2016 Brings New California Laws on Minimum Wages, Individual Liability and Paid Sick Leave

January 2016

Minimum Wage Rate

On January 1, 2016, the California minimum wage rate increased to $10.00 an hour. This new wage rate also affects the minimum monthly salary for exempt executive, administrative and professional employees, which now must be no less than two times the state minimum wage for full-time employment - $3,466.67 per month.

If you are an employer you must comply with the new minimum wage and salary requirement. Failure to pay the minimum wage is unlawful and subjects an employer to fines and restitution of the wages to the employee.  Furthermore, discrimination or retaliation against an employee who requests the minimum wage is an unlawful employment practice and an employee can file a discrimination and retaliation complaint with the Labor Commissioner's Office.

Individual Liability

Effective in January 2016, new provisions were added to the Labor Code providing the Labor Commissioner with the ability to go after individuals for wage and hour violations. Now, “persons acting on behalf of an employer” may be held personally liable for violating wage and hour laws, including laws on meal and rest break requirements, minimum wages, and timely payment of wages. The Labor Commissioner now has the authority to conduct a hearing against an individual to recover civil penalties for such violations.

Thus, if you are an owner, director, officer or managing agent acting on behalf of an employer, you may now be held individually liable for violating wage and hour laws.

Paid Sick Leave

The Healthy Workplaces, Healthy Families Act (the Act), effective July 1, 2015, creates an employer mandate to provide paid sick leave. Under the Act, an employee who works in California for 30 days or more in a year is entitled to paid sick leave. Under recent amendments to the Act, which took effect on July 13, 2015, the 30 days of work must be for the same employer to qualify for accrued sick leave. In other words, an employee is not eligible for paid sick leave until he or she works for your business for 30 days within a year of the start of the employment.

An employer may choose the “statutory accrual method,” under which an employee earns one hour of sick pay for every 30 hours worked. Alternatively, an employer may use a different accrual method, provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off in each 12-month period.

You need to ensure that your paid time off plan meets the minimum requirements of the new law. The complexities of the law and stiff penalties for noncompliance – ranging from $50 to $4,000 aggregate – require careful crafting of any sick leave policy.

If your business is unsure whether or not its current PTO policy meets the minimum requirements of the Healthy Workplaces, Healthy Families Act, or you have other questions regarding compliance with the new 2016 laws, please contact us at dkornbluh@millermorton.com or 408.292.1765.