Minimum wage goes up

An election and Gov. Arnold Schwarzenegger’s continuing efforts to promote business development in California resulted in another year of modest
legislative change for employers here,
according to Thomas H. Reilly, a partner in
the Newport Beach office of Newmeyer &
Dillion LLP.

“The governor vetoed several bills that
would have had an impact on employers,
including bills that would have established
a health care system funded by employer
contributions,” Reilly says. Other vetoed
bills would have increased penalties for
gender-based pay discrimination, provided
unemployment compensation to employees who are locked out during labor disputes, and more.

“The governor has been a check-and-balance on a labor-friendly legislature, and
that’s been helpful to employers,” Reilly
says. “In his recent state of the state
address, however, the governor proposed a
universal health care system funded partially by employer contributions. Employers may not be as fortunate in the current legislative session.”

Smart Business asked Reilly to sum up
the four new pieces of California legislation already in the books.

What is Assembly Bill (A.B.) 1835?

A.B 1835 increased the state minimum
wage. On Jan. 1, 2007, the minimum wage
in California increased from $6.75 per hour
to $7.50 per hour. Effective Jan. 1, 2008, the
minimum wage in California will again
increase from $7.50 per hour to $8.00 per
hour. Employers are required to post
amended wage orders reflecting these
changes.

Moreover, as a result of these changes,
the minimum salary that may be paid to
exempt employees (executive, administrative or professional) increased to $31,200
per year ($2,600 per month) on Jan. 1, 2007,
and will increase further to $33,280 per
year ($2,773.33 per month) on Jan. 1, 2008.

In a limited number of industries and
occupations employing unskilled workers,
the minimum wage hike may have a significant impact. In most industries, however, employers have long been unable to pay
minimum wages and attract or retain competent employees. The bill will not have a
significant impact on most California
employers, who were already paying substantially more than the minimum wage.

What is A.B. 2095?

This bill clarifies that California’s mandated sexual harassment training requirements, which became effective in 2005,
apply only to supervisors working in
California. California law does not require
employers to train supervisors working
outside of the state.

Notwithstanding the clarification in A.B.
2095, we recommend that employers train
all supervisors in preventing sexual harassment, regardless of their work location.
Federal law and other states’ discrimination laws also prohibit sexual harassment.
If an employer chooses not to train supervisors in another state and a harassment
claim arises in that state, the claimant’s
attorney will use the absence of training to
demonstrate the employer’s indifference
toward protecting its employees.

This bill also amends Labor Code section
204 to allow overtime paid in the next consecutive pay period to be itemized on that period’s pay stub, provided that the pay
stub lists the dates of the pay period for
which the employer is correcting its initial
report of hours worked.

What about the two other pieces of legislation?

A.B. 1806 requires that the California
Department of Fair Employment and
Housing post its employment discrimination posters and sexual harassment information sheets online. Employers can
download these required posters and information sheets at the department’s Web site,
www.dfeh.ca.gov.

Senate Bill (S.B.) 144 provides comprehensive regulation of health and sanitation
standards at retail food facilities. S.B. 144
will have a substantial impact on employers in the retail food service industry, but
not on other employers.

Finally, don’t California employers have to
remove Social Security numbers from pay
stubs now?

Not yet. S.B. 101, which passed in 2005,
requires that employers remove Social
Security numbers from pay stubs by Jan. 1,
2008. In their place, employers may use the
last four digits of the employee’s Social
Security number or an identification number other than the employee’s Social
Security number. Employers should implement changes necessary to comply with
this law during 2007.

S.B. 101 was intended to combat identity
theft and allows substantial penalties
against employers that continue to use
Social Security numbers on pay stubs after
Jan. 1, 2008. Employees who are damaged
from a ‘knowing and intentional’ failure to
comply can recover their actual damages
or penalties of up to $4,000, whichever is
greater, plus attorneys’ fees.

THOMAS H. REILLY is a partner in the Newport Beach office of
Newmeyer & Dillion LLP. Reach him at [email protected] or
(949) 854-7000.