As the new year approaches, employers in California should take note of the changes in employment law to ensure that they are in compliance with the new laws set to take effect. There are several changes to the employment law landscape that will go into effect at the start of 2020. Furthermore, there are some notable trends in the current employment laws that Californian employers may find interesting.
New Laws:
Minimum Wage
Beginning January 1, 2020, the minimum wage will increase to $13.00 per hour for California employees of employers with 26 or more employees. The minimum wage will increase to $12.00 per hour for California employees of employers with 25 or fewer employees.
Additionally, starting January 1, 2020, the minimum salary for exempt white-collar employees will be $54,080 for employers with 26 or more employees and $49,920 for employers with 25 or fewer employees.
Arbitration Agreements
Beginning January 1, 2020, AB 51 will ban mandatory arbitration agreements and prohibit employers from mandating employees to waive any right, forum, or procedure in pursuing employer violations as a condition of employment or the receipt of employment related benefits. This law will also prohibit employer retaliation and discrimination against applicants who refuse to sign an arbitration agreement. According to AB 51, employers may not refuse to hire an applicant or terminate an employee on the sole basis that the applicant or employee refuses to sign an arbitration agreement.
However, AB 51 will not cover arbitration agreements that were made or extended prior to January 1, 2020.
Prohibition On Seeking Job Applicant’s Salary History
Also, arriving with much fanfare was Labor Code § 432.3, which prevents any prospective employer from seeking, either personally or through an agent, a job applicant’s salary history information. Employers are also restricted from relying on salary history information in extending an employment offer or determining salary.
However, the caveat is that if the job applicant volunteers this information without any prompting, an employer may consider this information as a factor in determining what salary to offer. The employer is still not allowed to use any salary history information as any factor to decide whether or not to employ the job applicant. In 2019, AB 2282 clarified that while employers cannot seek an applicant’s salary history, they can ask for an applicant’s salary expectations. Furthermore, AB 2282 clarified that employers can make compensation decisions based on an existing employee’s current salary if a wage differential can be explained by factors such as seniority, merit, and education.
Lastly, AB 2282 clarified that if the job applicant reasonably requests the salary or pay scale for a job position, then the employer must provide the job applicant this information if the applicant has completed their initial interview. Labor Code § 432.3 applies to all employers, regardless of the number of employees employed.
Trends:
Labor Code 558.1 Use as A Means for Individual Liability
Since the enactment of Labor Code 558.1, many Plaintiffs have felt embolden to name individual owners and/or directors in Wage and Labor disputes. Labor Code 558.1 makes individuals liable for employer violations of many different wage and hour rules. Now individuals and not just companies may be liable for these claims. This trend has occurred more frequently in 2019.
Labor Code 558.1 states:
“(a) Any employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission or violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.
(b) For purposes of this section, the term “other person acting on behalf of an employer” is limited to a natural person who is an owner, director, officer, or managing agent of the employer, and the term “managing agent” has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.
(c) Nothing in this section shall be construed to limit the definition of employer under existing law.”
Despite the dearth of any clear and express statutory language that show California Legislature intended to create a private right of action, many courts have found that at the Motion to Dismiss/Demurrer stage, Labor Code 558.1 allows suit against an individual owner and/or director. See, e.g., Carter v. Rasier-Ca, LLC, No. 17-CV-00003-HSG, 2017 WL 4098858, at *5 n. 1 (N.D. Cal. Sept. 15, 2017); Rangel v. RTI Properties, Inc., No. BC641439, 2017 WL 2345874, at *2 (Cal. Super. Ct. May 3, 2017); Gonzales v. Starside Security & Investigation Inc., No. 37-2015-00036423, 2016 WL 6989454, at *2 (Cal. Super. Ct. Nov. 18, 2016). However, as of yet, no binding appellate authority exists.
Therefore, owners and/or directors should be aware of the growing trend of the Court to allow cases to proceed under Labor Code 558.1. To date, statutory interpretation from a higher court has not occurred. Therefore, the trial and district courts are not bound when interpreting whether or not Labor Code 558.1 is limited to the Labor Commissioner.
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