2016 Employees earn more
Minimum Wage—Effective Jan. 1, 2016, is raised to $10.00 per hour in California. To be exempt from FSLA employees must be paid a weekly salary that is two times more than minimum wage. Example: minimum wage is $10.00 and weekly salary must be $20.00 or more. Salary of $800.00 a week. It applies to all Cities in CA… so if the city min goes up so does the weekly salary. An easy way for an employer to misclassify employee exempt by not paying the right weekly salary.
Local Minimum Wage Rates
In addition to state minimum wage hikes, a number of major cities and counties will be increasing their wage rates in 2016. As indicated below, some of those localities will increase rates on Jan. 1, while others have announced raises for later next year.
|Municipality or County||2015 Minimum Wage||2016 Minimum Wage
(as of 1-1-16)
2016 Increases and
|Berkeley, CA||$11.00||$11.00||$12.53 (10-1-16)|
|Emeryville, CA||$12.25 to $14.44 based on employer size||$12.25 to $14.44 based on employer size||$13.00 to $14.82 based on employer size (7-1-16)|
|Los Angeles, CA||$9.00||$9.00||$10.50 for employers with 26 or more employees (7-1-16)|
|Mountain View, CA||$10.30||$11.00|
|Palo Alto, CA||N/A||$11.00|
|San Francisco, CA||$12.25||$12.25||$13.00 (7-1-16)|
|Santa Clara, CA||$9.00||$11.00|
|Sunnyvale, CA||$10.30||$10.30||$11.00 (7-1-16)|
Salary test for exempt from overtime—Effective Jan. 1, 2016, employers can treat computer-software employees as exempt from overtime requirements if such employees earn at least $41.85 an hour, $7,265.43 a month or $87,185.14 a year; licensed physicians and surgeons are exempt from overtime if they earn at least $76.24 an hour.
Expansion of Labor Commissioner Enforcement Authority. AB 970, effective January 1, 2016, amends Labor Code sections 558, 1197, and 1197.1 to authorize the Labor Commissioner to enforce local laws regarding overtime and minimum wage provisions and to issue citations and penalties for violations, provided the local entity has not already cited the employer for the same violation. The bill also authorizes the Labor Commissioner to issue citations and penalties to employers who violate the expense reimbursement provisions of Labor Code section 2802. San Francisco, Oakland, San Jose, LA, etc have local minimum wages that are higher than the state. Employers should make sure salaried employees are making two times minimum wage based on the min set for the city.
Exempt Employees DOL proposes increased salary test.–The Feds have proposed raising the salary threshold from $455 per week to $970 per week. This amount would be more than California standard of 2 times the minimum wage. This raises the salary to be exempt from the fair labor standards act to $50,440 annually. The employer should review their exempt employees and analyze the hours they are working? It’s a good time to review the job descriptions and content of the work. They estimate that we will get the final regulation in the 4 quarter of 2016.
Reimbursement of Expenses Cochran v. Schwan’s Home Service court found labor code sections 2802 requires the employer to pay a reasonable percentage of monthly cell phone bill for an employee who is required to use the phone for business. The court says the cost is an operating expense of the employer and cannot pass its operating cost on to employees. Broad implications.
Mileage Rates for 2016– Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 54 cents per mile for business miles driven, down from 57.5 cents for 2015
- 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
- 14 cents per mile driven in service of charitable organizations
The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.
Piece Rate. AB 1513, adding Labor Code section 226.2 and repealing sections 77.7, 127.6, and 138.65 will make it, even more, difficult for California employers to pay employees on a piece-rate basis. Effective January 1, 2016, employers must pay piece-rate employees for rest and recovery periods (and all other periods of “nonproductive” time) separately from (and in addition to) their piece-rate compensation. Specifically, employers will need to pay the following rates for rest and recovery periods and “other nonproductive time”:
- Rest and recovery periods. Employers must pay a piece-rate employee for rest and recovery periods at an average hourly rate that is determined by dividing the employee’s total compensation for the workweek (not including compensation for rest and recovery periods and overtime premiums) by the total hours worked during the workweek (not including rest and recovery periods).
- Other nonproductive time. Employers must pay piece-rate employees for other nonproductive time at a rate that is no less than the minimum wage. If employers pay an hourly rate for all hours worked in addition to piece-rate wages, then those employers would not need to pay amounts in addition to that hourly rate for the other nonproductive time.
Employers must specify additional categories of information on a piece-rate employee’s itemized wage statement: (i) the total hours of compensable rest and recovery periods, (ii) the rate of compensation paid for those periods, and (iii) the gross wages paid for those periods during the pay period. If employers do not pay a separate hourly rate for all hours worked (in addition to piece-rate wages), then the employer must also list (i) the total hours of other non-productive time, (ii) the rate of compensation for that time, and (iii) the gross wages paid for that time during the pay period.
Industrial Welfare Commission: Wage Orders—Hospital Meal Periods. SB 327 clarifies that existing law regarding a health care employee’s ability to waive voluntarily one of the two meal periods on shifts exceeding 12 hours remains in effect. The bill states that the rules remain the same as they have been since 1993 (as expressly embraced by the Industrial Welfare Commission in 2000). The legislation was adopted to remove any uncertainty caused by the decision in Gerard v. Orange Coast Mem. Med. Ctr., 234 Cal. App. 4th 285 (2015).
Fair Wage Equality. As we discussed in detail immediately after the Governor’s October 6 signing of SB 358, the bill, effective January 1, 2016, amends Labor Code section 1197.5 to prohibit employers from paying any employee at a wage rate less than that paid to employees of the opposite sex for doing substantially similar work—when viewed as a composite of skill, effort, and responsibility. The new legislation also requires employers to affirmatively demonstrate that a wage differential is based entirely and reasonably upon enumerated factors, such as a seniority system, a merit system, a system that measures earnings by quantity or quality of production, or a bona fide factor that is not based on or derived from a sex-based differential in compensation and that is consistent with a business necessity. The bill contains anti-retaliation provisions and provides a private right of action to enforce its provisions.
Independent Contractor- The US Department of Labor issued an opinion on the factor it will use to determine whether the worker is employee or Independent contractor. The guidance explicitly makes clear that most workers are employees under FSLA. It also states it will continue to crack down on misclassifications. The key factors: Extent the work is an integral part of employer’s business, worker opportunity profit, and loss, relative investment of employer and work, the permanency of the relationship.
EDD has ramped up misclassification of Independent Contractor, aggressively going after employers for not paying employment taxes. If you have questions about your classification as worker or independent contractor… use this form. Note the form is only good for EDD. http://www.edd.ca.gov/pdf_pub_ctr/de38.pdf
Kin Care. SB 579, effective January 1, 2016, amends California’s Kin Care law (Labor Code section 233) to tie its protections to the reasons and definition of “family member” specified in the Healthy Workplaces, Healthy Families Act of 2014 (i.e., paid sick leave law). The bill also expands coverage of California’s school activities leave (Family School Partnership Act, Labor Code section 230.8) to include day care facilities and cover child care provider emergencies, and the finding, enrolling, or reenrolling of a child in a school or day care, and would extend protections to an employee who is a step-parent or foster parent or who stands in loco parentis to a child.
PAGA. AB 1506, amending California’s Private Attorneys General Act (“PAGA”) codified in Labor Code sections 2699, 2699.3, and 2699.5, became effective upon the Governor’s signature on October 2, 2015. PAGA, as thus amended, now gives employers a limited right to cure certain wage-statement violations before an aggrieved employee may sue under PAGA. Specifically, an employer can cure violations of the wage-statement statute (Labor Code section 226(a)) with respect to providing either the inclusive dates of the pay period or the name and address of the legal entity that is the employer. An employer can take advantage of this provision only once for the same violation of the statute during each 12-month period.
Employer Liability: Employee Family Member Protected Complaints & Labor Contractor Joint Liability. AB 1509, effective January 1, 2016, amends Labor Code sections 98.6, 1102.5, and 6310 to forbid employers from retaliating against employees for being a family member of an employee who has, or is perceived to have, engaged in activities protected under those Labor Code sections (i.e., generally, making complaints about working conditions or pay, or whistleblowing).
Annual E-Verify Bill. AB 622, effective January 1, 2016, adds section 2814 to the Labor Code to prohibit an employer from using E-Verify to check the employment authorization status of an existing employee or an applicant who has not received an offer of employment, except as required by federal law or as a condition of receiving federal funds. Each employer that uses E-Verify in violation of this new section is liable for $10,000 per violation.
Paid Sick Leave Amendments. AB 304, signed by the Governor July 13, 2015, and effective on that date, amends provisions of the Healthy Workplaces, Healthy Families Act of 2014 codified in Labor Code sections 245.5, 246, and 247.5.
Accommodation Request as Protected Activity. AB 987, effective January 1, 2016, amends Government Code section 12940 to overturn the interpretation in Rope v. Auto-Chlor Sys. of Washington, Inc., 220 Cal. App. 4th 635 (2013), that an accommodation request is not a protected activity. The Legislature thus intended to clarify that a request for reasonable accommodation based on religion or disability constitutes protected activity. The Fair Employment and Housing Act, thus amended, will now expressly prohibit retaliation and discrimination against a person for requesting an accommodation, regardless of whether the request is granted.
Security 2016, taxable wage base will remain the same — $118,500 maximum taxable earnings. The Social Security withholding rate is unchanged for 2016 and remains at 6.2 percent, up to the maximum taxable amount.
Labor Commissioner is authorized to file a lien on real estate, or a levy on an employer’s property, or impose a stop order on an employer’s business in order to assist an employee in collecting unpaid wages where there is a judgment against the employer. Any employer, or an individual acting on behalf of an employer, who violates any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or who violates other related provisions of law may be held liable as the employer for such violation. A bond of up to $150,000 may be required of an employer who does not promptly pays a judgment for unpaid wages. (SB 588; adds sections 690.020-690.050 to the Code of Civil Procedure; amends section 98 of the Labor Code, and adds sections 96.8, 238, 238.1, 238.2, 238.3, 238.4, 238.5, and 558.1).
The duration of the “disability benefits period” is extended from 14 days to 60 days. (SB 667; amends, repeals, and adds sections 2608 and 2627 of the Unemployment Insurance Code).
Beginning on January 1, 2017, an employer with 10 or more employees must file all reports and returns electronically, and remit all contributions for unemployment insurance premiums by electronic funds transfer, except as provided. Beginning on January 1, 2018, these electronic filing and fund transfer requirements will be extended to all employers. The bill would authorize the granting of a waiver from these requirements. The bill would impose a penalty of $50 on those employers who fail to file a quarterly return electronically without good cause. (AB 1245; amends sections 1088, 1110, 1112, 1114, 13002, and 13021 of the Unemployment Insurance Code, and adds section 1112.1).
Affordable Care Act requires applicable large employers to file information reporting returns with the IRS and employees. ALEs are generally those employers with 50 or more full-time employees, including full-time equivalent employees in the preceding calendar year.
The vast majority of employers are not ALEs and are not subject to this health care tax provision. However, those who are must use Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to report the information about offers of health coverage and enrollment in health coverage for their employees.
Here are eight things ALEs should know about the information returns they must file at the beginning of 2016.
- Form 1095-C is used to report information about each employee who was a full-time employee of the ALE member for any month of the calendar year.
- Form 1094-C must be used to report to the IRS summary information for each employer, and to transmit Forms 1095-C to the IRS.