LATEST ON CALIFORNIA WAGE LAWS

CALIFORNIA WAGE LAWS: EMPLOYER ALERTS FOR 2023

By Susan A. Rodriquez, APC

Employers need to take action in response to legislation effective in 2023 that impacts California wage laws, wage requirements and related matters. This blog will discuss three bills: Senate Bill (SB) 3, passed in 2016 with provisions effective January 1, 2023; SB 1162, passed in 2022 and effective January 1, 2023; and a third bill, Assembly Bill (AB) 257, passed into law in 2022 but suspended pending a referendum in the November 2024 election.

Employers must be aware of the requirements enacted by SB 3 and SB 1162. They should review employment policies and procedures to ensure compliance and reposition as needed. While employers may be inclined to wait until the referendum vote is cast to take action regarding AB 257, it would be wise to prepare in advance for the possible changes it would implement.

Employers with California wage and hour questions may contact Southern California employer attorney Susan A. Rodriguez to discuss their changing responsibilities under these laws.

California Wage Laws Impacting Employers

Senate Bill 3 raised the minimum wage in California annually, with the 2023 wage requirements applying to employers of all sizes.  Senate Bill 1162 amended section 12999 of the California Government Code and section 432.3 of the California Labor Code, enacting new requirements for recordkeeping and pay transparency.

If AB 257 survives the referendum, the Fast Food Accountability and Standards Recovery Act, or FAST Recovery Act, will become effective.  The Act would create a Fast Food Council responsible for establishing standards of operation for fast food restaurants, including requirements related to wages, hours and working conditions.  The law also contains provisions related to retaliation and discrimination.

California Minimum Wage Changes under SB 3

SB 3 mandated annual increases in the minimum wage in California, beginning in 2017.  The minimum wage requirement of $15.50 per hour effective in 2023 applies to businesses with any number of employees in California.  Wage increases after 2023 are to be based on the Consumer Price Index. In previous years, employers with 25 employees or fewer were permitted to pay a lower minimum wage than employers with 26 employees or more.

Some municipalities in California have mandated a minimum wage within their jurisdictions that may be higher than required under California wage laws.  The University of California Berkley Labor Center maintains a list of these wage requirements.  Employers must pay the highest minimum wage required by the laws and ordinances that govern the jurisdiction where an employee works.

California Employer Responsibilities under SB 1162

SB 1162 implemented multiple requirements for employers of various sizes regarding pay transparency and records related to positions and wages.  First, employers with 15 or more employees must include a pay scale in all job postings, including those posted or shared by a third party.  This requirement applies if the position may be filled in California, whether the employee works on-site or remotely.  Additionally, an employer must provide an employee with the pay scale for the position he or she holds if requested.

California employer responsibilities now include keeping job titles and wage history records for all employees while employed and for three years after employment ends.  The Labor Commissioner may inspect these records to evaluate or identify wage discrepancy patterns related to race, ethnicity or sex.  An employer’s failure to keep proper records establishes a rebuttable presumption in favor of an employee wage claim.

Private employers with 100 or more employees must submit a pay data report to the Civil Rights Department of the Business, Consumer Services and Housing Agency.  These reports must be filed by the second Wednesday of May each year, beginning in 2023.

California Wage Laws and AB 257: Act Now or Wait and See?

Although the provisions of AB 257 have been suspended pending a referendum vote in the November 5, 2024 election, employers would be wise to evaluate their positions and plan ahead for the vote’s outcome. If the amendments to the Labor Code are approved by vote, the FAST Recovery Act will become effective.

The Act would establish a Fast Food Council responsible for establishing standards for the fast food industry. Cities and counties with a population of more than 200,000 will be permitted to create local councils that may make recommendations to the state council.

The Fast Food Council will have the authority to raise the minimum pay for fast food workers to as much as $22 per hour, with annual increases on the cap based on inflation. This and other standards established by the Fast Food Council will apply to restaurants with at least 100 locations throughout the US.

While AB 257 applies specifically to employers with businesses defined as “fast food restaurants” by the criteria outlined in the bill, mandatory wage increases and other requirements for fast food restaurants would likely put pressure on the restaurant industry in general to increase wages or modify operations to retain employees and keep pace.

Businesses that may be impacted by this law should take steps to evaluate their options and make adjustments that may help offset the potential challenges posed by AB 257.

Contact Attorney Susan Rodriguez with Your California Wage and Hour Questions

As a Southern California employer attorney at the Law Offices of Susan A. Rodriguez, APC, Susan Rodriguez has advised and represented employers in California for more than 30 years.  She helps clients stay up-to-date on changes to California employer responsibilities regarding wages and much more.  To discuss recent and pending updates to California wage laws or other employment law matters, contact Susan by calling (213) 943-1323 or completing the law firm’s online contact form.

Posted by Susan A. Rodriguez, Esq.

The information, comments and links posted on this blog do not constitute legal advice, and no attorney-client relationship has been or will be formed by any communication(s) with the blogger.  Do not send any confidential or privileged information to the blogger.  No information, documents or materials you send to the blog will be considered confidential or privileged by the Law Offices of Susan A. Rodriguez, APC or its lawyers and no information, documents or materials will be returned to you.  If you do send any information, documents or materials to the blog, you give permission for the blogger to include them on or in the blog.

For legal advice, contact an attorney at Law Offices of Susan A. Rodriguez, APC or an attorney actively practicing in your jurisdiction.

Merit and Pay Increases for 2024

Paycheck Increases For 2024: What Can Employers Expect?

Blue Whale has prepared the following summary advisory report on the current market and economic conditions to provide insights into how these factors may impact companies’ decisions regarding merit and pay increases in 2024.

U.S. Wage Increases in 2024

A) White-Collar Jobs

Pay increases in most white-collar roles are expected to slow down in 2024. This deceleration can be attributed to the economic outlook and general business sentiment prevailing in the market. For example, according to the World Economic Forum, most chief economists expect moderately weakened growth in the United States and Europe. Pay freezes – uncommon over the last three years- have become increasingly common as companies face economic headwinds and undertake job cuts. For example, SalesForce, Microsoft, and other leading employers have announced no salary raises for full-time employees in 2023, indicating a shift in the approach adopted by some major organizations.

B) Blue-Collar Jobs

On the other hand, and perhaps due to minimum wage increases in states like California, Washington, and other larger metropolitan areas, blue-collar roles will likely experience continued above-average wage growth in 2024. Beyond increases in the minimum wage, the other drivers for this upward trend are the scarcity of skilled labor and increased demand. Industries such as construction(1), manufacturing, mechanical, supply chain, and transportation, facing workforce shortages, are expected to offer higher wages to attract and retain talent.

c) Overall Projection: Wage and Salary Movement

Based on a review of wage growth, wage/salary movement for 2024 is likely to match or come in only slightly below 2023 levels. Projected pay movements for 2024 are as follows:

• 4.8% for managers and executives
• 5.1% for professional administrative positions
• 5.2% for hourly administrative positions
• 5.0% for production and blue-collar classifications

D) PROJECTED MERIT INCREASES, BUDGETS: 2024

In setting up budgets, it is essential to understand the difference between overall wage movements and planned increases. Overall wage movements include several personnel decisions impacting an employee's paycheck, including promotions, cost-of-living increases, salary adjustments, adjustments to meet new minimum wage guidelines, and merit-driven increases.

On the other hand, planned increases are the budgeted payroll percent increases set by employers for employee increases. Typically those increases are merit-driven, tied to an employee's performance; however, some companies have plans that call for a flat percent increase for all employees. Generally, depending on industry, and other labor factors, budgeted payroll increases trail overall wage and salary movements by .5% to .75%.

As we look ahead to 2024, a number of publications are forecasting budgets for increases ranging between 4.0% and 4.2%.

Understanding today's market is essential

As employers begin to budget for 2024, organizations must conduct wage benchmarking exercises promptly to assess their position relative to the market. Failure to benchmark wages may result in companies being unaware of potential disparities in market pay. According to the Bureau of Labor Statistics wage and benefits growth tracker, US wages across all jobs have increased by 5.0% as of May 2023. However, it is essential to recognize that specific roles in local markets may have experienced higher growth rates, potentially exceeding the overall average.

To illustrate the impact, let's consider a scenario where the market pay for critical roles has risen 8% in the past year. If a company granted its employees a 4% pay increase, they may unknowingly fall behind the market heading into 2024. To bridge this gap and remain competitive, the organization may consider providing an additional 4-5% increase, considering the observed market pay increases.

Our Software HELPS ORGANIZATIONS Maintain Market Parity

If keeping track of market movement is part of your organization's strategy, our compensation software, BlueComp can help. Developed by Blue Whale Compensation, BlueComp is a game-changing cloud-based compensation management application that stands out from the competition. What sets BlueComp apart is its remarkable ability to offer robust features and functionality as a freeware app. While competitors often charge monthly fees that can reach thousands of dollars, BlueComp provides unparalleled value at no cost. BlueComp is available as a freeware application. Its rich and robust compensation management features are ideal for organizations moving from spreadsheets to cloud-based applications. BlueComp comes with a wide range of features:

• Track Market Movements
• Easily Compare the Market Value for Different Jobs across multiple locations
• Manage Pay Bands by Location
• Easily Edit Employee Data
• Simple Visual Representation of Salary Structure
• Salary Suggestions and Compensation Assistant
• Employee-level Suggestions for Reducing Pay Gaps
• Market Differences stats to manage costs, address pay gaps, and keep pay in line with the company's compensation philosophy

Maintain Market Standing with BlueComp's Dynamic Market Capabilities

The estimates used by BlueComp to determine annual compensation changes come primarily from the Employment Cost Index (ECI). Published quarterly by the Bureau of Labor Statistics, the ECI is a comprehensive index that tracks wage and employee-related costs across various industries and sectors.

By leveraging ECI data within their BlueComp account, clients can make informed decisions, refine their budgeting, and ensure their compensation strategies remain competitive and responsive to market conditions.

As of 8/1/2023, all BlueComp accounts have been updated with the latest ECI figures. These figures are based on major industry sectors, metro areas, and employment size.

For more information on wage/salary escalation and how to interpret or use your account's information, contact a BlueComp representative today.

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Comp Resources & Trends

How to Combat Job-Hopping? Hire Part-Time Employees and Interns!

Is Job Hopping Here to Stay?

It used to be that most employees would stay in a position on average of four to six years. That is no longer the case. The fact is that most employees are no longer considering long-term employment with your company.  

The leaders of the job-hopping movement are, to no surprise, millennials. They are now aptly called the “job-hopping generation” because they display a significantly higher willingness to switch careers than previous generations. The long-tenured career employee is essentially over.   

Employee mobility with employment options, and the opportunity to get more money with the next move, have resulted in decreasing employee tenure. Social media is saturated with narratives about getting a 20% increase by going to a new company. The fact is that strategy works for people. In previous years, job jumping was frowned on – now, that tactic is part of the challenges that employers must seriously account for.  

Given that employees are less likely to stay with your company for a long period, you need to develop shorter and more impactful training procedures to make up for time lost in the hiring process. Shorter employment also makes companies question their pension and retirement benefits. Instead of benefit and tenure keeping in immediately waiting 6 to 12 months longer and increasing vesting provisions from 3 to five years. 

Hire Part-Time Employees to Fill the Labor Gap

One driver of the current resignation wave is that employees are looking to shift their work schedule and work with more flexible work type arrangements. Often, even a full-time WFH arrangement is not enough. Employees are also looking for a shorter, flexible work schedule.  Part-time employment may be an option for them and many employers.  

Beyond the cost economics – which may help the employer – part-time employees often have the experience and the technical agility that employers often require from new employees.  Given the new dynamics in work arrangements, part-time employees, when properly structured, can add the stability that the current environment lacks. 

Managers will be key. Managers can resist the perception that part-time employees are supplemental and not worthy of long-term investment in terms of training to development. HR must bring considerable company culture efforts to show how part-time employees can be more than a short-term for the organization. Employees now place a high value on the ability to control their work/life balance, so they are likely to appreciate the opportunity to earn income while being able to accommodate to their lifestyle.  

High Demand for Interns Expected in 2022

Intern season is coming up! A well-managed internship program is a great way to identify potential long-term talent against the wave of resignations. If you have been on the fence about hiring interns, this may be the year for you to jump into developing an internship program.  A properly vetted internship program offers a variety of solutions that can quickly fill the labor gaps most employers are experiencing. 

Hiring interns is a great way to get specific skill-based labor that can support critical key functions and relieve areas with entry-level support. A good program should also be able to help you identify potential long-term talent. If you target and recruit specific skill sets, you may be able to bring some support to key projects that might be stuck due to a lack of resources.  

Most of the jobs that are being lost, besides retail and health, are office administrative classifications where minimum wages have not kept up with inflation. That means interns and part-time employees could provide much-needed relief during the late spring and summer months.