Legislative Updates Employers Should Know About To Avoid Wringing In The New Year

The California legislature played an active role in 2015 by enacting new rules and amendments in many employment areas. The following covers some of the key highlights, some of which became effective on January 1, 2016.

Equal Wages for Substantially Similar Work (SB 358). Known as the "Fair Pay Act," SB 358 will amend Labor Code Section 1197.5 with the aim of improving gender wage equality. We blogged about the bill's controversial provisions when it was first introduced in March of this year. To summarize, Section 1197.5 currently prohibits an employer "from paying an employee wages less than the rates paid to the opposite sex within the same establishment for equal work." But under the new language, an employer will now be prohibited from paying any of its employees lesser wages than the amounts paid to employees of the opposite sex for "substantially similar work." Whether employees perform "substantially similar work" is determined by analyzing a composite of skill, effort, and responsibility. Notably, SB 358 does not confine the "substantially similar work" analysis to "the same establishment" of the employer. The bill also increases the burden of defense by requiring an employer to demonstrate that any wage differential is not based on or derived from a sex-based differential in compensation, is related to the job at issue, and is consistent with business necessity. This new law became effective on January 1, 2016.

Increased Minimum Wage. As we pointed out last week, on January 1, 2016 the minimum wage increases to $10.00 an hour. This also bumps the annual salary minimum for exempt employees to $41,600.

Separate Pay for Rest and Recovery Under Piece-Rate Plans (AB 1513). This bill adds Section 226.2 to the Labor Code, which provides that piece-rate workers must be "compensated for rest and recovery periods and other nonproductive time" at an hourly rate that is separate from any other piece-rate compensation. The statute further defines "other nonproductive time" as "time under the employer's control, exclusive of rest and recovery periods, that is not directly related to the activity being compensated on a piece-rate basis."

In conjunction with this new requirement, AB 1513 also amends Labor Code Section 226(a) to impose additional administrative obligations upon employers of piece-rate workers. Those workers' wage statements must now also reflect the total hours worked for compensable rest and recovery periods and other...