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Keeping up with the HR laws

By Faith Driscoll, Esq.

This article is being written in the midst of the CalSHRM Legislative & HR Conference taking place in Sacramento.  It is that special time of year when HR practitioners gather in the Capitol to learn, share and commensurate.  The conference has covered some of the newest changes to impact HR and how to handle everyday issues in the workplace.  A summary of two of the newest laws seemed appropriate for this month’s HR Hotspot.

Increased Paid Family Leave Benefits.  The most recent law signed by Governor Brown was signed just nine days ago, which expands the benefits afforded to employees who take Paid Family Leave.  Currently, under California’s family temporary disability insurance program, employees may receive up to 6 weeks of wage replacement benefits when taking time off work to care for specified persons (e.g., child, spouse, parent, etc.) or to bond with a minor child within one year of the birth or placement of the child in connection with foster care or adoption.  Citing a concern that the relatively low wage replacement rate dissuaded employees from using this benefit, this bill amends Insurance Code section 3301 to increase the wage replacement benefits.  It changed the formula for calculating these benefits to ensure a minimum weekly benefit of $50, and to increase the wage replacement rate from the current 55% to 70% for most low-wage workers, and to 60% for higher wage earners.  Although this change may be of little concern to employers because it is paid for by employee contributions to the state disability fund, starting in 2017 Bay Area employers will be required to supplement the difference between benefits and the employee’s regular compensation to ensure 100% wage replacement while off work. 

San Francisco employees will have to be employed by their employer for at least 180 days before starting the leave period to be eligible for the top up benefit.  To be entitled for supplemental compensation under the ordinance, employees must also agree to allow their employer to apply up to two weeks of unused accrued vacation leave to help meet the employer’s obligation to provide supplemental compensation.  Covered employees can be part-time or temporary employees, but they must spend at least 40% of their total weekly hours (and eight hours per work week) for the employer within the geographic boundaries of San Francisco.  The total state benefit and employer top up cannot exceed 100% of employee salary.

As of January 1, 2017, the ordinance will apply to all employers who regularly employ 50 or more employees, regardless of location.  Over the following year, the ordinance will be phased in until employers with just 20 employees or more must comply after January 1, 2018.

Stepping up the Minimum Wage.  Another law recently signed by Governor Brown was SB 3 which increased the minimum wage yet again.  This bill, signed on April 4, 2016, requires employers with over 25 employees to increase hourly compensation to $10.50 on January 1, 2017, then to $11 on January 1, 2018, and increase by $1 each January until 2022.  For smaller employers each increase is delayed by one year.  The increase to non-exempt employees will also impact exempt employees because they must earn at least 1.5 times the minimum wage to pass the salary basis test.  This means that by 2022 an exempt employee must be paid at least $62,400 per year.  Additionally, in order to maintain overtime-exempt status for commissioned salespeople where the threshold is calculated at 1.5 times the current minimum wage, employers must now pay a higher minimum earnings threshold and over one-half of that amount must consist of commissions, so commission schedules may need to be increased accordingly.  Other implications of these increases are:

  • Loss of exemption from the Paid Sick Leave (“PSL”) law for union workers. CBA-covered employees are exempt only if their regular hourly rate is at least 30% more than minimum wage.
  • California employees under a qualifying CBA are exempt from state overtime law. As with the PSL exemption, the CBA must provide for a regular hourly rate is at least 30 % more than minimum wage.
  • Employees who earn wages on a piece-rate basis must be paid for non-productive time effective January 1, 2016. The hourly rate calculation for that time must be no less than the new minimum wage each time it increases.

If you have not attended the CalSHRM conference before, plan to attend next year on April 19-21, 2017 in Sacramento!  Share your thoughts about these new laws with SHRM Tulare/Kings in our new Member Forum.  To access the page, log on, then select the Member Forum page from the Members menu.

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