Dan
Welcome to Sound Business Insights. I’m Dan Watkins.
Katya
This episode is about wage an hour. Legal updates for 2023 and beyond.
Dan
This podcast is not intended to provide legal advice.
Neil
I’m sitting with Katya Adams, who is the office administrator for the Watkins firm. Katya has been a past president of the San Diego chapter of the Association of Legal Administrators. Katya has been advising our clients regarding human resources and business administration matters for over 13 years. Through her frequent continuing education, she has been invaluable in assisting the Watkins firm in keeping our clients in attorneys up to date on most current and pressing business administration and employment law practices. And we’re really thankful to have her with us this morning. Katya, we’ve just received all of the updates for what minimum wages are going to be here in California. Can you review those minimum wage updates for 2023 and at this point for beyond?
Katya
Sure. So we’ve been getting some notice ahead of time of what to expect for 2023, but the time is now in California’s minimum wage is up to $15.50. San Diego’s minimum wage is up to $16.30 per hour.
Neil
And what is the white collar exemption now in California?
Katya
The white collar exemption in California has now gone up to that individual must make $1,240 weekly or $64,480 annually.
Neil
And Katya, we’ve had a conversation in the past about San Diego County versus the city of San Diego. So if you have employees that are moving in and out or you’re not sure you’re in the county, what’s the best practice for how to handle minimum wage?
Katya
Definitely default to that San Diego minimum wage of the higher $16.30 to eliminate any risk.
Neil
And if you are sure you’re in the county and you’re always in the county, then what is the minimum wage for San Diego County?
Katya
$16.30 an hour.
Neil
Very good. Katya, you mentioned exempt employees. What are the qualifications for who can be an exempt employee?
Katya
There are a whole slew of requirements, but generally, you know that individual has to be in a professional licensed category or a management category, and that management also has to be a certain percentage of their time is spent managing. A lot of times you see this in a white collar job, these employees are paid a salary rather than an hourly wage, and they are not entitled to overtime pay. So what happens a lot of times is people say, okay, well maybe I can make this person a manager and they do it improperly because either A, that person isn’t really spending X amount of time managing, I believe it’s at least 70% of their time managing, but whatever that is, that person’s not doing it. Or if they are, they’re paying them a salary of $45,000 a year and you can’t do that. It has to be a minimum of 64,480 in California in order for you to consider making that person an employee that’s not eligible for overtime.
Neil
And can you give us a few examples of some of the common types of employees that might be exempt?
Katya
Sure. Professionals, attorneys, accountants, engineers, managers, accounting managers, administrative managers, human resources managers, people that maybe oversee a pool of other employees, project developers on a site, things like that.
Neil
So Katya, what do employers need to know about non-exempt employees?
Katya
Non-exempt employees are subject to a completely different set of rules. They’re protected by wage and hour laws in California. What that means is if there’s any overtime you have to pay them and they’re entitled to certain meal breaks and rest breaks. This becomes a challenge a lot with really hard workers that want to work through their lunch or maybe they’re too busy and they can’t take their lunch by the required fifth hour per the meal breaks. And unfortunately you have to monitor that and really reinforce it and unfortunately sometimes discipline those good employees to make sure that you’re conforming to California laws. Now the nice thing is California has something called “De Minimous.” So if it’s something that’s happening very minimally, once in a blue moon, you don’t really have to worry about it. But if that’s not the case, you really need to watch what your employees are doing, keeping track of hours. Too many people don’t do that. They don’t have people clocking in and clocking out. You have to do that in some way to acknowledge that they’re not missing any overtime and they’re not missing those rest breaks and meal breaks.
Neil
And there’s been some clarification in the law. I think many employers have been in the habit of maybe rounding up some of their employees ours. Can you talk about that change?
Katya
No more rounding. Nobody should be rounding. Everybody should be using some kind of a system. There’s so much technology out there, or just using a regular email system, whatever you may need to make sure that you are paying based on the exact time that they’re coming and going.
Neil
So Katya, one of the major changes for this year was updating of SB 1162, the Pay Transparency Act. How does that affect California employers going forward?
Katya
If you are an employer of a hundred plus employees, and keep in mind, this is not just in California, but say you’ve got an office in California that of 15, but nationally you’re 105, you’re falling into this category, you must now file a federal EEO1a document, which is going to outline all of the job categories, what they’re paid, and also describe for those employees the race, ethnicity, and sex of that individual. The other big is if you’ve got 15 plus employees and you post job ads on LinkedIn, indeed, wherever you might do it, every job has to have a pay range associated with it. It can be really broad because some people might say, oh, well that’s not fair. It depends on experience, it depends on education. That’s fine. It could be extremely broad, but it has to be there.
Neil
And what internal documentation should they start to keep regarding pay scales?
Katya
It’s a good idea to have your job titles. If you don’t already have job descriptions, that’s something else that should be considered. That’s a good tool to prevent from potential lawsuits or to be a good defense. But in addition to your job descriptions for the positions you have, you should have very broad pay scales for those positions because your employees do have the right to approach you and see what other people in their position are making. And while you don’t have to give an exact number, you do have to provide them with that scale only for their position. Not other people, but you do have to provide it for them.
Neil
Katya, can you tell me a little bit about the new mandatory bereavement leave in California now?
Katya
Employers of five plus are required to provide bereavement leave to the employee that does not have any repercussion. Five days will be offered to eligible employees. And what constitutes an eligible employee is someone that’s worked for your company for 30 days. There is a specific listing of who that bereavement leave will include. Its spouse, child, parent, sibling, grandparent, grandchild, domestic partner, or parent in-law. Some companies already have a paid bereavement leave policy. So they say, okay, well what do I do? Well, it depends on your policy. At the end of the day, all you have to do is offer five days unpaid. That will not affect the job security of your employee. It’s a protected five days. So if you’ve already got a three days that you pay for tack on another two days that are unpaid to your policy, couple other changes from a regular bereavement leave or other policy like this is these five days don’t have to be taken simultaneously. They can be taken within three months of the death in whichever order the employee chooses.
Neil
Hmm.
Katya
And you can request proof. So that’s what’s funny with the California laws is sick time. You can’t request proof, you can’t ask for a doctor’s note if they want to use sick time. But this bereavement leave, yes, you can ask for a death certificate or an obituary or whatever the case might be.
Neil
Katya, there’s been a lot of talk about this new “designated person” as well. What is a designated person now under the law as far as bereavement goes?
Katya
CFRA, which actually did change a couple of years ago to apply to employers of Five Plus, whereas before it was, I believe 50 plus and CFRA was a job protected unpaid leave that you could take for disability, pregnancy, or to take care of a particular family member. And much like the bereavement policy had a specific listing of those individuals, you could take care of a child, a parent, a spouse. So what AB 1041 does is it now adds one more group to that list and it’s a designated person. So what that means is you could say, well, I’ve got a third cousin that I consider a brother and I need to take time off through s r to take care of them and you can and your job will be protected.
Neil
Katya, there’s a lot of changes. What does this really mean for clients of the Watkins firm who are employers?
Katya
Well, they should really contact us to make sure that their handbooks are properly revised. The handbooks are not only meant to make sure that their policies are correct, but that they know what it is they have to do as an employer. The rules that they have to follow, those five days that they must give within three months, or that the person that just started for you one week ago doesn’t qualify for this, they should also contact us to make sure they’re following all of the other laws such as the Pay Transparency Act and CFRA and the white collar exemption minimums
Neil
Katya, There’s also been some updates to harassment, discrimination, and retaliation. Can you tell us a little bit about that?
Katya
FEHA, which we all know as the Fair Employment and Housing now is going to be the California Civil Rights (CRD) Department. So if you get any notices, and it’s from CRD Considerate FEHA, it’s the same thing. But they have added some classes, they’ve added some protective classes. Generally we’ve always had religion, age, gender, sexual orientation. Well now they’re adding some new classes that are protected by CRD, formerly known as FEHA, political beliefs, educational level social membership, and reproductive decision making. So that’s something to consider. Again, when you’re looking at your handbooks, making sure that those items are included and accounted for. And also making sure that if this is an issue that does come up for any of your employees, you are doing everything you can to accommodate properly.
Neil
So SB 1044 also added a new emergency condition and retaliation law. This has to do with workplace safety and whether or not workers feel safe. Can you tell us a little bit about this?
Katya
Basically it says that you can’t retaliate if an employee is unable to work or to report to work due to an emergency condition. It’s a little convoluted because what is an emergency condition? Ironically, a health pandemic does not qualify as an emergency condition. I believe it’s things like weather, natural disaster shootings. I know shootings is one of them.
Neil
Bomb scares.
Katya
Mm-hmm. <affirmative> bomb scares. Exactly. But then there’s all kinds of exceptions. So if you’re a first responder, unfortunately this is not going to apply to you naturally. That makes sense. But there’s a whole slew of rules that goes into this, such as if they’re not able to give you notice, you can’t discriminate in any way. They’re protected by this new law
Neil
And it’s based on a reasonable belief from their point of view that the workplace or work safe is unsafe.
Katya
Correct.
Neil
How is that going to play out in real life in your mind?
Katya
Well, in real life, I think this is so big now because the workplace has completely changed for a big chunk of the population, the workplace is now their home. So if they’re unable to work in their home because of a natural disaster, and it’s also preventing them from getting into the office or workplace for one way or another, they’re protected.
Neil
Katya, we know that there are changes coming regarding use of marijuana outside of the work environment. Can you tell us what you see on the horizon?
Katya
In 2024? AB 2188 is slated to pass, which will allow protection for employees to use marijuana off duty. Historically, this has been one of those things that if you are drug tested and you’re positive in the system, it doesn’t matter if you say, oh, this was two weeks ago. The employee has the right to terminate you. This is going to change the landscape of this testing. And so what that means is employers have to really think long and hard about how they want to implement drug testing. My understanding is you can still write a policy where there are certain rules of drug testing that will result in the termination of an employee, but you have to be consistent with all of your employees and that testing. And what that means is you can’t pick and choose who you’re going to fire for having a positive test and who you’re going to keep for having a positive test. So based on the current landscape and how much marijuana is becoming a more normalized thing, people may want to consider the risk of losing a potentially really good employee if they stay very strict with those policies in the future.
Neil
Katya, we’re now recommending a new best practice for our employer clients as well. And it relates to workplace investigations. Can you tell us a little bit about that?
Katya
When you have a claim of harassment or discrimination in the workplace? Of course, the first thing that has to happen is a swift an immediate investigation. But there’s really a whole slew of best practices that should be followed in order to handle it correctly and also make sure that you’re protected in case of a lawsuit. Really the best thing you can do is bring in an outside non-biased investigator. A lot of companies have these great internal HR departments that do a bang-up job of these investigations, but sometimes you run the risk of, oh, well the person that we’re complaining about is really good friends with the HR manager. That could come up later in a trial. Or what if you’re listing in your employee handbook, one particular individual to report to, and this is the individual that’s being accused of the harassment. So a lot of times bringing in an outside party, whether it’s an attorney, an investigator, that is really the best method for doing this non partial and always trying to designate at least two people for reporting harassment or discrimination complaint in your handbook, probably with a caveat that or a manager if one of those people is not appropriate to report to.
Neil
And on that theme of best practices, Katya, we’ve never really talked about an employee termination checklist, and yet that’s something that you and I have talked about a lot. Can you tell me about that concept and what are some of the things that should be involved in that?
Katya
Sure. And again, that depends on what type of termination do we have. So if you are terminating somebody, you need to have everything ready that day, their final check if they’ve got PTO or vacation that you’ve calculated the appropriate payout, all of the appropriate and required documentation. If somebody gives you notice, you have 72 hours from their resignation to give them a check. Now, sometimes that can get sticky because people will say, okay, well Joe resigned on Monday, but he’s working from Monday to Friday, so I have 72 hours from Friday. No, you have to give the check on Friday. It’s 72 hours from resignation or the last day, whichever comes later. Some of the required documentation. There is a form by the EDD called the notice for unemployment benefits. That is something that has to be given to the employee along with a form called a written notice of change in relationship that must be provided with their final paycheck.
Katya
It’s a very basic form. We’re happy to hand one out to any of our clients and let them know how to use it. You’ve got to make sure, again, you’re paying out any vacation time or P T O sick time does not have to get paid out. So that’s one of the reasons we always really recommend that you don’t commingle those policies if you don’t have to pay that time out. Say they’ve got one day of P T O, but a whole week of sick time now instead of paying them one day, you’re paying them eight days.
Neil
Finally Katya, the subject of those that work through outside contractors to provide workers. There’s been some important changes. Can you tell me about contract workers?
Katya
Sure. So employees that you obtain through a placement company or a staffing company, a lot of times those companies are a really great resource because they absorb the cost of the hiring and the interviewing and sometimes the payroll taxes if it’s a temp position. But now you have to keep in mind that those labor contractors also have to submit that additional pay data with the extended information. So if I hire somebody through this staffing company, now not all of the burden is all in the staffing company. I also have to report not only what that person has been paid, but which company we used.
Neil
So we know there’s always a lot to keep track of as an employer here in California. Katya, let’s talk a little bit about record keeping and the employee’s file. What are some best practices there and is there anything that’s changed in that regard?
Katya
There’s always been a required list, and that’s another thing that we help our clients with. We can provide you with an exhaustive list, making sure you’re keeping your employee files up to date, whether they’re physical or electronic. But either way, they have to be easily accessible in case the employee comes and requests their file, which they have the right to inspect, or another agency, which we’ll get to in a minute. But there’s the obvious required things, the W4, the I9, the identification. There’s other recommended things like maybe the job description, but the new law that’s part of that Pay Transparency Act. SB 1162 now maintains that employers must have records of each employee’s job title and wage history for their entire employment, and they must keep it for three years after termination of the employment. So another thing is the records do have to be easily accessible because they can be open to inspection by the labor commissioner,
Neil
So the labor commissioner can just simply walk in and say, show me your file on so-and-so, and that’s what has to be there.
Katya
Absolutely. Just like OSHA can walk in and request certain things or just like we experienced a few years ago with the I9 inspections, this is the new one for this year is the labor commissioner,
Neil
And so the new model is three years. Thank you.
Dan
You can learn more about the Watkins firm@watkinsfirm.com or call our office at (858) 535-1511.