Beginning April 1, 2024, the minimum wage for many fast food employees will be $20 per hour.
This new minimum wage applies to employees who work for a fast food restaurant in California that’s part of a national fast food chain. The law defines a national fast food chain as a group of limited-service restaurants that meets the following three criteria:
• It has more than 60 establishments across the country
• It shares a common brand, or has standardized options for appearance, marketing, packaging, and offerings
• It’s primarily engaged in providing food and beverages for immediate consumption that customers select and pay for upfront with minimal or no table service
The law doesn’t apply to certain bakeries or restaurants inside grocery stores. Detailed FAQs are available here.
Required Notice
Employers with covered employees are required to post a supplement to the minimum wage order in a place where employees will frequently see it.
Future Increases
The newly created Fast Food Council will have the authority to raise this minimum wage annually beginning January 1, 2025.

Last week, a California Appeals Court ruled that requiring an employee to call in two hours before a shift to see if they are needed must result in the employee receiving reporting time pay.

Reporting time pay is compensation that is required by California Wage Order 7 when a non-exempt employee reports to work but is either immediately sent home or given a shorter shift than originally scheduled. Prior to this case, “reporting to work” was understood to mean that the employee physically shows up at the workplace. The court last week, however, determined that an employee calling in to see if they need to show up for their shift also counts as reporting to work.

According to Wage Order 7, employees who report in for work (physically or, now, via phone) must be paid for half their usual or scheduled day’s work, but no less than two hours and no more than four hours. These hours should be paid at their regular rate of pay.

The court made it clear that not every instance of an employee checking their schedule would trigger reporting time pay. In this case, employees were required to call in just two hours in advance and subject to discipline if they didn’t; the court felt this clearly warranted pay. A different result may have been reached had employees been told to call in 12 hours in advance or to check a schedule posted online. Unfortunately, the court didn’t draw a line for employers.

In the words of the court, “on-call shifts burden employees, who cannot take other jobs, go to school, or make social plans during on-call shifts—but who nonetheless receive no compensation . . . unless they ultimately are called in to work. This is precisely the kind of abuse that reporting time pay was designed to discourage.”

We recommend that employers who have employees call in to verify shifts on the day of either change their scheduling practices to eliminate the need to call in or budget for reporting time pay.

As usual, the California legislature and various city councils had a busy year regulating the world’s fifth-largest economy. Included below are both state and city minimum wage increases as well as summaries of the laws that impact the human resources function.

Beginning January 1, 2019, the following minimum hourly wages will be in effect:

State—Employers with 26 or more employees: $12.00

State—Employers with 25 or fewer employees: $11.00

Belmont: $13.50

Cupertino: $15.00

El Cerrito: $15.00

Los Altos: $15.00

Mountain View: $15.65

Oakland: $13.80

Palo Alto: $15.00

Richmond: $15.00

San Diego: $12.00

San Jose: $15.00

San Mateo: $15.00, but $13.50 for 501(C)(3) organizations

Santa Clara: $15.00

Sunnyvale: $15.65

Exempt Employee Minimum Salary
The yearly minimum salary for properly classified exempt employees in California is twice the minimum wage x 2080 hours per year. Therefore, each year as the minimum wage goes up so does the minimum amount an exempt employee must be paid. Exempt employee minimum salaries are as follows for 2019:

Employers with 25 or fewer employees: $45,760 per year, or $880 per week.

Employers with 26 or more employees: $49,920 per year, or $960 per week.

References and Sexual Harassment
Currently, employers who are providing a reference are allowed to share certain factual information about the individual’s job performance and qualifications for a position, as well as whether they would rehire that person. Effective January 1, 2019, the law will specify that an employer may also say whether its decision not to rehire is based on its determination that the individual engaged in sexual harassment.

For this kind of communication to be protected, it must be provided only to someone who the employer reasonably believes is a prospective employer. The information also must be given without malice; this means without hatred or ill will, and with reasonable grounds for believing their statements are true. Finally, an employer may only share that its decision not to rehire is due to sexual harassment if that decision is based on credible evidence. For example, if an employer terminated an employee for multiple reasons, including an unsubstantiated and uninvestigated sexual harassment complaint (perhaps the final straw), it should not share information about the sexual harassment complaint with a prospective employer.

Currently, it’s unclear whether employers can say more than, “our decision to rehire is based on sexual harassment,” so until further guidance is provided by the state, we recommend that employers share only that much information when asked about eligibility for rehire.

California requires employers to post a notice informing employees of their right to voting leave. Employers should post the notice in a conspicuous location at least 10 days before a state or national election. The notice covers the basic voting leave rights for employees, which include the following:

• Employees are eligible for paid time off for voting only if they do not have sufficient time outside of working hours to vote;
• Employees may take as much time as they need, but they’ll be paid for a maximum of two hours;
• An employer may require employees to give advance notice that they will need to take time off for voting;
• An employer may require employees to take this time off at the beginning or end of their shift.

The notice can be downloaded here.

The California Supreme Court has adopted a new, tougher legal standard for determining whether a worker is an independent contractor or an employee. Previously, the state followed a multi-factor balancing test that looked at the level of control held by the employer as well as several economic factors, such as who provided the tools to do the job. The new test, called the ABC Test, is an all-or-nothing test. To properly classify a worker as an independent contractor, the employer must be able to say “yes, this is true” to all three parts of the test.

The ABC Test
A worker may be classified as an independent contractor if:

A. The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in fact;

B. The worker performs work that is outside the usual course of the hiring entity’s business; and

C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

An Explained – Free From Control
Every state and federal test currently in use for independent contractors looks at control. Most, however, ask about the degree of control. The ABC test is much more definitive—it demands that the worker be free from control. This ruling is only days old, and there will no doubt be litigation about the exact meaning of “free” in the future, but for now, we encourage employers to take this criterion at face value. If an employer dictates how or where the work gets done or who does it, they have an employee. Likewise, although an employer may put a “when” on work by establishing a deadline, they should not dictate that the work be done on certain days or during certain hours.

B Explained – Outside Usual Course of Business
An independent contractor must be doing work that is outside the employer’s usual course of business—that is, not essential to the offerings of the business. For example, in a restaurant, the cooks and servers do work that is in the usual course of business, whereas someone hired to design the new menu or reupholster the booths does not. The cooks and servers must always be employees, while those who do work that is not part of the business’s core offering would pass this requirement of the test.

C Explained – Worker Has an Established Business
Part C asks whether the worker is in business for themselves doing the kind of work that they are doing for the organization that has hired them. For instance, does the individual hired to design the new menu offers their graphic design skills on the open market? Do they have other paying customers, a business card, a website, their own graphic design software? Is their business registered with the state?

The focus—in inquiries from the state and in future litigation—will likely be more on whether the individual made money from other sources doing the same kind of work they offered to the employer and less on whether they had the standard business accessories. That said, the more evidence of an established business, the stronger the argument for an independent contractor.

Action Items
Audit Your Independent Contractor Classifications
Because this new standard is case law—meaning it was created by the Supreme Court rather than the legislature—it takes effect immediately. Employers can limit their liability if they analyze their independent contractor classifications and make necessary changes promptly.

Employers who currently use independent contractors should reevaluate each of those relationships and ensure that the worker passes the ABC Test. If they do not, the employer has three options:

1. Reclassify the worker as an employee.
2. Terminate the worker’s services.

If the relationship passes Part B and C, and only fails on Part A, the employer may be able to alter the parameters of the relationship so that the worker is now free from their control.

Last Friday the Department of Labor (DOL) adopted a new test for unpaid interns. Employers should use this test—called the primary beneficiary test—when determining if a worker can be properly classified as an unpaid intern or if they need to be classified as an employee and paid minimum wage and overtime. The test adopted by the DOL has already been in use in four federal appellate courts, most recently the Ninth Circuit Court of Appeals. The DOL’s switch to the primary beneficiary test creates a nationwide standard.

Balancing v. All-or-Nothing
Previously, the DOL was using a six-question all-or-nothing test. An employer needed to be able to say “yes, the internship does that” to all six questions or else classify the worker as an employee. The new test is a balancing (or factors) test and has seven questions. No single question will disqualify the worker from being classified as an unpaid intern. Instead, the employer may look at the answers as a whole.

The New Questions
The new questions overlap significantly with the old questions. The major element missing from the new test is a focus on whether the intern is providing a tangible benefit to the employer. The old test indicated that the employer should receive little to no benefit from the services of an unpaid intern, with the exception of goodwill and a qualified future applicant. The new test doesn’t ask if the employer is receiving a benefit.

In place of questions about whether the employer receives any benefits, the new test places more emphasis on the internship being academically focused. Only one of six questions in the old test asked about the training and educational aspects of the job, whereas four of seven do in the new test. Employers are free to look at factors outside of these seven, but should be careful about stretching to find new questions if these seven lead to an answer of “paid employee.”

Under the primary beneficiary test, employers should consider the following:

1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee.
2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
3. The extent to which the internship is tied to the intern’s formal education program by integrated coursework or the receipt of academic credit.
4. The extent to which the internship accommodates the intern’s academic commitments by corresponding to the academic calendar.
5. The extent to which the internship’s duration is limited to the period in which the internship provides the intern with beneficial learning.
6. 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.
7. 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.

Minimum Wage Increases
On January 1, 2018, California’s minimum wage for employers with 26 or more employees will increase to $11.00 per hour. The minimum wage for employers with 25 or fewer employees will increase to $10.50 per hour.

On January 1, 2018, the following municipal minimum wage increases will also take effect:
Cupertino: $13.50
El Cerrito: $13.60
Los Altos: $13.50
Milpitas: $12.00
Mountain View: $15.00
Oakland: $13.23
Palo Alto: $13.50
Richmond: $13.41
San Jose: $13.50
San Mateo: $13.50
Santa Clara: $13.00
Sunnyvale: $15.00

We recommend that you review the pay rates of your employees to ensure compliance with the new minimum wages.

Exempt Employee Minimum Salary Increase
Beginning January 1, 2018, the minimum salary for exempt employees of employers with 26 or more employees will increase to $45,760 per year. For employers with 25 or fewer employees, it will increase to $43,680 per year.

California Bans the Box
Beginning January 1, 2018, it will be illegal for any employer with five or more employees to include on any application for employment any question that asks about an applicant’s conviction history. Additionally, it will be illegal to inquire into or consider the conviction history of an applicant until that applicant has received a conditional offer of employment. It will also be illegal to consider, distribute, or disseminate information related to arrests, diversions, and convictions.

In addition to the above restrictions, an employer who ultimately acquires an applicant’s criminal history and intends to deny them the job even in part based on that information must conduct an individual assessment. The assessment should determine whether the applicant’s conviction history has a direct and adverse relationship with specific duties of the job as well as the following: the nature and gravity of the offense or conduct; the time that has passed since the offense or conduct and completion of the sentence; and the nature of the job.

If the employer decides that the applicant’s conviction history disqualifies them from the job, they must notify the applicant in writing and allow them five days to respond; this notification and process must meet certain requirements. If, after the applicant has had a chance to respond, the employer still decides to not go forward with hiring the individual, the employer must send a final written notice with specific pieces of information. For more details on these notices and procedures, use the search bar on the HR Support Center and type in California ban-the-box and select the Arrest and Conviction Records page.

Transgender Rights in the Workplace
Beginning January 1, 2018, employers with five or more employees are required to post a notice created by the Department of Fair Employment and Housing (DFEH) titled “Transgender Rights in the Workplace.” The notice must be posted in a prominent and accessible location in the workplace. The notice can be downloaded here.

Additionally, employers who are required to provide sexual harassment training for supervisors (those with 50 or more employees) must incorporate information about harassment based on gender identity, gender expression, and sexual orientation.

California Bans Salary History Inquiries (eAlert published October 2017)
Beginning January 1, 2018, California employers will no longer be able to ask applicants about their current or previous salary or an hourly rate of pay, whether on an employment application or during the interview process. Additionally, employers must provide an applicant with the pay scale for the position upon reasonable request.

If an employer is aware or becomes aware of an applicant’s salary history, that information should not be used to determine the rate of pay they offer, unless the information was volunteered by the applicant without any kind of prompting. In accordance with the California Equal Pay Act (which is already in effect), even if salary history is provided without prompting, it must not be the only basis for a disparity in pay between employees.

New Parent Leave Act (eAlert published October 2017)
Beginning January 1, 2018, employers in California with 20 or more employees within 75 miles must offer up to 12 weeks of unpaid time off within one year of when a new child is born, adopted, or placed in foster care. Employees are eligible for this leave only if they have worked for the employer for more than 12 months and have done at least 1,250 hours of work in the 12 months immediately prior to taking the leave.

During the leave, employers must continue to pay the usual portion of the employee’s health insurance premiums, though they will be able to recover those funds if the employee does not return to work for a reason other than a serious medical issue or circumstance not within the employee’s control. If both eligible parents work for the same company, the leave may be limited to 12 weeks between the two of them.

The minimum wage for federal contractors will increase to $10.35 per hour as of January 1, 2018. The wage requirement applies to new and replacement contracts (solicited on or after January 1, 2015) with employers covered by the Service Contract Act or any employer who handles concessions and services in connection with federal property or lands. We recommend that employers review the pay rates of their employees and plan any changes necessary to comply with the rate increase.

Beginning January 1, 2018, employers in California with 20 or more employees within 75 miles must offer up to 12 weeks of unpaid time off within one year of when a new child is born, adopted, or placed in foster care. Employees are eligible for this leave only if they have worked for the employer for more than 12 months, and have done at least 1,250 hours of work in the 12 months immediately prior to taking the leave.

During the leave, employers must continue to pay the usual portion of the employee’s health insurance premiums, though they will be able to recover those funds if the employee does not return to work for a reason other than a serious medical issue or circumstance not within the employee’s control. If both eligible parents work for the same company, the leave may be limited to 12 weeks between the two of them.

Until 2020, a mediation program will be in place, allowing employers to require that employees who believe the law has been violated engage in a mediation process prior to filing a lawsuit.

Regulations related to the Act have not yet been issued, but since it is essentially an extension of the California Family Rights Act (CFRA), we expect similar if not identical rules to be applied. We will update employers if and when essential new information is released.

Beginning Monday, September 18, employers must use the revised Form I-9 for all new employees. This new version of the form has a revision date of 7/17/17. The I-9 form can be found here or at the HR Support Center.

You can visit USCIS’s I-9 Central or the News Desk section of the Support Center to learn more about the changes.

Seven municipalities in California have passed minimum wages that are higher than the state rate and will go into effect or increase on July 1, 2017.

Emeryville
For employers with 56 or more employees: increase from $14.82 to $15.20 per hour
For employers with 55 or fewer employees: increase from $13.00 to $14.00 per hour

Los Angeles City and unincorporated areas of LA County
For employers with 26 or more employees: increase from $10.50 to $12.00 per hour
For employers with 25 or fewer employees: increase from $10.00 to $10.50 per hour

Malibu
For employers with 26 or more employees: increase from $10.50 to $12.00 per hour
For employers with 25 or fewer employees: increase from $10.00 to $10.50 per hour

Pasadena
For employers with 26 or more employees: increase from $10.50 to $12.00 per hour
For employers with 25 or fewer employees: increase from $10.00 to $10.50 per hour

San Francisco
An increase from $13.00 to $14.00 per hour

San Leandro
An increase from $10.00 to $12.00 per hour

Santa Monica
For employers with 26 or more employees: increase from $10.50 to $12.00 per hour
For employers with 25 or fewer employees: increase from $10.00 to $10.50 per hour

Under the Fair Employment and Housing Act (FEHA), California already protects transgender employees from employment discrimination with respect to hiring, firing, and other terms and conditions of employment. New regulations going into effect July 1 extend those protections by requiring that employers take affirmative steps to acknowledge and respect an employee’s gender identity. Here are the key provisions of the new regulations:

1. Names and Pronouns: Employers must use an employee’s preferred name and pronoun and may only use a different name indicated on government-issued identification (e.g., birth certificate or passport) if required to do so by law.
2. Gender/Sex Inquiries: Employers may not require or request proof of an individual’s sex or gender, gender identity, or gender expression.
3. Transitioning: The new regulations make it clear that FEHA protections extend to people in transition, perceived to be transitioning, or post-transition. The process of transitioning may include changes in name and pronoun usage, facility usage, participation in employer-sponsored activities (e.g., sports teams), or undergoing hormone therapy, surgeries, or other medical procedures.
4. Grooming and Dress: Employers may not enforce dress codes or grooming standards or requirements that conflict with an employee’s gender identity.
5. Facilities: Employees must be allowed to use the restroom, locker room, or other gendered facilities that correspond with their own gender identity.

There are no required notices, but employers should ensure that all levels of management are familiar with the new regulations and take appropriate steps to comply

The California Department of Industrial Relations recently released a new notice regarding California’s Domestic Violence Leave Law. Employers with 25 or more employees must provide this notice to all new hires (as part of a new hire packet is acceptable) and to any employee upon request. The notice is available for download on the HR Support Center by searching California Domestic Violence Notice.

The Fair Employment and Housing Council released new rules related to the use of criminal histories in employment decisions, which take effect July 1.

The new rules are in line with the guidance that the Equal Employment Opportunity Commission has provided since 2012, and require that employers consider whether their use of criminal histories will have an adverse impact on any protected class. If an applicant or employee claims that the policy or practice of using criminal histories has an adverse impact on a protected class, the employer will have to show that the policy was job-related and consistent with business necessity. This is a test we have long advised employers to use as a best practice (particularly those in California).

Under the new regulations, even if an employer can show job-relatedness and business necessity, it must also prove that there was no less discriminatory policy or practice that could have been used to achieve the same result. Employer policies should also specifically allow for individual assessment, which should consider the nature of the offense, how long ago it took place, and how it relates to the position, if at all.

The new rules also include a notice requirement. Applicants or employees must be notified if an adverse action will be taken because of their criminal history and given an opportunity to address any factual inaccuracies. If a record is shown to be inaccurate, it must not be considered.

As a reminder, the following criminal records should not be considered in California:

• Arrests that did not result in conviction (unless the trial is pending)
• Detentions that did not result in a conviction
• Sealed records
• Convictions that have been judicially dismissed, including through expungement
• Misdemeanor marijuana convictions more than two years old
• Participation in pre-trial or post-trial diversion programs
• Proceedings in juvenile court

Additional information can be found on the HR Support Center under Arrest & Conviction records.