From minimum wage laws to confidentiality agreements, there have been several legal updates over the past year that apply to most CA employers. Lukas Clary and Ryan Abernethy break down five top developments in wage and hour law for 2024 in this special 50^th edition of California Employment News.

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Ryan: Hi, everyone. Welcome to the latest installment of “California Employment News.” I’m Ryan Abernathy, and I’m here with Lukas Clary, and we’re both shareholders here at Weintraub Tobin’s Labor and Employment Practice Group. Today we’re going to be going over and talking with you some things about five top developments in wage and our law this past year that should apply to most California employers. So, Lukas, why don’t you start us off by sharing some of the developments you found for us?

Lukas:
Yeah. Thanks, Ryan. So, I think the first place I want to start is to remind everyone of changes around the minimum wage laws here in California. So, just a real quick recap: for about the past decade or so, we’ve been on what I call the march to $15, which was the march to get to $15 an hour as the minimum wage. It’s kind of crazy to think about now, but as recently as just a decade ago, roughly the minimum wage was only $8 an hour. And then we slowly went up in small increments until getting to $15 within the last couple of years, depending on the size of your workforce. And many thought we were done once we got to $15, but it wasn’t that simple. The bill actually required or implemented an instrument for periodic additional increases tied to inflation, and that recently got us to $15.50 as the statewide minimum wage last year. And now, beginning January 1 of this year, we are at $16 an hour as the statewide minimum wage. That is the rate regardless of employer size at this point. Then, beyond that statewide total, we also have to keep in account of local minimum wages that many employers need to be aware of. While no cities or counties can reduce the statewide $16 an-hour minimum wage, they are permitted to set higher minimum wages. And several cities, mostly around the Bay Area and parts of southern California, have done just that. We have local minimum wages in several cities that are upwards of $17, $18, and even, in some places, $19 an hour. So, employers in those areas need to be sure to check local minimum wages as well. Finally, this year, we have a few specific industries that now have higher minimum wages than even the statewide requirement. First, there’s a new law that requires fast food employers, basically, those restaurants that offer primarily counter service, in chains with 60 or more nationwide locations, so think about your McDonald’s, Subway, and Taco Bell-type places. They now have to pay a minimum wage of at least $20 an hour beginning this coming April 1. Then there’s another bill that requires healthcare workers to earn minimum wages of anywhere from $18 to $23 per hour, depending on the size of the employer and the type of worker. So, employers in those industries should consult with their legal counsel to make sure they are paying the proper rate that applies to any one of their given employees. For all other employers, $16 is the local minimum now, but they should be aware of those minimum wages specific to the healthcare and fast-food industries because you should know your employees now have that out there if they want to make minimum wage in those fields. So, Ryan, beyond minimum wage, what other new wage and hour updates should employers be aware of?

Ryan:
Yeah, so this past year, we actually saw some big changes in the way that PAGA claims are treated here in California. So, just to remind everyone, the Private Attorney General Act, or the PAGA, it authorizes employees to file lawsuits to recover penalties from their employers on behalf of themselves, other employees, and the state of California for labor code violations. And these PAGA claims, they look a lot like class actions in a lot of ways, but when it comes to arbitration agreements. So, while a valid arbitration agreement between an employer and employee can, in some instances, lead to a complete dismissal of a class action, last year, in the case of Adolf versus Uber Technologies, the California Supreme Court held that arbitration agreements cannot prevent an aggrieved employee from seeking recovery under the PAGA on behalf of other similarly situated employees. So, this was an expensive hit for California employers. On the bright side, however, the Adolf court did leave open few benefits that arbitration agreements may still have in PAGA actions. And obviously, such agreements, they remain a valuable tool for employers in the defense of class action claims. So, employers are wise to continue to use and update their arbitration agreements where appropriate. This year, we also saw two important developments coming from the National Labor Relations Board or the NLRB. So first, the NLRB held that confidentiality and nondisparagement provisions in severance agreements are now impermissible if they could reasonably be interpreted as preventing the employee from discussing their severance agreements with their coworkers or from making public statements about the workplace. So, the NLRB further held that defective provisions are unlawful, even if the employee was the one who requested the provision, and that merely offering a defective confidentiality or nondisparagement provision is enough to constitute a violation of the act. But the NLRB did clarify that severance agreements are not entirely prohibited, but it remains entirely unclear to what extent confidentiality or nondisparagement provisions can be enforced at all. So, the second big development we got from the NLRB this past year was their plan to increase scrutiny of employer handbooks and workplace policies. So, under the old Boeing test, the NLRB broadly considered certain types of work rules to always be lawful, regardless of how they were drafted. Under the new standard, these same policies will be closely scrutinized on a case-by-case basis, and policies or rules that could reasonably be interpreted to infringe on employee’s protected concerted activity will be considered unlawful labor practices or unfair labor practices. So, policies that are expected to draw particular attention from the NLRB include meal break policies, social media policies, and confidentiality rules. So, Lukas, why don’t you close us out with a few remaining top developments this year.

Lukas:
Yeah, thanks, Ryan, so that’s certainly a lot to process. I hate to add more, but I wanted to briefly return to the minimum wage increase that I discussed earlier and specifically how that might impact your exempt employees. So many employees can be exempt from certain wage and hour laws such as overtime, minimum wage, and meal and rest breaks. The most common exemptions that employees may qualify for are what we call the white-collar exemptions. These are the exemptions that are available to certain managerial, professional, and administrative employees if they meet a number of requirements. Well, one of those requirements is that they earn a set minimum salary that is tied to California’s minimum wage. So, more specifically, employees classified as exempt under one of those white-collar exemptions must earn a minimum salary that is equal to double the statewide minimum wage for a full-time employee. So, with the minimum wage now at $16 an hour, the minimum exempt salary under those white-collar exemptions is $1,280 per week or $66,650 per year. If someone’s being paid less than that, they won’t qualify for those exemptions. Then there are also minimum salary requirements for some of the lesser-used exemptions, and those have changed this year as well. For example, employees who are classified under the computer professional exemption must now earn at least $55.58 an hour, which carries out to $115,763 per year for full-time employees. If they make less than that, they are not going to qualify for that exemption. Similarly, licensed physicians and surgeons must now earn an hourly rate of at least $101.22 to qualify for the exemption available to them. Because minimum pay is just one of several criteria employees must meet to qualify for all of those exemptions, this is also a good reminder to consult your employment law counsel to make sure any employees classified as exempt meet all the criteria and are properly classified. Well, that’s it for today. Thanks for joining. You can continue to find installments of “California Employment News” on our blog at www.theleblog.com or wherever you listen to your favorite podcasts. Thanks, and see you next time.