E-Alerts

California Enacts Important Changes In Employment Laws

[December 26, 2013]  Employers that operate in California should be aware that Governor Jerry Brown recently signed into law three important new pieces of employment legislation.  Specifically:

  • The minimum wage in California will rise, in two stages, from its current rate of $8.00 per hour to $10.00 per hour by January 2016.
  • A new law known as the Domestic Worker Bill of Rights establishes a right to overtime pay for approximately 200,000 Californians who are employed as domestic workers in private households.
  • The California Paid Family Leave Program has been expanded to cover leaves taken to care for additional categories of family members.

Minimum Wage Increases

Under the minimum wage legislation, the state minimum wage will increase from $8.00 per hour to (i) $9.00 per hour as of July 1, 2014, and (ii) $10.00 per hour as of January 1, 2016.  These increases will put California’s minimum wage well above the current federal minimum wage of $7.25 per hour.

Proponents of the legislation argue that low-wage workers need these increases to meet California’s high cost of living.  Many business groups, however, have expressed concern that a higher minimum wage will hurt smaller employers and undermine the state’s ability to attract new businesses.

Domestic Worker Bill Of Rights

With the enactment of the Domestic Worker Bill of Rights, California has become the third state, following Hawaii and New York, to provide for overtime pay for domestic workers.  (Domestic workers are excluded from coverage under the overtime provisions of the federal Fair Labor Standards Act.)

The new California law, which goes into effect on January 1, 2014, requires overtime pay for workers employed in private households if they spend at least 80 percent of their time attending to or caring for children, elderly persons, sick or convalescing persons, or persons with disabilities.  Covered workers must be paid one-and-one-half times their regular hourly rate for all hours worked in excess of either (i) nine hours in a workday or (ii) 45 hours in a workweek.

The Domestic Worker Bill of Rights does not apply to family members who provide personal care services, casual babysitters, or minors under 18 years of age.  Also, the statute includes a “sunset provision” under which the legislation will expire as of January 1, 2017, unless it has been extended by the legislature.  (The statute directs the Governor to appoint a committee to study and report on the effects of the legislation prior to the sunset date.)

Expansion Of Paid Family Leave Program

Finally, California’s Paid Family Leave Program, which provides wage replacement benefits under the State Disability Insurance Program, has been expanded to cover leaves taken to care for additional types of family members.  This amendment to the statute takes effect on July 1, 2014.

Currently, the Paid Family Leave Program provides up to six weeks of wage replacement benefits to employees who take time off to care for a seriously ill child, spouse, parent, or domestic partner, or to bond with a minor child within one year of the child’s birth or placement for foster care or adoption.  Effective July 1, 2014, the Paid Family Leave Program will be broadened to cover leave taken to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law as well.

It is important to note that this change in the law does not give California employees a right to take a leave of absence to care for a seriously ill grandparent, grandchild, sibling, or parent-in-law.  Because those categories of relatives do not fall within the federal Family and Medical Leave Act or the California Family Rights Act, an employer is free to decide, as a matter of policy, whether to allow leaves to be taken to care for those relatives.  If, however, an employer does permit employees to take leaves to care for seriously ill grandparents, grandchildren, siblings, or parents-in-law, then, under this change to the Paid Family Leave Program, such employees will be eligible to receive wage replacement benefits under the State Disability Insurance Program.

This distinction is a vital one and may well be a source of confusion for many employers as well as employees.  Thus, California employers should ensure that their managers and HR employees understand this distinction, particularly since the recent expansion to the Paid Family Leave Program will likely spark an increase in the number of employees who request leaves to care for sick grandparents, grandchildren, siblings, and parents-in-law.

Finally, many observers expect that the California Employment Development Department (“EDD”) will issue a revised mandatory workplace poster reflecting this broadening of the Paid Family Leave Program.  As of this writing, however, no such updated poster has been issued.

Recommendations For Employers

In light of these new California laws, there are a number of steps we recommend:

  • California employers should prepare to comply with the new minimum wage rates that will go into effect in July 2014 and January 2016.
  • Individuals who employ domestic workers in California should determine, in consultation with experienced employment counsel, whether those workers are subject to the Domestic Worker Bill of Rights and, if so, ensure that the workers are paid in accordance with the new overtime requirements.
  • California employers should ensure that their managers and HR employees understand the recent change to the Paid Family Leave Law.  Employers should also keep an eye out for the new workplace poster that the California EDD is expected to issue in connection with this change.

Please feel free to contact us if you have questions about these new California laws or any other employment issues.  We regularly counsel employers that operate in California and throughout the nation, and we would be happy to help.