Minimum wage increase. Effective January 1, 2008, the California minimum hourly wage increases from $7.50 to $8.00. As an automatic consequence of this change, the following additional changes become effective: (a) the overtime rates for minimum-wage earners will increase; (b) the minimum ''tool rate'' for employees who are required to use their own tools as a condition of employment without employer compensation for the cost of the tools increases to $16.00 per hour; (c) the minimum salary for exempt status (which is double the minimum wage) increases to $33,280 per year ($2,773.34 per month); (d) the split-shift premium, which is payable at one hour at the state minimum wage to employees working a ''split shift'' goes up to match the new minimum wage; (e) the maximum amount of meal and lodging that can be credited against the minimum wage increases by 6.7%; (f) the threshold for commissioned salespersons to be exempt from overtime goes up to more than $12.01 per hour; and (g) the minimum regular hourly rate of pay under the collective bargaining opt-out from overtime requirements increases to $10.40 per hour.
Employers' use of SSNs restricted. January 1, 2008, is the deadline for all employers to comply with amended Labor Code section 226, which prohibits an employer from including any more than the last four digits of an employee’s social security number or an existing employee identification number on the employee’s itemized pay statement.
Reduced hourly rate for the ''computer exemption.'' Labor Code section 515.5 has been amended to reduce the hourly rate that computer employees must earn in order to be exempt from California’s overtime requirements. The former minimum hourly rate was $49.77, which is now reduced to $36.00. This amount is adjusted annually by the Division of Labor Standards Enforcement.
Alternative workweeks for pharmacists. Pharmacists who work in the mercantile industry and are employed pursuant to Wage Order 7 will now be allowed to adopt an alternative workweek scheduled as permitted by Wage Order 4. This allows an alternative workweek schedule of 3/12 without daily overtime, as well as eliminating Wage Order 7’s requirement that any such schedule have two consecutive days off.
Increased IRS mileage rate. The IRS has increased the standard mileage rate commonly used to reimburse employees for business use of a car to $.505 per mile, up from $.485 in 2007. The new rate applies to all miles driven beginning January 1, 2008.
Check-cashing fees. An employer who uses an out-of-state bank for payroll must make arrangements for California employees to be able to cash payroll checks without delay and without incurring any fee or other reduction. Possible alternatives include providing in-house check-cashing services, arranging for fee-free check-cashing services with a third party located in California, or paying any fees on behalf of the employee.
New Leave Laws
Military spouse leave. Under California law, an employer with 25 or more employees must give an employee who works at least 20 hours per week and who is the spouse of a member of the military up to 10 days of unpaid leave when the spouse is on leave from active duty in the U.S. Armed Forces, Reserves, or National Guard. Although the law does not specifically state this, ''spouse'' includes a registered domestic partner because California Family Code section 297.5 provides that registered domestic partners must be granted the same rights as those granted to spouses. The employee must give two days’ notice and provide appropriate written documentation.
Family and Medical Leave
Pursuant to a Seventh Circuit decision, an employer may not require employees on FMLA leave to use paid sick leave or vacation time if the employee is receiving some other form of ''paid leave.'' According to the court, ''paid leave'' includes such things as workers’ compensation benefits, SDI benefits, and payments from internal salary continuation programs. The use of paid sick leave or vacation time can still voluntarily be elected by the employee.
Retiree Plans
Under the EEOC’s new regulation, an employer can reduce or eliminate health benefits for retirees when they turn 65 and become eligible for Medicare. Thus, an employer can have two classes of retirees and two levels of benefits, one consisting of retirees who are younger than 65 and have greater benefits, and the other consisting of those who have turned 65 and have lesser or even no benefits. A younger retiree can thus have benefits reduced or eliminated when he/she turns 65. In addition, an employer can reduce or eliminate health benefits provided to the spouse or dependent of a retired worker 65 or older, regardless of whether benefits for the retiree are changed.
''Hands Free'' Device Required for Cell Phone Usage
Effective July 2008, anyone in California who wishes to talk on a cell phone while driving must use a ''hands free'' device. Any employer whose employees drive as part of their work duties should take steps to comply with this law by implementing an appropriate policy.
Records Subpoenas
Courts are authorized to issue a protective order when a subpoena seeks records pertaining to current or former employees or members of labor organizations. If the party giving notice of a deposition is a subpoenaing party, and the deponent is a witness commanded by a deposition subpoena to produce personal records of a consumer or employment records of an employee, the deposition must be scheduled at least 20 days after issuance of the subpoena.
New I-9 Form
By now, all employers should be complying with the new I-9 requirements that became effective in late 2007. All new employees should only fill out the new version of the I-9 form. The new form expands the list of acceptable employment authorization documents to include employment authorization documents issued by the U.S. Citizenship & Immigration Services (USCIS). It also eliminates an employer’s ability to accept a number of documents, including a Certification of U.S. Citizenship, Certificate of Naturalization, Refugee Travel Document, and Alien Registration Receipt Card.
New EEO-1 Form
The EEO-1 form that is required for many employers has been changed. The job category ''Officials and Managers'' has been divided into two separate categories. The racial classification list has added ''Native Hawaiian or Other Pacific Islander'' and ''Two or More Races (Not Hispanic/Latino).''
Required Posters and Pamphlets
There are several new or revised posters and pamphlets that employers should have in their workplace:
- Updated DFEH sexual harassment (DFEH-185) and pregnancy leave (DFEH-186) notices;
- Updated minimum wage poster (MW-2007);
- Updated EDD publications on paid family leave and state disability insurance.
Earned Income Tax Credit
Employers must now notify employees that they may be eligible for the federal earned income tax credit within one week before or after the date the employer provides an annual wage summary (W-2 or 1099). An employer cannot substitute a poster, email, or intranet posting for individual notice. The notice must be given to the employee in person or mailed to the employee at the employee’s last know address. The notice must contain the following language:
BASED ON YOUR ANNUAL EARNINGS, YOU MAY BE ELIGIBLE TO RECEIVE THE EARNED INCOME TAX CREDIT FROM THE FEDERAL GOVERNMENT. THE EARNED INCOME TAX CREDIT IS A REFUNDABLE FEDERAL INCOME TAX CREDIT FOR LOW-INCOME WORKING INDIVIDUALS AND FAMILIES. THE EARNED INCOME TAX CREDIT HAS NO EFFECT ON CERTAIN WELFARE BENEFITS. IN MOST CASES, EARNED INCOME TAX CREDIT PAYMENTS WILL NOT BE USED TO DETERMINE ELIGIBILITY FOR MEDICAID, SUPPLEMENTAL SECURITY INCOME, FOOD STAMPS, LOW-INCOME HOUSING, OR MOST TEMPORARY ASSISTANCE FOR NEEDY FAMILIES PAYMENTS. EVEN IF YOU DO NOT OWE FEDERAL TAXES, YOU MUST FILE A TAX RETURN TO RECEIVE THE EARNED INCOME TAX CREDIT. BE SURE TO FILL OUT THE EARNED INCOME TAX CREDIT FORM IN THE FEDERAL INCOME TAX RETURN BOOKLET. FOR INFORMATION REGARDING YOUR ELIGIBILITY TO RECEIVE THE EARNED INCOME TAX CREDIT, INCLUDING INFORMATION ON HOW TO OBTAIN THE IRS NOTICE 797 OR FORM W-5, OR ANY OTHER NECESSARY FORMS AND INSTRUCTIONS, CONTACT THE INTERNAL REVENUE SERVICE BY CALLING 1-800-829-3676 OR THROUGH ITS WEB SITE AT WWW.IRS.GOV.
No Identification Implants
The California Civil Code has been amended to prohibit an employer (among other persons) from requiring employees to have identification tags implanted under their skin that can be read by electronic monitors.
Workers’ Compensation Temporary Disability Benefits Extended
An employee may now receive aggregate disability payments as a result of a workers’ compensation injury for five years, instead of the previously-provided two years.
San Francisco Health Care Security and Minimum Wage Ordinances
San Francisco has two ordinances that affect employers.
The Health Care Security ordinance requires certain employers who do business in San Francisco and who are subject to its business registration requirements to make minimum health care expenditures for their employees.
The minimum wage for employees within San Francisco will increase from $9.14 to $9.36, effective January 1, 2008.
This Alert is published as a service to our clients and friends. It is intended for informational purposes only and is not intended to constitute advertising, solicitation, or legal advice.
About the Author
Teresa R. Tracy is chair of Berger Kahn's Labor & Employment Group. She focuses her practice on labor and employment law, including wrongful terminations, discrimination claims, wage and hour matters, class actions, breach of contract, and related claims. Ms. Tracy has been named a "Southern California Super Lawyer" for the past five years in a row. Contact Ms. Tracy at (310) 821-9000, x 717 or ttracy@bergerkahn.com.
