Out with the old and in with the new?  Not so fast.  For California employers, it’s more like keep the old and add the new.  And, as so often happens, the new year brings new concerns.  While this list is not exhaustive, California employers should keep their sights on the following new state and local regulations or requirements for 2017:

  • State Minimum Wage Goes Up to $10.50 on January 1, 2017.  Application of the new minimum wage to hourly employees may seem simple enough, but it also requires an examination and potential increase (or reclassification) for exempt employees.  The increased minimum wage raises the annual salary requirement for exempt employees to $43,600.  This will continue to increase in the coming years as minimum wage is scheduled to rise every year until it hits $15.00 per hour in 2022.  Employers with workers in Los Angeles, San Diego and many other municipalities should also be mindful of local minimum wage ordinances.
  • Ban the Box Legislation in Effect in Los Angeles.  On December 9, 2016, Los Angeles enacted an ordinance that prohibits employers in the City of Los Angeles from asking job applicants about criminal convictions until after a conditional offer of employment has been made.  Although some exceptions apply to workers in fields such as law enforcement and child care, the ordinance will affect all city contractors and private employers with 10 or more employees who perform at least two hours of work on average each week within the geographic boundaries of the City of Los Angeles.  Employers will no longer be permitted to include any questions on job applications that seek disclosure of an applicant’s criminal history, nor can there be any questions about criminal history during the job interview process.
  • San Francisco Paid Family Leave.  On January 1, 2017, employers with more than 50 employees will be required to pay the difference between the state Paid Family Leave and the employee’s salary (to a set maximum cap for highly compensated workers) for those eligible employees in San Francisco who utilize the Paid Family Leave program for baby bonding time or other qualifying purposes.  Employers with more than 35 employees will have to comply as of July 1, 2017.  The state’s portion of payment is 55% of salary; that percentage will be increasing over the next few years.
  • Expansion of Fair Pay Act.  Under the Fair Pay Act, which went into effect on January 1, 2016, employers are generally prohibited from paying an employee at wage rates less than the rates paid to employees of the opposite sex in the same establishment for equal work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions.  The recent amendment to the Fair Pay Act (Labor Code Section 1197.5) provides that an employee’s prior salary cannot, by itself, justify any disparity in compensation.  The amendment also expands the requirements of the Fair Pay Act to include employees’ race or ethnicity, and not just gender as a prohibited basis for pay disparities.
  • Choice of Law and Forum in Employment Contracts.  Effective January 1, 2017, new California Labor Code Section 925 prohibits employers from requiring California-based employees to enter into agreements (including arbitration agreements) requiring them to: (1) adjudicate claims arising in California in a non-California forum; or (2) litigate their claims under the law of another jurisdiction, unless the employee was represented by counsel.  Any provision of a contract that violates this new law is voidable by the employee; the employee may, therefore, choose to have the dispute adjudicated in California under California law.  The statute also provides for an award of attorneys’ fees for successful employees.

As a result of these new laws, employers should consult with legal counsel to ensure their policies are compliant and their employee handbooks and practices are up to date.