Articles Discussing California Wage & Hour Laws.

In this episode, Jen explains the value of wage-hour audits.

California employers rejoiced when the Legislature recently announced a new law to reform the Private Attorneys General Act (PAGA). PAGA wage-hour claims cost employers billions of dollars every year.

In this episode, Jen discusses the new California law related to time off for crime victims and another mandatory paid sick leave expansion.

By: Think Beating a Settlement Offer Protects You? California’s Surprising Ruling Says Otherwise In Wage And Hour Context

California employers may not be able to recover the costs of a lawsuit from prevailing employees in certain types of wage claims, even if they obtained a more favorable result after trial than their statutory offer to compromise pursuant to Code of Civil Procedure section 998 (section 998 offers). In Jorge Chavez v. California Collision, LLC, the California Court of Appeal reversed the trial court’s decision to award costs to the defendants for beating their section 998 offer. The Court held that section 998 was superseded by the Labor Code, which precludes an award of costs to an employer in wage claims where the employee prevails, regardless of whether the employer beats its section 998 offer.

In Jorge Chavez v. California Collision, LLC, plaintiffs Samuel Zarate, Jorge Chavez, and Aldo Isas sued California Collision and its owner, George Osorio, for various wage and hour claims. Before trial, defendants made section 998 offers to each plaintiff. Chavez and Isas accepted their 998 offers, so only Zarate proceeded to trial. Although Zarate prevailed on two causes of action at trial, the jury awarded him damages ($21,061) lower than the defendants’ section 998 offer ($38,750). Because section 998 offers shift certain costs to the party failing to achieve a more favorable result than the settlement offer, the trial court awarded costs to the defendants and against Zarate under section 998. While awarding Zarate attorneys’ fees and costs (limited to those incurred before the date of the first section 998 offer by operation of that statute), the trial court slashed Zarate’s requested amount significantly due to unsatisfactory proof of reasonable hours worked. Zarate appealed.

The Court of Appeal held that the trial court erred in awarding costs to the defendants under section 998, due to contrary provisions in Labor Code sections 1194 and 218.5. Specifically, Labor Code section 1194 allows a prevailing employee in an unpaid minimum wage and overtime suit to recover costs but makes no mention of an employer being able to recover costs. Similarly, Labor Code section 218.5 permits a prevailing employer to recover costs in suits for unpaid wages only if the court finds the employee brought the action in bad faith. There was no finding of bad faith in this case. The Court noted that these Labor Code provisions superseded section 998’s cost-shifting provisions while highlighting the strong public policy interest in supporting employees’ ability to pursue wage claims without fear of incurring substantial costs. As Zarate prevailed on some wage claims, the Court reversed the trial court’s order awarding costs to the defendants under section 998.

This decision is surprising in limiting the applicability of a 998 offer based on policy reasons, and potentially encourages unreasonable behavior where plaintiffs reject reasonable settlement offers. This decision will likely discourage California employers from making reasonable 998 offers in hopes of shifting costs onto plaintiffs when these offers are unreasonably rejected, which will further burden California’s impacted court system. However, this decision appears to be an exception and its application should be limited to the facts and claims at issue. California employers should work with their counsel to minimize the risk of potential wage claims, especially in light of this decision which makes it difficult for employers to recover costs.

In this episode, Jen addresses new state pay transparency laws and the complications they create for remote workers.

By: California’s Ban on Subminimum Wage for Disabled Workers Effective January 2025 and DOL May Soon Follow

For years, Federal law authorized employers to pay wages below the federal minimum wage to incentivize employers to hire disabled employees who might not otherwise have been hired. To qualify, employers were required to obtain a “section 14(c) certificate” from the Department of Labor (DOL) authorizing a special minimum wage. 29 C.F.R. § 525.5. The DOL authorized section 14(c) certificates for workers with intellectual disabilities, visual and hearing impairments, and psychiatric disabilities, such as anxiety, depression, and bipolar disorder. 

Last week, the DOL proposed a rule phasing out section 14(c) certificates, reasoning that employment opportunities for individuals with disabilities have increased dramatically since the federal regulations were last updated in 1989. Under the proposed rule, the DOL will no longer issue new section 14(c) certificates on or after the effective date of the final rule. Employees subject to the FLSA would then be entitled to the federal minimum wage ($7.25 per hour) despite any impact their disability may have on productivity. Existing section 14(c) certificate holders will be able to continue paying the subminimum wage for up to 3 years after the effective date of the final rule. The DOL will hear comments on the proposed rule until January 17, 2025. This rule, along with many others adopted under the Biden administration, may be scrapped by the Trump administration. 

Whether or not the DOL moves forward with its proposed rule, employers should be aware that California already approved a similar phase-out, effectively banning subminimum wages for disabled workers. Effective January 1, 2025, an employee with a disability must be paid the state minimum wage or the applicable local minimum wage ordinance, whichever is higher. California Labor Code Section 1191.5, the previous law permitting California employers to pay a subminimum wage to workers with a physical or mental disability, will be repealed on January 1, 2025. (California Labor Code Section 1191.5(b)). 

If you have any questions about this post, please contact your favorite CDF attorney.

Yes, the California minimum wage is going up again. Effective January 1, 2025, all employers, regardless of size, must pay workers at least $16.50 per hour. The Director of the CA Department of Finance determined and certified that

By: California’s Computer Professional Exemption Minimum Compensation to Increase by 2.5% Next Year

Section 515.5 of the California Labor Code provides that certain California computer software professionals are exempt from the overtime requirements of state law outlined in the various wage orders and section 510 of the Labor Code. One of the criteria for qualifying for this exemption is that the employee’s compensation is equal to or greater than the specified minimum pay rates set by the California Department of Industrial Relations (DIR).  

Effective January 1, 2025, the DIR adjusted the computer software professional’s minimum hourly pay rate to qualify for the exemption from $55.58 to $56.97 and the minimum monthly salary for the exemption from $9,646.96 to $9,888.13. Finally, for those professionals paid annually, the minimum annual salary exemption moves from $115,763.35 to $118,657.43.  

If you are employing computer software professionals on an exempt basis in California and using the provisions of Section 515.5 of the Labor Code to qualify the employee as exempt, you’ll want to make sure the employee continues to receive the minimum compensation required when this change is implemented on January 1, 2025.

In addition to the salary requirement, the employer must also show that an exempt California computer professional satisfies the duties test set forth under Labor Code Section 515.5. This includes proving that the exempt computer professional employee regularly exercises discretion and independent judgment while engaged in intellectual or creative work. The duties test does not change from 2024 to 2025. California employers can determine if their computer software professionals perform the duties necessary to fulfill the duties test by comparing the duties their computer software employees perform and comparing it with the requirements of the statute.  

In 2016, the California Legislature enacted a law increasing the minimum wage in steps over a period of years. After reaching $15/hour, the law ties the minimum wage to the U.S. Consumer Price Index. Currently,

By: California Prop. 32: A Closer Look at Minimum Wage Increases

Should Proposition 32 be voted into law this year, California faces yet another minimum wage hike.

Current Minimum Wage Landscape

The Golden State has surely lived up to its name, offering employees one of the highest state minimum wages in the country, trailing only the District of Columbia ($17.00 per hour) and Washington ($16.28). Juxtaposed with the Federal minimum wage, which has remained at $7.25 for the past 15 years, California’s minimum wage has doubled since 2010 and currently stands at $16.00 per hour.

Upcoming Changes to California Minimum Wage

Due to annual inflation, the state is currently scheduled to see another wage increase on January 1, 2025, regardless whether Proposition 32 is enacted or not. If the ballot measure should fail, all employers can expect to pay employees at least $16.50 per hour. However, should the measure pass, this rate would raise even higher. Employers with 25 or fewer employees would be required to pay non-exempt employees at least $17.00 per hour beginning January 1, 2025, and employers with 26 or more employees—$18.00.

If passed, Proposition 32 would also include a subsequent wage hike in 2026 for employers with 25 or fewer employees, thereby matching the minimum wage for all non-exempt employees at $18.00 per hour. Afterwards, any further increases year after year will be tied to the U.S. Consumer Price Index (CPI-W).

Interplay With Other Minimum Wage Laws

These increases would not immediately impact persons already subject to a higher minimum wage, such as certain fast-food workers earning at least $20.00 per hour and certain health care workers earning $25.00 per hour, or employees in various locales where minimum wage is higher than that set by the State. 

Competition Among Employers

One major concern with these increases is the impact on competition among employers. As wages rise, industries may feel pressure to match these rates to attract and retain talent. Workers are likely to gravitate towards positions that offer better pay, compelling employers across various sectors to reconsider their compensation strategies. This, coupled with anticipated increased overhead costs, could have a significant impact on many employers in the coming years.

Current Polling Status

As for the political landscape surrounding Proposition 32, polls indicate a mixed response from voters, but are trending towards opposition to the ballot measure. While some surveys continue to show support for higher wages across the job market, others reveal hesitance regarding the broader implications of such measures. Predictions about the outcome of Proposition 32 passing remain uncertain, but at least one poll released by the Public Policy Institute of California recently showed that only 44% of voters back the measure, down from approximately 50% in September, 2024.

Conclusion

Whatever the result, one thing is clear: the outcome will not only shape California’s labor landscape, but also set a precedent for minimum wage policies across the nation. Ultimately, the decision rests in the hands of voters, who will be forced to weigh the benefits of higher wages against potential challenges for employers and the broader economy.

Stay tuned for updates as we monitor the developments leading up to and following the election!