New California Employment Laws For 2014: What Your Business Needs To Know

Linda Auerbach Allderdice is a Partner, James Michalski is Senior Counsel and Tim Fisher is an Associate in the Los Angeles office

HIGHLIGHTS:

California employers and employers with business in California should be aware of a number of new employment laws in the state, many of which take effect January 1, 2014. California's new labor and employment laws include a higher minimum wage, more powerful whistleblower protections and new immigration status-related protections for employees. The California Legislature enacted numerous employment laws in 2013 that affect California employers. The significant changes initiated by these statutes include a higher minimum wage, increased whistleblower protections and new protections based on immigration status. Below is a brief summary of some of the most important new laws. Unless otherwise specified, the legislation is effective January 1, 2014.

New Wage and Hour-Related Laws in California

Minimum Wage Increases on July 1, 2014 and January 1, 2016

AB 10 raises California's minimum wage of $8.00/hour to $9.00/hour on July 1, 2014, and to $10.00/hour on January 1, 2016.

Increased Penalties for Minimum Wage Violations

In addition to existing penalties, AB 442 amends Labor Code sections 1194.2 and 1197.1 to authorize the Labor Commissioner to seek payment of liquidated damages to employees for an employer's violation of minimum wage requirements.

Heat Illness Recovery Period Penalties

SB 435 prohibits employers from requiring an employee to work during any cooldown period required under Cal/OSHA's heat illness prevention standards, which is termed a "recovery period" in the new law codified at Labor Code section 226.7. The penalty for a violation is the same as for meal and rest period violations, i.e., one additional hour of pay at the employee's regular rate of pay for each day that a recovery period is not provided. Employers with outdoor places of employment should note they are subject to Cal/OSHA's heat illness prevention requirements.

Attorneys' Fees Limitation for Employers Prevailing in Wage Claims

SB 462 amends Labor Code 218.5 to provide that employers who prevail in lawsuits by employees seeking recovery of unpaid wages may recover attorneys' fees and costs from the employee only if the court finds that the employee brought the lawsuit in bad faith. This will dramatically curtail the award of attorneys' fees to prevailing employers, as the added showing of bad faith is now required. Note that this bill does not modify the rules applicable to shifting of attorneys' fees in lawsuits for overtime or minimum wage violations, which have long allowed only for one-way fee shifting in favor of prevailing employees, not prevailing employers.

Criminal Penalty for Failure to Remit Withholdings

SB 390 makes it a crime for an employer to fail to remit withholdings from an employee's wages that were made pursuant to state, local or federal law. SB 390 adds to existing law, which provides for criminal penalties where an employer fails to make agreed-upon payments to health and welfare funds, pension funds or...