California labor law tends to become the benchmark for the rest of the nation and compliance is often more complex compared to most other states. Each year brings new requirements and new laws that must be complied with. Staying on top of these changes and additions can be a job in itself.
California Labor Law Issues to Remember
Minimum Wage in San Francisco and Oakland
In San Francisco, the minimum wage increased to $12.25 per hour on May 1, 2015 from the current rate of $10.74 per hour. The law will increase minimum wage again to $13 per hour in July 2016. From there, the wage will go up by one dollar every year until July 2018 when it tops out at $15 per hour.
Voters in Oakland also approved a similar measure in November to increase the citywide minimum wage to $12.25 which began on March 2, 2015. This is up from the current state level of $9.00. For employees in Oakland the minimum wage rate will see increases every year on January 1st based on cost of living adjustments.
Paid Leave Law
On July 1 of this year the new Paid Leave Law takes effect. Essentially, this law requires that employers provide paid sick time for their staff who work 30 or more days in a calendar year. Employees, including part-time and temporary employees, will earn at least one hour of paid leave for every 30 hours worked. Employees can begin taking this leave after their first 90 days as an employee.
There are a few exceptions allowed. Employees covered by qualifying collective bargaining agreements, In-Home Supportive Services providers, and certain employees of air carriers are not covered by this law.
An employer may limit the amount of paid sick leave an employee can use in one year to 24 hours or three days. Accrued paid sick leave may be carried over to the next year, but it may be capped at 48 hours or six days.
In addition, there are several things employers must do to comply with the Healthy Workplace Healthy Family Act of 2014 (AB 1522).
- Display poster on paid sick leave where employees can read it easily.
- Provide written notice to employees with sick leave rights at the time of hire.
- Provide at least 24 hours or three days of paid sick leave for each eligible employee to use per year.
- Allow eligible employees to use accrued paid sick leave upon reasonable request.
- Show how many days of sick leave an employee has available. This must be on a pay stub or a document issued the same day as a paycheck.
- Keep records showing how many hours have been earned and used for three years.
Increased FUTA tax
The current Unemployment Insurance (UI) loan balance issue continues to cost California employers an increasing amount due to the graduated increases in the percentage of the credit reduction. For tax year 2015, it is safe to say that, unless California's outstanding advance is not repaid by November 10, 2015 employers will see an additional 0.3% reduction in their FUTA credit.
This means the credit reduction amount will be at least 1.5% instead of the previous 1.2% penalty. That's an additional $1,050 per employee per year. In addition, it is possible that an estimated BCR add-on of 1.4% could be applied. And while a request for a waiver would probably be applied for, it is possible for the Federal government to refuse to grant the waiver.
If that were to occur, California employers would be looking at a total potential credit reduction of 2.9% next year. If an employer paid, say, $7,800 in FUTA credit reduction penalties per employee this year, that same employer would be looking at close to $19,000 for next year.
Being Well Informed Is The Best Defense
Unfortunately, ignorance of the law is never a good defense when it comes to California labor law. While no employer deliberately or maliciously violates the law, lack of information or failing to stay up to date can lead to serious issues.
Having professional help is always a plus and HR managers and staff can use all the help they can get in today's increasingly complex work environment.
Considering a Third Party Ally
An updated compliance strategy will help your organization meet its obligations, while providing accuracy and timeliness. So take time to understand the law and prioritize accurate record keeping. In this way, you will make compliance a sure thing.
Another key step in maintaining HR compliance and increasing your company's cost-effectiveness is to consider outsourcing. A professional agency such a Accuchex can provide much-needed help with Human Resources needs and questions. Accuchex is a full spectrum Payroll Management Services provider offering expertise in Time Management, Insurance and Retirement issues, as well.
If you are looking for reliable resource for your HR issues, we can help. And you can get your Free Download: Payroll Outsourcing Guide to help you make an informed decision, or call Accuchex Payroll Management Services at 877-422-2824.
You can also get a free copy of our informative ebook FUTA Tax Increases:Why You Need To Plan Right Now!