Aunt Ann’s labor attorney, Lisa Weinberger filled us in on the most recent updates regarding employment law in California. Below you’ll find updated information pertaining to minimum wage and mileage rates, wage theft, and more.
REQUIRED UPDATES TO CONFIDENTIALITY AGREEMENTS, PROVISIONS, AND POLICIES
New laws go into effect on January 1, 2022 that impact employers’ abilities to keep certain information confidential, and create notice obligations for employers to ensure their employees understand their rights in this regard. While there are nuances in these laws, and employers are advised to seek individual counsel regarding their particular situation, the high-level takeaways are as follows:
- All confidentiality agreements, provisions, and policies that are required to be signed as a condition of employment, or within a severance agreement, must include the following language: “Nothing in this agreement prevents you from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that you have reason to believe is unlawful.” Any required document that does not have this, or substantially similar language, will be rendered unenforceable.
- To the extent a claim relating to a protected category (for example, harassment or discrimination based on sex, race, disability, pregnancy, etc.) is filed in court or with an administrative agency (as opposed to simply in a demand letter), settlement agreements for such claims can restrict disclosure of the amount paid to settle the claim, but cannot restrict disclosure of the underlying facts.
- In order to be enforceable, severance agreements must specifically advise employees that they may consult with counsel of their choice at their own expense before signing, and give at least 5 business days in which to consider the offer (unless the law requires a greater notice period).
Consult with counsel about revising relevant documents (offer letters, employment agreements, confidentiality agreements, employee handbooks, severance agreements, etc.).
CHANGES TO MANDATORY ARBITRATION AGREEMENTS
Two years ago, Lisa notified us of a new law in California that prohibited employers from requiring arbitration as a condition of employment. Soon after the law passed, it was stayed in connection with an appeal, and no action was taken for quite a while. However, this past September, a Ninth Circuit panel held that the law could go into effect. This will certainly be appealed again, but in the meantime, all employee arbitration agreements must be voluntary in order to be enforceable.
Consult with counsel about revising relevant documents that reference arbitration (offer letters, employment agreements, arbitration agreements, employee handbooks, etc.).
CALIFORNIA FAMILY RIGHTS ACT UPDATE
Last year, Lisa reported that the California Family Rights Act (“CFRA”) had been greatly expanded to cover all California employers with 5+ employees. This year, the law was amended to provide protection for covered employees who need to take time off from work to care for parents-in-law, as opposed to just their own parents. For those of you who implemented CFRA policies last year, these should be updated to account for this change – and for those of you who have not yet prepared a CFRA policy, now is the time! Please contact Lisa’s office for assistance if she can be helpful.
Consult with counsel to ensure that you have a CFRA policy that is in place and up to date.
INCREASED MINIMUM WAGE, SALARY BASIS THRESHOLD, AND IRS MILEAGE REIMBURSEMENT RATES
As of January 1, 2022, please be aware of the following increases:
In California, the minimum wage for employers with up to 25 employees will be $14.00 per hour. For employers with 26+ employees, the minimum wage will be $15.00 pern hour.
Please keep in mind that many cities throughout California have local minimum wages that are higher than what the state of California requires. Most local minimum wage ordinances increase in July, but some go up on January 1st, including these cities (not an exhaustive list): Burlingame ($15.60), Los Altos ($16.40), Menlo Park ($15.75), Oakland ($15.06), Palo Alto ($16.45), Redwood City ($16.20), San Diego ($15.00), San Jose ($16.20), San Mateo ($16.20), Sonoma ($16/$15), and West Hollywood ($15.50/$15.00). If you have any question as to what the minimum wage is for your employees, please contact Lisa.
Salary Basis for Exempt Employees
In order for California employees to be properly classified as exempt (which means that they are not entitled to overtime pay), they must be paid on a salary basis and that salary must be at least two times the state minimum wage for full-time work. As such, each time the state minimum wage increases, the salary basis increases, as well.
With this in mind, in order for a California employee to be classified as an exempt employee, he or she must be paid a salary of at least $58,240 (if the employer has up to 25 employees) or $62,400 (if the employer has 26+ employees).
Mileage Reimbursement Rate
The business mileage reimbursement rate for 2022 will be 58.5 cents per mile.
Check your payroll to make sure that all employees are earning at least the minimum wage, and that all exempt employees are earning enough to meet the new, higher salary basis thresholds.
A new law in California makes the “intentional theft of wages, benefits or compensation” in an amount greater than $950 for 1 employee, or $2350 for 2+ employees, in any 12-month period punishable as grand theft under the California Penal Code, which can be charged as a misdemeanor or a felony. If you have any questions at all as to whether you are paying your employees properly, please schedule a time with me to discuss.
Make sure that you are classifying your workers properly and paying non-exempt employees in accordance with the law. Consult counsel if you have any questions.
California law now requires that employee personnel files be retained for four years.
Adjust record retention policies and practices to ensure that applicable files are maintained for the requisite amount of time.
Within the last several years, state and local governments have implemented so-called “Ban the Box” laws that restrict the use of criminal background checks at certain times in the application process. This past October, the Department of Fair Employment and Housing (“DFEH”) announced that it would begin to utilize technology to conduct mass searches of online job advertisements to identify violations of California’s “ban the box” statute (which is called the Fair Chance Act). The DFEH claims to have found in excess of 500 violations in just one day of using this technology. The agency is also asking applicants to report any job postings with discriminatory language.
A lot of technical violations of these laws are unintentional. The DFEH has released a Fair Chance Act Toolkit that includes sample forms and guides, which can be helpful for employers who want to be sure that they are in compliance with this law in their processes, and that their publicly available materials reflect that.
Review your background check requirements and documentation and be sure that your job postings and application materials do not contain outdated statements.
MANDATORY RETIREMENT PROGRAMS COMING SOON
Some of you may have heard about CalSavers, which is California’s new retirement savings program that is available to California workers whose employers don’t offer a workplace retirement plan. Such individuals have the opportunity, through this program, to contribute to an IRA. Employers with 5+ employees who don’t offer their own retirement plan are required to register for CalSavers by the appropriate deadline (which, for the vast majority of my clients, will be June 30, 2022) to facilitate their employees’ access to the CalSavers Prorgam.