Employers and HR managers know that each new year brings with it a new set of workforce management changes and requirements. January 2020 is no different.

We previously posted an overview of the significant labor-related legislation that will affect most, if not all, employers in California. Here is a brief set of highlights of a few more items that will likely have the broadest impact California businesses.

Minimum Wage for California in 2020

According to a post at GovDocs.com,

"The fifth-largest economy in the world, California has long been at the forefront of minimum wage changes. Two years ago, the state enacted legislation that will push minimum wage to $15 statewide in 2023, regardless of how many employees a company has.

In the meantime, employers still must stay ahead of increases to minimum wage in California cities. Also note that:

- All minimum wage changes will require a posting update

- State law does not provide for a separate wage for tipped employees

- Some cities will update rates in the summer of 2020"

The number of cities that have their own minimum wage laws in effect has grown to 31 along with a few counties and other municipal agencies. 

Eighteen cities will see minimum wage increase beginning January 1, 2020 while the remaining thirteen municipalities will up their wage rates in the summer, most of them on July 1, 2020. The increases range from a new rate of $12.50 per hour in Sonoma for employers with 25 or less employees, to a new high of $16.05 hourly in both Mountain View and Sunnyvale.

Meanwhile, the 2020 state rate for California will be $12 for small employers (25 employees or less) and $13 for large employers. (26 employees or more.)

All the towns and cities with rates increasing in 2020 will be well above the federal minimum wage of $7.25.

Overtime Compliance and the FLSA

The United States Department of Labor (DOL) recently revised the regulations that govern the overtime exemptions under the Fair Labor Standards Act (FLSA).

The new rule, which takes effect on January 1, 2020, increases the minimum salary level qualifying  employees for so-called “white collar” exemptions from $455 per week, or $23,660 per year, to $684 per week, or $35,568 per year.

According to an article from Reinhartlaw.com, employers should consider these actions for transitioning and maintaining compliance with the new FLSA overtime regulations:

"Evaluate employee compensation data, focusing on employees who make between $455 and $683 per week. Determine whether non-discretionary bonuses may be used to reach the required minimum salary.

For those employees who do not meet the required minimum salary, consider increasing their salary to $684 per week, or reclassifying them as nonexempt employees. Employers should take into account more than simply the cost of any salary increases; for example, assess the workloads of the employees, and weigh the cost of the salary increases against the cost of paying overtime.

Update the employee handbook to ensure that timekeeping, meal and rest breaks, and similar policies comply with the new rule.

Communicate these changes to affected employees, as well as appropriate managers, supervisors, and human resources personnel."

In addition to the new wage and salary thresholds, the rule requires that exempt computer employees be paid at the increased salary level, as well. Alternatively, employers can opt to pay them at the applicable minimum hourly rate of $27.63 per hour.

Independent Contractors in California Redefined

Beginning January 1, 2020, a new law will affect nearly every California employer using independent contractors. Governor Brown signed Assembly Bill 5 (AB-5), which will become Labor Code Section 2750.3 on January 1st. The classification is for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission (IWC).

The new rule changes the test California employers must use to determine whether a worker is an employee or independent contractor to what is commonly referred to as the "ABC" test.

In summary, the text of the law provides that a person providing labor or services for remuneration shall be considered an employee rather than an independent contractor unless the hiring entity demonstrates that all of the following conditions are satisfied:

(A) The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

(B) The person performs work that is outside the usual course of the hiring entity’s business.

(C) The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

Compliance is essential for employers in California to avoid potential costs such as violations for wage claims, fines and penalties from audits, possible class-action lawsuits and even proactive payments for workers who are re-classified as employees.

Your Professional Partners for HR Best Practices and Compliance

In addition to HR management best practices and labor law compliance, we can offer online payroll software for your payroll process - a great option for staying in compliance on the payroll front.

Another "best practice" is to consider outsourcing.

This can be done by simply outsourcing one process such as payroll. However, with a full-service provider such as Accuchex, you also have additional options for outsourcing as well.

Let Accuchex help you in managing your HR needs, payroll processes, and staying on top of compliance demands. Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.