As we head into the home stretch for 2016, it’s important to know about new employment-related requirements that will go into effect next year. Here’s a summary of those requirements. As always, we will keep you updated about any changes or additions.
New overtime rules delayed
The new overtime rules that were to go into effect on December 1 have been temporarily blocked due to a lawsuit filed by 21 states to block enforcement. The new overtime regulations would have increased the salary required for an employee to be considered exempt to $913 per week, or $47,476 annually. Enforcement will be blocked until a final decision is made in the case or an appellate court overturns it.
The current California minimum annual salary for exempt employees is $41,660. This means that, if the new regulations go forward, California employers with employees who are currently classified as exempt and earn between $41,660 and $47,476 would need to decide whether to reclassify these employees as nonexempt, or increase their salaries to at least $47,476.
Electronic Unemployment Insurance reporting
Starting January 1, 2017, employers with 10 or more employees will be required to submit their unemployment insurance reports to the Employment Development Department electronically. Under the new requirements, employers must also remit contributions for unemployment insurance premiums by electronic funds transfer. The requirement will apply to all employers beginning January 1, 2018.
California minimum wage increase
Effective January 1, 2017 California’s minimum wage will increase to $10.50/hour for employers with 26 or more employees. Earlier this year, Governor Brown signed legislation that will increase California’s minimum wage annually, reaching $15/hour by January 1, 2022. For employers with 26 or more employees the minimum wage will increase per the following schedule:
- January 1, 2017 – $10.50/hour
- January 1, 2018 – $11/hour
- January 1, 2019 – $12/hour
- January 1, 2020 – $13/hour
- January 1, 2021 – $14/hour
- January 1, 2022 – $15/hour
Employers with 25 or fewer employees will be on a schedule one year behind the above schedule, reaching $15/hour on January 1, 2023.
San Francisco Paid Parental Leave
Also effective January 1, a new San Francisco ordinance will require employers with employees in San Francisco to supplement California’s Paid Family Leave (PFL) so that employees receive 100% of their gross weekly wages while on a parental leave of absence. PFL currently provides eligible employees with up to 55% of their regular wages, subject to a maximum weekly benefit of $1,129. Employees may receive these benefits for up to six weeks in a 12-month period. San Francisco’s law will require covered employers to provide additional wage replacement benefits of up to 45% of the employee’s wages, subject to the weekly maximum.
This law goes into effect on January 1, 2017 for employers with 50 or more employees; July 1, 2017 for employers with 35 or more employees; and January 1, 2018 for employers with 20 or more employees.
Paid Sick Leave changes
An amended San Francisco paid sick leave law, which goes into effect January 1, 2017, simplifies the sick leave pay calculation to match that of the California state law. For non-exempt employees, this means paying them for sick leave using either their regular rate of pay, or, a rate calculated by dividing total wages (excluding overtime) by total hours worked in the previous 90 days of employment. Exempt employees should be paid for sick leave at the same rate they are for other leaves.
The amended law will also prohibit an employer from requiring employees to take sick leave in increments of more than one hour.
Los Angeles also recently passed a sick leave ordinance. This new law allows employees working in the City of Los Angeles the ability to accrue and use up to 48 hours of sick leave. This is twice the amount provided by California state law. The ordinance went into effect on July 1 for employers with 26 or more employees, and will go into effect on July 1, 2017 for employers with 25 or fewer employees.
San Diego’s paid sick leave law went into effect on July 11 and provides employees with 40 hours of sick leave per year.
Note that San Francisco, Oakland, San Diego, Emeryville, Santa Monica, and Los Angeles all have sick leave laws that vary slightly from the California law. If you have employees working in those cities, be sure to check with your employment counsel to ensure you are complying with the appropriate requirements.
With all these changes on the horizon, and as we head into year end, this is an excellent time to review your Employee Handbook. Need Assistance? Contact me at firstname.lastname@example.org to get started!