California at Work: New Labor Laws for 2018.

• Author: Terman, Mark E.

You may not have expected that the California Legislature in 2017 designated an official state dinosaur (Augustynolophus morrisi) and four state nuts (almond, pecan, walnut and pistachio), which are technically seeds, but that's a separate article.

Less surprising is that employer regulation and employee rights continue to expand in our state, the sixth-largest economy of the world. The rate of expansion, however, seems to have taken another pendulum swing: 304 bills introduced in 2017 mention "employer," compared to 569 bills in 2016 and 224 in 2015. Most of those bills did not pass, and of the ones that did, most were not signed into law by Gov. Brown. Essential elements of several bills that became law affecting private employers, effective Jan. 1, 2018, unless noted otherwise, follow.

State Minimum Wage On The Rise

As part of legislation enacted in 2015, the state minimum wage increased on Jan. 1, 2018, to $11 per hour for employers with 26 or more employees, and to $10.50 per hour for employers of 25 or fewer employees. It will continue to increase by 50 cents annually until $15 per hour is reached by Jan. 1, 2022, for the larger (26-plus employees) employers and by Jan. 1, 2023, for smaller employers.

Changes in state--but not local--minimum wage also affect classification of most exempt workers. In addition to strict "duties tests" for administrative, executive and professional wage and hour exemptions, a salary of at least twice the state minimum wage must be paid to meet the "salary basis test." By Jan. 1, the annualized salary rate that employers with 26 or more employees must pay to meet the exempt salary requirement will advance to $45,760, up from $43,680. For employers with smaller workforces, the exempt salary requirement will move to $43,680, up from $41,600. When the $15 per hour rate is reached, the exempt salary rate will be $62,400.

Each state increase also impacts retailers who rely on the inside-sales exemption, which requires that employees be paid at least 1.5 times the state minimum wage, and at least half of their other earnings be from commissions.

Municipalities continue to create and increase their own minimum wage for companies that have employees working in their jurisdiction. Employers must pay the higher of the state or local minimum wage. For example, by July 1, 2018, the city of Los Angeles will require employers with 26 or more employees to raise the local minimum wage to $13.25 per hour, up from $12, then comply with other scheduled annual increases up to $15 per hour by July 1, 2020. Los Angeles employers with fewer employees, or nonprofit corporations who obtain approval to pay a deferred rate, must pay at least $12 per hour by July 1, 2018. These same rates apply in Los Angeles County, unless a city ordinance requires a higher local minimum wage.

The minimum hourly wage for employees in San Francisco will increase to $15, up from $14, on July 1, 2018. Many other cities, including Berkeley, El Cerrito, Malibu, Oakland, Palo Alto, Pasadena, Richmond, San Diego, Santa Monica and Sunnyvale have enacted local minimum wage laws. Each jurisdiction has its own rate change dates. Most are Jan. 1 or July 1, but there are outliers such as Berkeley (Oct. 1). In addition, living wage laws may require higher minimum wages be paid as a condition of contracting with local, state or federal agencies.

Employers should monitor the requirements to assure compliance in each municipality they have employees working in. A good starting place is the UC Berkeley Labor Center Inventory of U.S. City and County Minimum Wage Ordinances, calcpa.org/laborcenter.

Minimum Pay For Computer Professional Overtime Exemption Increases

Labor Code Sec. 515.5 contains an overtime pay exemption for certain highly skilled computer professionals who spend more than 50 percent of their working time in top-level intellectual or creative work that requires the exercise of discretion and independent judgment, such as software engineers and programmers, and systems designers and analysts.

To qualify for exemption, the employee also be paid at least a certain amount per hour or, alternatively, a salary equal to that hourly rate. Each year, the California Department of Industrial Relations sets that pay rate based on the California CPI increase. For 2018, the rate is $43.58 per hour or $90,790.07 annual salary (i.e., $7,565.85 monthly).

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