MINIMUM WAGE INCREASE SET FOR JULY 1ST
Effective July 1, 2022, all non-exempt employees covered by the Los Angeles Minimum Wage Ordinance will be required to be paid the new minimum wage of $16.04. A copy of the Wage Ordinance can be found here. The current applicable minimum wage for all covered non-exempt employees in Los Angeles is $15.00/hour.
Employers should note that “covered employees” are those who, in any particular week, perform at least two (2) hours of work within the geographic boundaries of the City of Los Angeles. This includes full-time, part-time, seasonal, or temporary employees. Businesses mainly operating outside of metropolitan Los Angeles but sending personnel into the City for even a minimal amount of time must comply with the minimum wage increase.
No Impact on Exempt Employees:
The increase in the Los Angeles City minimum wage has no impact on the minimum salary required for exempt employees. Such salary threshold is determined by the state’s minimum wage (currently $14/hr. for employees who work for employers with 25 or fewer employees, and $15/hr. for employees who work for employers with 26 or more employees).
Employers are reminded to post notices of current minimum wage rates in a conspicuous place accessible to all employees. Current posters for minimum wage and paid sick leave are available at https://wagesla.lacity.org/, in multiple languages.
With the recent increase in remote workers, California has approved providing required notices to employees via e-mail at the email address that the employee uses for work-related matters, provided that a hard copy notice is ALSO placed in accessible areas at the work site. In other words, emailing the notice does not eliminate the need to physically place the poster in the workplace.
PAGA ACTIONS – ARE THEY HERE TO STAY?
The status of the dreaded PAGA (Private Attorney Generals Act) action which have become so prevalent in California in recent years, and the impact of which has been financially devastating to businesses, may soon change.
A brief recap of what PAGA is: PAGA generally allows any one employee to bring a “representative action” on behalf of all other allegedly “aggrieved” employees to recover substantial penalties for alleged violations of various Labor Code sections (many of which have resulted in no economic or other harm to a single employee).
In addition to the penalties that are recoverable (which start at $100.00 per pay period per employee and go up to $250.00 and $1,000.00 per employee per pay period), the driving force behind the PAGA action is the recovery of Plaintiff’s attorneys’ fees. Of the amount recovered in a PAGA action, the attorneys are paid, the “aggrieved employees” share in 25% of the recovery and 75% goes to the State of California to assist in funding various enforcement actions.
All of this may change if one or two pending events occur.
A. Pending Decision Before the U.S. Supreme Court
First, the U. S. Supreme Court recently heard oral argument in a case entitled Viking River Cruises, Inc. v. Moriana which will decide whether an arbitration agreement can include a waiver of PAGA action, as has been allowed with class actions. When class action waivers became enforceable in arbitration agreement, employees who entered into arbitration agreements with their employers were required to bring their claims in arbitration as individual claims, and not on behalf of a class of employees. The result was that not as many class actions were filed and the employees’ attorneys turned to PAGA to file a “representative action”- similar to Class Actions but without most of the procedural requirements.
The U.S. Supreme Court’s decision on whether PAGA actions can be waived in employment arbitration agreements is expected by the end of summer and if the decision is to permit PAGA waivers, the PAGA actions may be less of a threat for California employers.
B. November Ballot Initiative to Revise PAGA
An initiative brought by an association of California businesses called Californians for Fair Pay and Accountability, are seeking to have the November ballot include a proposal called the Fair Pay and Employer Accountability Act (FPEAA) which will essentially re-write the PAGA statute.
The stated goals of the FPEAA “is to replace PAGA with increased enforcement mechanisms in the hands of the Labor and Workforce Development Agency (LWDA) so that workers recover wages faster and employers are no longer targeted by frivolous private litigation.”
The FPEAA seeks to:
- Ensure 100% of penalties go to workers
- Speed up recovery of wages and penalties for workers
- Double penalties where employers willfully violate the law
In addition, the FPEAA would establish a Consultation and Policy Publication Unit within the Department of Industrial Relations (Labor Commissioner) to publish information and provide confidential consultations to employers with compliance questions and charges the California Legislature with ensuring the Department has the funding necessary for enforcement.
This initiative is strongly supported by the California Chamber of Commerce. For more information on the California Fair Pay and Employer Accountability Act visit https://cafairpay.com/.
MANDATORY BEREAVEMENT LEAVE
Assembly Bill (AB) 1949 has revived a prior proposal to require mandatory bereavement leave for all employees. The bill would make it an unlawful employment practice for an employer to refuse to grant a request by an eligible employee to take up to 5 days of bereavement leave upon the death of a family member, including a spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law.
In addition, the bill would require that the bereavement leave be completed within 3 months of the date of death. The bill would also require the employer to maintain employee confidentiality relating to bereavement leave.
Under the bill, in the absence of an employer’s existing policy providing for paid time off, the bereavement leave would be unpaid, however, the bill would authorize an employee to use certain other leave balances available to the employee, including accrued and unused paid sick leave. If an employer’s existing leave policy provides for less than 5 days of bereavement leave, the bill would require the employer to provide a total of at least 5 days of bereavement leave to employees.
AB 1949 would not apply to employees who are covered by a valid collective bargaining agreement that provides for prescribed bereavement leave and other specified working conditions. We will continue to watch the progress of this bill and provide updates as available.
CAL SAVERS – WHAT YOU NEED TO KNOW NOW
BY MARILYN MONAHAN, ESQUIRE
Effective June 30, 2022, employers with 5 or more employees must either offer a qualified retirement plan to their employees or register to participate in CalSavers. The requirements are the same for non-profit and for-profit employers, but not government employers. The size of the employer is based on its average number of employees throughout the year, as reported to the Employment Development Department (EDD) on the Form DE 9C during the previous calendar year.
Are there penalties if the employer fails to comply? Yes. According to CalSavers, “Per Government Code Section 100033(b), each eligible employer that, without good cause, fails to allow its eligible employees to participate in CalSavers, on or before 90 days after service of notice of its failure to comply, shall pay a penalty of $250 per eligible employee if noncompliance extends 90 days or more after the notice, and if found to be in noncompliance 180 days or more after the notice, an additional penalty of $500 per eligible employee.”
For many California employers, the applicable implementation deadline has already passed. For others, the deadline is just over a month away. As a reminder, the staggered implementation schedule for CalSavers is:
Size of Business Deadline
Over 100 Employees September 30, 2020
Over 50 Employees June 30, 2021
5 or More Employees June 30, 2022
Employers do not have to register with CalSavers if they instead offer their employees a qualified retirement plan. Qualified retirement plans include:
- 403(a) – Qualified Annuity Plan or 403(b) Tax-Sheltered Annuity Plan
- 408(k) – Simplified Employee Pension (SEP) plans
- 408(p) – Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA Plan
- 401(a) – Qualified Plan (including profit-sharing plans and defined benefit plans)
- 401(k) plans (including multiple employer plans or pooled employer plans)
- Payroll deduction IRAs with automatic enrollment
If the employer already offers a qualified retirement plan, CalSavers asks that the employer inform CalSavers of the employer’s exemption through the employer portal.
Participating employers do not pay any fees to CalSavers, and they cannot contribute to CalSavers accounts. However, employers must register, transmit census data on a timely basis, and submit payroll deductions. Employers may authorize their payroll service provider to help perform these functions on the employer’s behalf.
All employees of a participating employer are eligible if they are 18 or older and have the status of a common law employee under California law. There are no minimum service requirements based on hours worked or tenure with the employer. Furthermore, employees are eligible to participate from the first day they are hired; employers must update their census data with CalSavers within 30 days of an employee’s hire date.
The CalSavers account is a Roth IRA, and the default contribution rate is 5% of gross pay (but the rate can be changed). If they do not opt out, employees are automatically enrolled after 30 days. The IRAs are portable—they stay with employees after they leave their jobs.
CalSavers has posted FAQs and other resources on its webpage: www.calsavers.com
Marilyn A. Monahan
Monahan Law Office
4712 Admiralty Way, #349
Marina del Rey, California 90292
This Newsletter is intended as a brief summary of employment law. While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship. If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved. ©2022.