California Employment Law Updates 2022: The B-Sides

4 min

While COVID-19 dominates headlines as the calendar turns to a new year, many of California's new 2022 employment laws pertain to more traditional issues. We wrote about some in our recent alert. Here are three "B-sides" that didn't make our top list but are still significant. All are effective as of January 1, 2022.

California Has the Highest Statewide Minimum Wage in the Nation: $15/Hour

As of January 1, 2022, California's minimum wage applicable to employers with 26 or more employees is $15/hour. This follows five years of gradual step-ups toward the $15 target. Employers with 25 or fewer employees are subject to a $14/hour minimum wage (and will be subject to the $15/hour minimum wage in 2023).

California's $15/hour minimum wage also impacts the threshold minimum salary that must be paid to employees to qualify as exempt from overtime rules under the executive, administrative, or professional overtime exemptions. That minimum threshold is tied to 2 times the state minimum wage for full-time employment. As of January 1, 2022, the minimum exempt salary thresholds are:

Employers with 26 or more employees: $62,240/year

Employers with 25 or fewer employees: $58,240/year

In other words, employees whose salaries are below those new applicable thresholds can no longer qualify as exempt from overtime rules, regardless of whether their duties otherwise qualify as exempt.

Note: Some localities had already raised minimum wages to $15/hour (Los Angeles, for example); and San Francisco's minimum wage now sits at $16.32 (per the most recent adjustment tied to the Consumer Price Index). But the exemption threshold for salaried workers is tied to 2 times the state minimum wage, not the local minimum wage.

Takeaway: Employers should assess not only their hourly employees' wages to ensure they are above the new minimum for 2022, but also the salary levels for workers at and around the exemption threshold to ensure that they exceed the new threshold if they are treated as exempt.

California Employers Must Retain Personnel Records for Four Years (Up From Two Years)

California employers have long been required to retain employee personnel records for at least two years. Senate Bill 807 ups that requirement to four years.

It shall be an unlawful practice for employers… to fail to maintain and preserve any and all applications, personnel, membership, or employment referral records and files for a minimum period of four years after the records and files are initially created or received, or for employers to fail to retain personnel files of applicants or terminated employees for a minimum period of four years after the date of the employment action taken.

In addition, if an employer receives a notice that a complaint has been filed with the California Department of Fair Employment and Housing, it must maintain relevant personnel records until the later of the matter reaching full and final resolution or the applicable statute of limitations running.

Takeaway: Employers should check their document retention policies and update them if needed.

Intentional Wage Theft in California Is Now Punishable as Grand Theft

For years, California law has inched toward increasingly significant criminal penalties for serious violations of certain wage and hour laws. For example, existing law makes it a misdemeanor to violate certain enumerated sections of the Labor Code regarding employee compensation. To no one's surprise, California passed a new law (AB 1003) making the intentional theft of wages in the amount of $950 or more for one employee, or $2,350 or more for multiple employees, within a 12-month period punishable as grand theft. Felony grand theft can carry a prison sentence of up to three years.

(a) Notwithstanding Sections 215 and 216 of the Labor Code, the intentional theft of wages in an amount greater than nine hundred fifty dollars ($950) from any one employee, or two thousand three hundred fifty dollars ($2,350) in the aggregate from two or more employees, by an employer in any consecutive 12-month period may be punished as grand theft.

(b) For purposes of this section, "theft of wages" is the intentional deprivation of wages, as defined in Section 200 of the Labor Code, gratuities, as defined in Section 350 of the Labor Code, benefits, or other compensation, by unlawful means, with the knowledge that the wages, gratuities, benefits, or other compensation is due to the employee under the law.

(c) For purposes of this section, "employee" includes an independent contractor and "employer" includes the hiring entity of an independent contractor.

Takeaway: AB 1003 raises the stakes for bad actors engaging in wage theft, but it does not change the underlying legal requirements for the payment of wages. It merely underscores the importance of training and educating managerial staff responsible for wage practices.

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Employers may contact one of Venable's experienced West Coast Labor and Employment attorneys with questions.