Mid-Year Labor Law Update: July 1 Marks Minimum Wage Hike, More New Laws​​​​​​​​

State Capitol

(June 30, 2014) Several laws that were signed last year will take effect on July 1, including the upcoming minimum wage increase. Employers should take note of the laws below and revise existing business practices accordingly.

For CalChamber members, HRCalifornia​ will be updated on July 1 to reflect these new laws.

Minimum Wage

On July 1, 2014, California’s minimum wage increases to $9 per hour from the existing minimum wage of $8 per hour. This is the first increase to the state minimum wage since January 1, 2008. The minimum wage will increase a second time to $10 per hour on January 1, 2016.

Employers should examine all pay practices that might be affected by the minimum wage increase. The minimum wage increase affects several employer practices, including:

  • ​Overtime rates of pay;
  • Exempt/nonexempt classification. The minimum salary requirement for administrative, professional and executive exemptions increases to $3,120 per month;
  • Meal and lodging credits;
  • Piece-rate pay. Employers must ensure that piece-rate employees receive the minimum wage for each hour worked;
  • Draws against future commissions, which must be equal to at least the minimum wage and overtime due to the employee for each pay period (unless the employee is exempt);
  • Tools and equipment. Only employees whose wages are at least two times the minimum wage can be required to provide and maintain hand tools and equipment customarily required by the trade or craft in which they work; and
  • The subminimum wage rate.

Notice Requirements

Employers will need to make certain to comply with all notice requirements that are affected by the minimum wage increase.

  • ​First, employers must post California’s official Minimum Wage Order (MW-2014) in a conspicuous location frequented by employees. The Department of Industrial Relations (DIR) updated the official notice, which now includes both the July increase and the second increase for January 1, 2016.
  • Second, the DIR recently revised all 17 industry Wage Orders. The DIR amended sections 4(A) and 10(C) in orders No. 1 through No. 15, and sections 4(A) and 9(C) in order No. 16. Employers are required to post a copy of the industry Wage Order that applies to their business in a place where employees can read it easily. Use the correct industry Wage Order(s), which now bear a revision date of “07/2014.”
  • Third, California employers must provide each employee with written, itemized wage statements at the time wages are paid. The wage statements must reflect all applicable hourly rates in effect during the pay period (Labor Code Section 226). 

Paid Family Leave Benefits

Effective July 1, SB 770 expands Paid Family Leave (PFL) wage-replacement benefits for employees to include benefits for time taken off to care for a seriously ill grandparent, grandchild, sibling or parent-in-law.

PFL does not create the right to a leave of absence, but provides California workers with some financial compensation/wage replacement during a qualifying absence. 

Background Checks

Effective July 1, AB 218 prohibits a state or local agency from asking an applicant to disclose information regarding a criminal conviction until after the agency determines the applicant meets minimum employment qualifications. There are specified exceptions, such as when a criminal history background check is otherwise required by law for the position.

At the local level, San Francisco’s Fair Chance Ordinance takes effect August 13, 2014. This ordinance limits the use of criminal history information by San Francisco employers and also requires employers to post a new notice.

Workers’ Compensation Predesignation of Physician

Workers’ compensation regulations concerning predesignation of personal physicians also take effect July 1.

According to the DIR, the final regulations change the criteria that an employee must meet to predesignate a personal physician or medical group for work-related injuries or illnesses to conform to SB 863 (which was passed in 2012).

DIR also revised the forms used for predesignating a personal physician or a personal chiropractor and the time of hire pamphlet.

Work Sharing Plans

The California Employment Development Department (EDD) uses a special work sharing program to help companies avoid mass layoffs by sharing the available work among employees. AB 1392 changes the requirements for those work sharing plans that take effect on or after July 1, 2014.

The EDD’s director still must approve plans. For more information about the work sharing program, visit EDD’s work sharing webpage.

Best Practices

  • Review your policies and practices to ensure compliance with legal updates.
  • Make certain that you update your posters and pamphlets.
  • CalChamber’s 2014 California and Federal Employment Notices poster includes the required minimum wage updates.
  • Updated Paid Family Leave and Workers’ Compensation pamphlets are available on the CalChamber store.​
  • Revised industry Wage Orders are available on HRCalifornia for both CalChamber members and nonmembers.
  • Note to Employee Handbook Creator subscribers: an updated PFL policy with the new family member definitions will be provided.

Staff Contact: Gail Cecchettini Whaley