employee receives a draw against commissions to be earned at a future date, the “draw” must be equal to at least the minimum wage and overtime due to the employee for each pay period (unless the employee is exempt).
  • Notice requirements: Mandatory minimum wage postings, itemized wage statements, and wage notices will all be affected.
  • Piece-Rate Employees: Piece-rate workers must receive at least minimum wage for each hour worked. Separate legislation effective January 1, 2016, requires payment of rest and recovery periods or other nonproductive time at a specified hourly rate. [NOTE: Employers with piece-rate employees are advised to consult with an experienced labor and employment attorney to review their piece-rate policies in light of recently enacted legislation, which imposes significant restrictions and obligations on piece-rate compensation policies.]
  • Tools/Equipment: Employees whose wages are at least two times the minimum wage can be required to provide and maintain hand tools and equipment customarily required by the trade or craft in which they work.
  • Subminimum wage: The subminimum wage for “learners” increased effective January 1, 2016, from $7.65 per hour to $8.50 per hour (85% of the state minimum wage).

This list is not intended to be all-inclusive, but is intended to alert employers the broad impact of the change in California’s minimum wage. This article does not address proposed changes to the federal minimum wage (expected to be decided in Spring 2016) or minimum wage raises in specific cities/counties. Because of the complexity of these issues, it is recommended that employers consult with experienced labor and employment counsel to ensure that all pay policies and practices are in compliance with the applicable minimum wage laws.

The year-end holidays tend to be a time when employers and employees are either winding down for the year or making one last big push to close the year strongly.  California employers should make time this week, though, to ensure they are ready for the new laws which will take effect in California this Friday – New Year’s Day – that will directly and immediately impact the workplace.Shauna Correia.standing

As a reminder, there are some notable employment-related laws which take effect January 1, 2016.  Click here to view a copy of those laws.  The list includes minimum wage hikes, other wage and hour amendments, expanded time off and sick leave, and expanded enforcement of state and local wage and hour laws conferred upon the Labor Commissioner.  For information on additional new laws and legislation, please see our previous blog titled: California Governor Signs a Bevy of Employment Laws, Vetoes a Few Others.

Companies should ensure that their pay practices, handbooks, job descriptions and records retention practices are compliant with the new laws and ensure that internal or third party payroll processors, supervisors, and human resources personnel are up to date, particularly regarding the new equal pay and leave laws and whistleblower, discrimination, and retaliation protections.  (The following is not an exhaustive list of the hundreds of new laws that take effect in 2016 and is only a summary of the laws listed.  Please consult your employment attorneys at Weintraub Tobin to answer questions and provide the details and nuances as applied to your company.)

The Ninth Circuit recently held that during an EEOC investigation, employers can be forced to produce “pedigree information” (i.e., name, telephone number, address, and Social Security number) of their employees or employment applicants. The decision broadens the scope of information that the EEOC can obtain during its investigations and gives the EEOC further grounds to investigate beyond what is arguably “necessary” to make a determination on an EEOC charge. Continue Reading Ninth Circuit Allows EEOC To Obtain Private Employee Information During Investigations

Weintraub Tobin’s 2016 Labor and Employment Seminar and Training schedule is now available.   Click here for a copy of the schedule.L&E2015

If you have any questions on any of our seminars or would like to inquire on private, custom-tailored training, please contact:

Ramona Carrillo
400 Capitol Mall, 11th Fl.
Sacramento, CA 95814
916.558.6046
rcarrillo@weintraub.com

California’s prohibition on non-competition agreements is less than absolute.  For example, non-compete agreements may be enforced against partners or sellers of businesses.  Additionally, in SingerLewak LLP v. Andrew Gantman (2015) 241 Cal.App.4th 610, a California Appellate Court affirmed an arbitration award that would be considered by most to be a misapplication of California’s non-competition law.

The underlying dispute arises from provision within a partnership agreement that imposed a cost on a departing partner (Gantman) who serviced clients of the firm after his departure.  At arbitration, the former partner argued that:

  1. The provision was not enforceable under California law because it was a restraint on competition;
  1. The exception to the general prohibition of restraints on competition for agreements by partners did not apply because he was not a partner; and
  1. The provision was invalid because it did not contain a geographical restriction.

The arbiter disagreed and enforced the provision.  The arbitrator concluded that Gantman was a partner for the purposes of Business and Professions Code section 16602 and that the provision was not a covenant not to compete but a provision allowing competition with the imposition of a cost on the departing partner.  SingerLewak filed a petition to confirm the arbitration award.  Gantman opposed and filed a petition to vacate the award.  The trial court vacated the arbitration award after it concluded that de novo review of the evidence was required and that the provision was invalid and unenforceable because it did not contain any geographical restrictions.

The Appellate Court concluded that the general rule prohibiting review of an arbitration award applied and that the arbitrator’s award should be been affirmed.  The Appellate court reasoned that judicial review of an arbitration award is only appropriate when the decision violates a party’s unwaivable statutory rights or the explicit legislative expression of public policy.  The court held that while section 16600 evidences a settled legislative policy in favor of open competition and employee mobility, there is no absolute public policy against the enforcement of a covenant not to compete entered into by partners.  As such, although the arbitrator may have erred in interpreting or applying section 16602, the decision did not violate an explicit legislative expression of public policy.  Accordingly, the Appellate Court reversed the trial court’s order which had vacated an arbitration award.

The full implications of the decision are unknown, but as of October 21, 2015, the California Supreme Court has ordered the decision published.   Businesses and employees using arbitration should ensure that they aggressively present arguments during the arbitration because it is unlikely they will have chance for review if they cannot meet this burden.