Employee wage and hour laws are crucial for all types of businesses. These laws were made to protect and remind employees of their rights while working in the labor force, and any employer who fails to provide their employees with the right wage and hour laws, as stated by their respective federal government, can be subject to large fines and penalties. To ensure employees are continuously upheld and protected, the California Legislature regularly revises and updates their wage and hour laws to fit the current economy. Here are the four main employee wage and hour employment law updates to be aware of this year.

1. Assembly Bill 1506 and 1561

In 2019, legislation codified the “ABC Test” through Assembly Bill 5 (AB 5), significantly changing how workers are classified as independent contractors. At the same time, the law carved out several industry exceptions to this new test, in which case the common law, multi-factor Borello test will still be used.

Last year, AB 2257 substantially revised AB 5, making changes to many of the industry exceptions and adding several more. This year, Assembly Bill 1506 (AB 1506) and Assembly Bill 1561 (AB 1561) are both amending AB 5, revising parts of the “data aggregator” exception to the ABC test. These bills now extend the exceptions for newspaper carriers, licensed manicurists, and construction trucking contractors until December 31, 2024. Keep in mind that these positions don’t automatically qualify as independent contractors. Employers still must evaluate the worker using the common law Borello test before classifying the worker as an independent contractor.

2. Senate Bill 657

Senate Bill 657 (SB 657) was signed into effect on July 16, 2021, and enacts Section 1207 of the Labor Code. This bill states that whenever an employer is required to physically post and/or display mandatory information meant to apprise employees of their rights under applicable statutes, employers “may also distribute that information to employees by email with the document(s) attached.” Essentially, it allows employers to provide required notices through email instead of in person. It is important to note that this law does not – in any way – invalidate an employer’s decision to post physical copies of mandatory notices in the workplace. It merely provides employers an option to go paperless when distributing such notices, especially if their workforce is fully remote.

3. Senate Bill 807

Senate Bill 807 (SB 807) modifies the enforcement procedures of the Department of Fair Employment and Housing (DFEH). These changes include the addition of new processes for when and how the DFEH can appeal adverse superior court decisions when it comes to compelling cooperation in investigations. Not only that but SB 807 also extends the time in which an individual can file a civil action for statutory violations by tolling that period while the DFEH investigates. By this amendment, the DFEH’s deadline to complete its investigation and issue a right-to-sue notice for employment discrimination complaints treated as class or representative complaints is extended to two years.

SB 807 also extends the current record retention requirements for employers, requiring them to preserve personnel records for applicants and employees pursuant to Government Code Section 12946 for four years from the date the records were created, after an employee is terminated, or when an applicant is not hired by a company. Once an employer receives notice that a verified complaint has been filed under this section, the employer must preserve all relevant records until after the resolution of the complaint or the expiration of the statute of limitations for the claims, whichever is later.

4. Minimum Wage Increases

In addition to the new bills created by California legislation, the overall minimum wage in California has increased. The minimum wage is the lowest wage per hour that a worker can be paid as mandated by federal law. Effective January 1, 2022, the state of California has increased its minimum wage to: 

• $15/hour for employers with 26 or more workers, and 
• $14/hour for employers with 25 or fewer workers.

This means that each worker will be paid $1 more than last year for every hour they are on the clock. Please remember that minimum wages can vary depending on each state and local municipality, so make sure to check your area’s wage updates and regulations.

Key Takeaways

As the economy continues to evolve, the California Legislature is continuing to take employee wage and hour regulations seriously, especially as businesses and workplaces reopen in person. To guarantee compliance with employment law, employers should take the time to educate themselves on all the new laws and regulations that are being implemented. If you need assistance navigating employee wage and hour regulations, please contact Hackler Flynn & Associates.

DISCLAIMER: Content within this post should not be considered legal advice and is for informational purposes only. Communications made through this post do not create an attorney-client relationship. Hackler Flynn & Associates is not responsible for any content that you may access from third-party resources that may be accessed through or linked to this post. Hackler Flynn & Associates is only licensed to practice in California.