Marco A. Lucido - Fenton & Keller, Attorneys at Law

Requirements for Tip Pooling Arrangements

Q: I run a small restaurant, and I want to make sure that everyone is rewarded equally for their hard work. Can I ask my tipped employees to share part of their tips with other employees?

A: Yes, but you need to follow some important guidelines and be aware of the limitations. The practice of requiring employees to share their tips in previously agreed percentages is commonly known as a mandatory “tip pool.” In California, employers can require employees to participate in a tip pool if the pool meets certain conditions. These conditions are:

Tipped employees should generally not be asked to contribute more than 15% of their tips to the tip pool;
Owners and supervisors should not be allowed to participate in any portion of the tip pool;
Tip pool participants should be limited to those employees who contribute in the “chain of service”; and
The money from the tip pool must be distributed to the eligible employees in the “chain of service” based on the number of hours they worked.

Sometimes, the most difficult requirement to navigate is the requirement to limit the tip pool participants to employees in the “chain of service.” This is because employers often want to allow back of the house employees such as chefs, cooks, and dishwashers to participate in the tip pool. Historically, the Labor Commissioner’s position is that only front of the house employees who provide direct table service can participate in a tip pool. In a 2005 Opinion Letter, the Labor Commissioner indicated that in the restaurant industry employees in the “chain of service” include “waitpersons, buspersons, bartenders, hostesses, wine stewards and ‘front room’ chefs.” Though the Labor Commissioner excluded back of the house employees from this list, it acknowledged that industry standards are likely to evolve over time.

At least one court has identified that standards have evolved. In 2009, a California Court of Appeal disregarded the 2005 Opinion Letter and expanded the types of employees who may participate in a tip pool. Specifically, the court held that back of the house kitchen staff may legally participate in a tip pool because they are part of the “chain of service.” The court reasoned that a customer’s experience is not limited to employees the customer can see and that the amount a customer tips may depend on the customer’s satisfaction with the food. This decision supports an employer’s ability to include kitchen staff in a valid tip pooling policy, especially when chefs or cooks are visible or interact with customers.

Employers should be aware that the Labor Commissioner has not yet revised its general guidance that only front of the house employees who provide direct table service can participate in a tip pool. Given this apparent conflict in authority, restaurant employers who are risk averse should continue to limit tip pools to front of the house staff only.

The central theme in the guidelines for tip pools is that the pool be reasonable in terms of its funding and participation. This is a case-by-case analysis based on the division of duties at each restaurant and should be analyzed carefully. Though it is not a requirement, it is recommended that employers with tip pooling arrangements create a written tip pooling policy that is signed by each participant.

by Marco A. Lucido

Updates to Protected Leave for Civic Duties and Victims of Violence

Question: I heard that—yet again—there are changes to an employee’s right to paid time off in California. Is this true?

Answer: Yes. Last Fall, Governor Newsom signed Assembly Bill 406 (AB 406) to expand the reasons for which an employee may take protected leave. Specifically, AB 406 amended the Labor Code, the Healthy Workplaces, Healthy Families Act (HWHFA), and the California Fair Employment and Housing Act (FEHA) to allow employees to take paid time off or job protected leave for certain civic duties or for situations involving crimes. While some of the provisions of AB 406 were already in effect last Fall, others will became effective on January 1.

The updates that were already effective last Fall relate to jury duty and witness leave. AB 406 amended the Labor Code to authorize the use of paid leave, including personal leave, paid sick leave, vacation, or other compensatory time that is available to an employee, for covered civic obligations. Under the law, a covered civic obligation is defined as jury service and witness testimony (e.g. appearing in court as a witness to comply with a subpoena or court order). Before this change, employees could take time off for these reasons, but they were not entitled to use available paid leave.

Beginning January 1, AB 406 expanded leave rights for paid time off for victims of violence and their family members. Previously, the law allowed leave only for victims of domestic violence, sexual assault, or stalking. Under AB 406, employees can also take leave if they or a family are a victim of an expanded list of crimes and are attending judicial proceedings related to that crime, including, but not limited to, any delinquency proceeding, a post-arrest release decision, plea, sentencing, postconviction release decision, or any proceeding where a right of that person is an issue. Moreover, he definition of a “victim” was broadened to include an individual who suffers direct or threatened physical, psychological, or financial harm as a result of specified crimes or delinquent acts, including: vehicular manslaughter while intoxicated; felony child abuse likely to produce great bodily harm or a death; assault resulting in the death of a child under eight years old; felony domestic violence; felony physical abuse of an elder or dependent adult; felony stalking; solicitation for murder; a serious felony; hit-and-run causing death or injury; felony driving under the influence causing injury; or sexual assault.

As with jury and witness leave, the employee may choose to use personal leave, paid sick leave, or other compensatory time available to take time off for covered judicial proceedings.

Employers are prohibited from discharging, discriminating, or otherwise retaliating against an employee for taking qualifying leave under AB 406. Further, if requested, employers may need to provide a reasonable accommodation for an employee who is the victim of a covered crime, unless it would impose an undue hardship.

The leave laws in California are ever-expanding. Employers are encouraged to stay up-to-date on these laws and ensure proper training for managers and human resource staff. Employers with questions regarding these updates to the ever-expanding leave laws may contact their HR consultants or labor counsel.

by Marco A. Lucido

New Prohibition on “Stay or Pay” Employment Contracts

Question: I heard that California recently passed a law that prevents an employer from making an employee’s repayment obligation for certain costs contingent on the employee remaining employed with the employer. Is this true? What does this mean for employers?

Answer: Yes, this is true. Last week, Governor Newsom signed AB 692, which makes it illegal to include in an employment contract a term that requires the employee to repay a debt if the employee’s employment ends. The contracts this new law aims to prevent are often referred to as “stay or pay” or “training repayment agreement provisions.” These provisions typically involve the employer providing some financial benefit to the employee (for example, a signing bonus or paying an employee’s tuition or educational training) on the condition that the employee stay for some specified period of time. If the employment relationship ends before that time, the employee must repay this “debt” to the employer.

California’s lawmakers enacted this law in response to concerns that these types of contracts prevent employees from moving freely from one job to another. The law applies to all employers in California. Subject to certain exemptions, the law will apply to covered contracts entered into on or after January 1, 2026.

Under the new law, employers can no longer:

Require an employee to pay an employer, training provider, or debt collector for a debt if the employee’s employment with the employer ends;
Authorize the employer, training provider, or debt collector to resume or initiate collection of a debt if the employee’s employment with the employer ends; or
Impose any penalty, fee, or cost on an employee if the employee’s employment or work relationship” with the employer ends.

Although the new law is expansive, it will not apply to various situations, including:

Agreements entered into before January 1, 2026;
Agreements entered into with independent contractors;
A contract entered into under any loan repayment assistance program or loan forgiveness program provided by a federal, state, or local governmental agency;
A contract related to enrollment in an apprenticeship program approved by the California Division of Apprenticeship Standards”; or
Tuition repayment for a transferable credential that “is offered separately from any employment contract” and does not require repayment to the employer if the worker is terminated, except if the worker is dismissed for misconduct.

Some good news for employers is that retention bonus agreements are still permissible if the following conditions are met:

It is not tied to specific job performance;
The terms of any repayment obligation are set forth in a separate agreement from the primary employment contract;
The employee is given five business days to review the agreement and is notified that they have the right to consult an attorney;
The repayment obligation for early separation from employment is not subject to interest accrual and is prorated based on the remaining term of any retention period, which may not exceed two years from the receipt of payment;
An employee can defer receipt of the payment to the end of a fully served retention period without any repayment obligation; and
Separation from employment prior to the retention period was by employee choice or the result of employee misconduct.

The law allows for private rights of action, including minimum damages of $5,000 per worker, injunctive relief, and attorneys’ fees and costs. Employers with questions about this new law may contact their labor counsel.

by Marco A. Lucido

New Employment Laws On The Horizon

Question: I run a small business on the Monterey Peninsula. Each year, I am surprised to lean about a new employment law. Are there any new laws on the horizon for 2026?

Answer: California’s employment law landscape changes frequently and keeping up can be tough. New employment laws (technically, “legislative bills”) are normally drafted throughout the year and, if approved, are signed into law in the Fall. Below is a list of the significant employment-related bills that lawmakers have introduced during the 2025 legislative session:

SB 642 – Amends California’s pay scale and equal pay act laws, including increasing the statute of limitations to allow a longer period in which an employee may seek a remedy for a violation of the law.
AB 1018 – Regulates the development and deployment of automated decision systems to make employment-related decisions, including hiring, promotion, performance evaluation, discipline, termination, and setting pay and benefits. The bill applies to machine learning, statistical modeling, data analytics, and artificial intelligence. It would require that employers allow workers to opt out of the automated decision system.
AB 1331 – Places a limit on workplace surveillance tools, including devices used for video or audio recording, electronic work pace tracking, location monitoring, electromagnetic tracking, and photoelectronic tracking. The bill would provide workers with the right to leave behind workplace surveillance tools that are on their person or in their possession when entering certain employee-only areas and public bathrooms and during off-duty hours, as specified.
SB 590 – Expands eligibility for benefits under the paid family leave program to include individuals who take time off work to care for a seriously ill designated person. The bill would define designated person to mean any care recipient related by blood or whose association with the individual is the equivalent of a family relationship.
AB 1371 – Allows an employee to refuse to perform a tasked assigned by an employer if it would violate those prescribed safety standards or if the employee has a reasonable apprehension that the performance of the assigned task would result in injury or illness to the employee or other employees.
SB 294 – Requires employers to provide employees with a “Know Your Rights” notice — developed by the Labor Commissioner’s office — on different kinds of workers’ rights, like heat illness, workers’ compensation and worker misclassification.

For a bill to advance, each legislative body (the Senate and Assembly) must approve the bill. The legislative session in California ends today, September 12. For each bill that advances past the legislative process, Governor Newsom will have until October 12 to either sign (approve) or veto (deny) the bill. The new laws that are signed into law will most likely become effective Jan 1, 2026.

In addition to these new laws, California’s Department of Finance recently announced that the state minimum wage will increase from $16.50 per hour to $16.90 per hour on January 1, 2026. This increase applies to all employers, regardless of size. This increase impacts the minimum salary for full-time exempt employees, which will increase from $68,640 to $70,304 per year on January 1, 2026.

Employers are encouraged to monitor the status of employment related bills this Fall. Once employers know which laws will become law, and when, they are encouraged to review and update their policies, employee handbooks, and training programs. Employers with questions about new laws should contact their employment counsel this Fall.

by Marco A. Lucido

Employing Minors or Interns During the Summer

Question: A teenager stopped by my business looking for a summer job. Can I hire the teenager as an unpaid intern? What else should I consider when hiring a teenager for the summer?

Answer: The law makes it difficult for an employer to hire an individual as an unpaid intern. Under federal and California law, an “intern” is considered an “employee” who must be paid at least the minimum wage unless the internship primarily benefits the intern, not the employer. Courts generally focus on the following seven factors:

The extent to which the intern and the employer clearly understand that there is no expectation of compensation.
The extent to which the internship provides training that would be similar to that which would be given in an educational environment.
The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
The extent to which the intern’s work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

No single factor is determinative. If an employer can meet all seven factors, they may hire an individual as an unpaid “intern.”

Separately, an employer who hires a teenager for the summer should consider the various requirements associated with employing a minor. Below are some of the main requirements:

Work Permit: Most minors must obtain a work permit before they can legally work. Summer work permits are obtained by the minor from the minor’s school district. Summer work permits expire five days after the start of the new school year. If an employer plans to employ a minor after the summer ends, the employer must timely renew the minor’s work permit.
Restrictions on Positions Held by Minors: There are also restrictions on the types of positions a minor can hold. For example, a 17-year-old may not work in a position that requires the minor to sell or serve alcohol to guests.
Wages and Work Hours: In general, when school is not in session, 12 through 15-year-olds may work eight-hour shifts and forty hours per workweek, and the shift can end as late as 9:00 p.m. Minors that are 16 or 17 years old can work eight-hour shifts and forty-eight hours per workweek, and the shift can end as late as 12:30 a.m. when the shift precedes a non-school day. When school starts, the number of hours 14 through 17-year-olds can work on or before a school day is limited, and 12- and 13-year-olds may only work during school holidays and weekends.
Reporting Child Abuse or Neglect: Employers should also be aware that employing minors may subject the employer to California’s mandated reporter law. If a business employs a minor and has five or more employees total, then its human resource professionals and supervisors are considered “mandated reporters” for purposes of the state reporting law.

For more information regarding compliance with child labor laws visit https://www.dir.ca.gov/dlse/DLSE-CL.htm and https://www.dir.ca.gov/dlse/ChildLaborLawPamphlet.pdf.

by Marco A. Lucido

Remaining COVID-19 Obligations for Employers

Question: I haven’t had an employee test positive for Covid-19 in a while. Someone just notified me this morning that they tested positive and need to stay home from work. What are the current requirements for an employer in this situation?

Answer: The good news for employers is that they may now treat Covid-19 like other illnesses in the workplace. With the exception of some recordkeeping requirements, the employer obligations specific to Covid-19 have all ended. Accordingly, the employer in this situation should follow the recordkeeping requirements below and allow this employee to utilize any accrued and unused paid sick leave and return when the employee feels better. In other words, other than the additional recordkeeping requirement, employers may now treat this situation just like they would with any other illness situation.

Many employers will recall the ever-changing regulations for Covid-19 during and after the Pandemic. The Covid-19 requirements were far-reaching and required employers to monitor whether employees tested positive for Covid-19, identify those employees worked near others during their infectious period, pay employees for making and testing, send notices to potentially affected employees, and keep the Covid-19 cases and close contacts away from the workplace for a certain number of days. The guidance on these topics (including the definitions for “infectious period,” “close contact,” and “isolation period”) frequently changed, making it nearly impossible for employers to track. Employers can finally breathe a sigh of relief. With one exception, all of these requirements have ended.

California Labor Code Section 6409.6, which had previously required COVID-19 notices to employees, ended on January 1, 2024. Most of the other Covid-19 requirements were contained in various Cal/OSHA regulations. Those regulations ended last month, with the exception of some reporting and recordkeeping requirements, which are set to expire in February of 2026. The end of these laws mean that employers may generally treat Covid-19 cases like other workplace illnesses. Employers no longer need to send special notices or require that employees quarantine for specific amounts of time.

The Covid-19 reporting and recordkeeping requirements that remain require employers to keep a record of and track all Covid-19 cases with the employee’s name, contact information, occupation, location where the employee worked, the date of the last day at the workplace, and the date of the positive Covid-19 test and/or Covid-19 diagnosis. These records must be retained for two years beyond the period in which the record is necessary to meet the requirements of this section. Employers must also provide information on Covid-19 cases to the local health department or various state health agencies upon request.

Although there is no longer a specific set of regulatory requirements relating to Covid-19 prevention in the workplace, employers in California must still:

Maintain a safe and healthful place of employment;
Establish, implement, and maintain an effective Injury and Illness Prevention Program (IIPP); and
Identify, evaluate, and correct any unsafe or unhealthy conditions, work practices, or work procedures associated with Covid-19 if they identify Covid-19 as a workplace hazard at their place of employment.

Employers with specific questions about how to handle Covid-19 cases in the workplace should contact their employment counsel.

by Marco A. Lucido

New Year, New Minimum Wage 2025

Question: As a business owner, I normally update my staff hourly wages and salaries each January. What is the minimum wage for 2025 and how does that impact my exempt salaried employees?

Answer: Effective January 1, California’s minimum wage will increase from $16 per hour to $16.50 per hour. This increase applies to all employers, regardless of size. The adjustment is based on the consumer price index (CPI), which saw a 3.18% increase over the past year.

With the increase to the minimum wage rate, employers also need to ensure that the annual salary for their exempt employees meets the minimum salary requirements for an exempt employee. Most exempt employees must be paid at least two times California’s minimum wage rate for full-time work. Therefore, as of January 1, most exempt employees must earn an annual salary of at least $68,640, an increase of over two thousand dollars from last year. Exempt employees must also satisfy a duties test to qualify as exempt.

Some exempt employees have unique minimum salary requirements. For example, exempt computer professionals must be paid at least $56.97 per hour, $99,888.13 per month, or $118,657.43 annually. Licensed physicians and surgeons must be paid a minimum of $103.75 per hour. If otherwise exempt employees do not meet these minimum salary thresholds, they cannot be classified as exempt. This means that such employees must be paid on an hourly basis, must track all of their hours worked, and are entitled to overtime pay and meal and rest periods.

Employers in the healthcare or fast-food industries should keep in mind that they may be subject to different minimum wage requirements. There is a higher minimum wage for fast food workers effective April 2024, and a higher minimum wage for certain health care workers effective October 2024. These higher minimum wages also impacts the annual salary requirements for exempt employees in these industries.

Moreover, employers with operations outside of Monterey County should note that some cities and counties in California have a local minimum wage that is higher than the state rate. A list of California city and county minimum wage rates maintained by University of California Berkely is available here: https://laborcenter.berkeley.edu/inventory-of-us-city-and-county-minimum-wage-ordinances/#s-2.

The new minimum wage rate also triggers an employer’s obligation to notify affected employees, in writing, of the new rate by providing the affected employees with advance notice of the change to the employee’s rate of pay. The notice must comply with the requirements of Labor Code section 2810.5. The California Department of Industrial Relations (“DIR”) publishes a notice that complies with this requirement. This “Notice to Employee” can be downloaded for use at https://www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf.

Employers should ensure they are complying with California’s workplace posting requirements related to the new minimum wage rate. The DIR publishes the required minimum wage poster, which can be downloaded at www.dir.ca.gov/iwc/MW-2025.pdf. The poster is required to be posted in an area that is frequented by employees, like a breakroom.

To ensure compliance with California’s minimum wage rules, employers should make any necessary wage or salary increases effective January 1. Employers with questions regarding the minimum wage increase or its impact on exempt employees should consult with their employment counsel.

by Marco A. Lucido

New Employment Laws On The Horizon

Question: I’m a small business owner and there seem to be new employment laws that surprise me every year. What are the main updates I should be aware of heading into next year?

Answer: California’s employment law landscape changes frequently and keeping up can be tough. New employment laws are normally drafted throughout the year and, if approved, are signed into law in the Fall. This year, Governor Gavin Newsom signed hundreds of bills into law on a variety of issues, including the employment laws below. Unless specified otherwise, these new laws are effective January 1, 2025:

Anti-Discrimination. First, SB 1100 prohibits employers from listing a driver’s license as a preferred qualification in a job posting unless the employer both: “Reasonably expects” driving to be one of the job functions for the position; and “Reasonably believes” that using an alternative form of transportation would not be comparable in travel time or cost to the employer. Next, SB 1137 clarifies that California’s antidiscrimination laws prohibit discrimination not only based on individual protected characteristics, but also on any combination of two or more protected characteristics.

Leaves of Absence. AB 2499 (applicable to employers with 25 or more employees) expands workplace protections for employees who are victims of crime or abuse. If applicable, employees may take leave in more situations, including to care for a family member who is a victim of a crime or abuse. This new law also clarifies that employees may use vacation of paid sick leave when using this leave. Another new law, SB 1105, clarifies that California’s paid sick leave law allows agricultural employees to use accrued paid sick leave to avoid smoke, heat, or flooding conditions created by a local or state emergency.

Independent Contractors. SB 988 creates the Freelance Worker Protection Act, which applies to agreements with freelance workers providing $250 or more worth of “professional services” to an employer. The Act requires that there be a written contract that includes certain information (e.g., names, dates, list of services and payment information). Additionally, payment must be made on the date specified in the contract or no later than 30 days after completion of services.

Employer Speech. SB 399 prohibits an employers from requiring employee attendance at a “captive audience” meeting, which is defined as an employer-sponsored mandatory meeting that discusses religious or political matters, including union-representation discussions. The law also provides that an employee who is working at the time of the meeting and elects not to attend must continue to be paid while the meeting is being held.

Minimum Wage. California’s minimum wage for all employers will increase to $16.50 per hour. And there’s more. The November 2024 ballot includes Proposition 32, which, if approved, will further increase the minimum wage as follows: Employers with 26 or more employees ($17 per hour for 2024 and $18 per hour beginning January 1, 2025); employers with 25 of fewer employees ($17 per hour beginning January 1, 2025, and $18 per hour in 2026). Employers must also determine if any local minimum wage ordinances apply. And remember, any increase to the state minimum wage triggers an increase in the minimum salary an employer may pay a salaried, exempt employee.

With these new laws going into effect soon, employers should review and update their policies, employee handbooks, and training programs.

by Marco A. Lucido

Updates On Use Of AI Tools In The Workplace

Question: I own a small, local business and lack the time or resources to recruit new employees. I’m considering using an artificial intelligence (AI) system to automate my recruitment and onboarding process. Would this also help eliminate the legal risks with this process?

Answer: Not necessarily. While AI may enhance efficiency and productivity, there are concerns about its potential to perpetuate bias and discrimination. Employers who use AI tools in the workplace still must ensure that their use of this new technology does not violate long-standing federal and state anti-discrimination laws. The rise of AI and the speed at which employers are implementing AI into the workplace have inspired federal and state regulators to act. Currently, the result is a patchwork of evolving federal and state rules and regulations.

For example, last year the U.S. Equal Employment Opportunity Commission (EEOC) recently issued guidance on the use of AI systems in a range of HR-related tasks. The main takeaway from this guidance is that an AI-driven process may inadvertently discriminate against protected groups. For example, if a recruitment algorithm screens out individuals with a gap in employment, that algorithm could have a disparate impact on individuals who took extended time off due to protected medical conditions. In its guidance, the EEOC puts the burden of compliance on employers, meaning an employer may be liable for the effect of an algorithm created by a third-party vendor.

More recently, on May 17, 2024, the California Civil Rights Council proposed new regulations aimed at ensuring AI tools prevent—rather than perpetuate—discrimination based on protected characteristics. Among other updates, the new regulations would:

Clarify that it is a violation of California law to use an automated decision-making system if it harms applicants or employees based on protected characteristics.
Ensure employers maintain employment records, including automated decision-making data, for a minimum of four years.
Affirm that the use of an automated decision-making system alone does not replace the requirement for an individualized assessment when considering an applicant’s criminal history.
Clarify that third parties are prohibited from aiding and abetting employment discrimination, including through the design, sale, or use of an automated decision-making system.
Provide clear examples of tests or challenges used in automated decision-making system assessments that may constitute unlawful medical or psychological inquiries.

A similar development is occurring in the California Legislature. Earlier this year, the California State Assembly Privacy and Consumer Protection Committee introduced Assembly Bill 2930, which seeks to prohibit bias and “algorithmic discrimination” by automated decision tools (ADTs).

Under the proposed legislation, employers who use ADTs to make consequential decisions must undergo impact assessments, where employers evaluate the pros and cons of using such technology. The proposed legislation also requires employers to provide certain notices to impacted employees. If AB 2930 becomes law, it would apply to employers with 25 or more employees, or employers with fewer than 25 employees who deployed an ADT that impacted more than 999 people per year. Moreover, the impact assessments would need to be completed by January 1, 2026.

These new developments highlight the importance of addressing potential bias and discrimination in automated systems. The use of AI in employment is new and will soon be subject to additional laws and regulations. Employers should consult their labor and employment counsel to ensure they remain current on the use of AI in the workplace.

by Marco A. Lucido

New Model Template for Workplace Violence Prevention Plans

Question: I heard my business needs to establish a workplace violence prevention plan by July 1, 2024. Is this a new requirement, and are there any guides or templates to help me get started?

Answer: Yes, this is a new requirement. Beginning on July 1, 2024, most businesses will need to establish a workplace violence prevention plan and comply with other workplace violence measures. Other than a few limited exceptions, the new workplace violence prevention requirements apply to all employers in California. Fortunately, Cal/OSHA recently published a fact sheet and a model workplace violence prevention plan to help employers comply with the new law.

The workplace violence prevention plan can be included in an employer’s existing Injury and Illness Prevention Program (IIPP) or maintained as a separate document. It must be in writing, easily accessible by employees, and contain the following information:

The identity of the individuals responsible for implementing the plan;
Procedures to obtain the active involvement of employees in developing and implementing the plan;
Methods used to coordinate the plan with other employers, when applicable;
Procedures for the employer to accept and respond to reports of workplace violence, and to prohibit retaliation against an employee who makes such a report;
Procedures to ensure that employees comply with the plan;
Procedures to communicate with employees regarding workplace violence matters, including how to report incidents and how reports will be investigated.
Procedures on how to identify and evaluate workplace violence hazards and how to respond to actual or potential workplace violence emergencies.

Recently, Cal/OSHA published its much-anticipated model workplace violence prevention plan, which employers can access under the “Workplace Violence Prevention” heading here: https://www.dir.ca.gov/dosh/PubOrder.asp#WVP. The model plan is designed to assist employers in drafting their own plans. Employers are not required to use Cal/OSHA’s model but may use it as a template. The model plan contains numerous questions and examples for employers to consider as they assess the risks in their own workplaces and “fill in the blanks” of the template accordingly.

In addition to establishing a workplace violence prevention plan, covered employers must also implement annual workplace violence training and maintain a log of every workplace violence incident. The written workplace violence incident log must be posted at the workplace and include the following information:

Date, time, and location of the incident;
Detailed description of the incident, including where it occurred and the type of violence that occurred;
Classification of who committed the violence (e.g. co-worker, supervisor; customer); and
A description of the employer’s response and information about the person completing the log entry.

The covered employers must provide employees with initial training when the workplace violence prevention plan is first established and annually thereafter. Records related to employee training, violent incident logs, and employer investigation of workplace violence incidents must be kept for at least five years. Employees are entitled to free copies of these records within 15 calendar days of a request.

Cal/OSHA also published a fact sheet that provides employers with a helpful overview of the above requirements. The fact sheet can be accessed using the same link listed above for the model prevention plan. Employers should consult with their labor counsel soon to draft a compliant plan and implement measures to comply with these additional requirements before the July 1, 2024 effective date.

by Marco A. Lucido

New Year, New Minimum Wage

Question: As a business owner, I normally update my staff hourly wages and salaries each January. What is the minimum wage for 2024 and how does that impact my exempt salaried employees?

Answer: Effective January 1, 2024, California’s minimum wage will increase from $15.50 to $16 per hour. The $16 per hour minimum wage applies to all employers, regardless of employer size. Employers with operations outside of Monterey County should note that some cities and counties in California have a local minimum wage that is higher than the state rate. A list of California city and county minimum wage rates maintained by University of California Berkely is available here: https://laborcenter.berkeley.edu/inventory-of-us-city-and-county-minimum-wage-ordinances/#s-2

The increase to the minimum wage is triggered by a 2016 law that tied minimum wage increases to inflation. Under this law, all future increases to the minimum wage rate will be calculated by the California Department of Finance. The minimum wage rate will be adjusted annually for inflation based on the United States Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W). Regardless of the CPI increase, the minimum wage rate will not be increased by more than 3.5 percent in any one year. Also, if the change in CPI is negative, there will be no change in the minimum wage for the following year.

With the increase to the minimum wage rate, employers also need to ensure that the annual salary for their exempt employees meets the minimum salary requirements for an exempt employee. Most exempt employees must be paid at least two times California’s minimum wage rate for full-time work. Therefore, as of January 1, 2024, most exempt employees must earn an annual salary of at least $66,560.00. Exempt employees must also satisfy a duties test to qualify as exempt.

Some exempt employees have unique minimum salary requirements. For example, exempt computer professionals must be paid at least $55.58 per hour, $9,646.95 per month, or $115,763.35 annually. Licensed physicians and surgeons must be paid a minimum of $101.22 per hour. If otherwise exempt employees do not meet these minimum salary thresholds, they cannot be classified as exempt. This means that such employees must be paid on an hourly basis, must track all of their hours worked, and are entitled to overtime pay and meal and rest periods.

Employers should ensure they are complying with California’s workplace posting requirements related to the new minimum wage rate. The DIR publishes the required minimum wage poster, which can be downloaded at https://www.dir.ca.gov/IWC/MW-2024.pdf. The poster is required to be posted in an area that is frequented by employees, like a breakroom.

To ensure compliance with California’s minimum wage rules, employers should make any necessary wage or salary increases effective January 1, 2024. Employers with questions regarding the minimum wage increase or its impact on exempt employees should consult with their employment counsel.

by Marco A. Lucido

Potential Increase in Paid Sick Days for Employees

Question: I run a small business and provide my employees with 3 days of sick leave per year. Someone told me employees might be entitled to more starting next year. Is this true?

Answer: Yes, most likely. The state Senate is currently considering Senate Bill 616, which would amend the Healthy Workplace Healthy Family Act of 2014 (the “HWHFA”) to increase the number of paid sick days for California employees beginning in 2024. The current version of the Senate Bill 616 increases the minimum number of paid sick leave days from three to five days per year. The Governor is expected to sign the final version of this bill into law this Fall. This means that beginning in January 2024, most employers in California will likely need to provide employees with at least five days of paid sick leave per year.

Among other things, the HWHFA provides eligible employees with a minimum amount of paid sick leave to care for themselves and others. Currently, under the HWHFA, eligible employees are entitled to a minimum of three days of paid sick leave per year. An employer can comply with the minimum paid sick leave requirements in one of three ways. The employer can either allow employees to accrue one hour for every thirty hours worked, accrue a minimum of three days of paid sick leave each year, or provide employees with a lump-sum of three days of paid sick leave per year. If an employer elects the accrual method, the employer may limit the use of paid sick leave to three days per year but must allow the employee to carry-over up to six days of paid sick leave from year-to-year.

If Senate Bill 616 is enacted, the annual lump-sum option will increase from three days to five days per year. Three of the five days must be made available to the employee by the completion of the employee’s 120th day of employment, and the remaining two days must be made available to the employee by the completion of the employee’s 200th day of employment. Similarly, the accrual method of three days of paid sick leave each year will be increased to five days of accrued leave per year, with at least three days being accrued by the 120th day of employment and no less than all five days being accrued by the 200th day of employment. The accrual method of one hour for every thirty hours worked would remain the same. Finally, for employers who choose one of the accrual methods, the bill increases the minimum carry-over cap to 10 days of accrued paid sick leave that employees can maintain from year-to-year.

Employers with workers in California should consider whether their current leave policies and communication methods would need to be revised. For example, employers may want to streamline the recordkeeping aspect of employee paid sick leave by providing employees with their annual amount of paid sick leave as an up-front lump sum, rather than having to calculate the accrual of paid sick leave throughout the year. Employers may also want to revisit their accrual caps on paid sick leave. Employers should monitor this bill, and if enacted, contact their labor counsel for guidance on compliance with the new law.

by Marco A. Lucido