6.Exempt Employees-(no significant change)
7.The ABC’s of Independent Contractors
As stated in my 2018 article, Employee Handbooks are a road map for an employer’s policies and procedures. Since then, California employment law has changed in many ways. For instance, now employers who have five or more employees, must provide leave under the California Family Rights Act (CFRA). Before, the CFRA had only applied to employers who had at least 50 employees. That is a major change, and it can create serious concerns for smaller employers. You can read about all the changes to the CFRA law in previous articles I had posted about it. In addition, employers should use their handbooks to address other California laws that have passed since 2018, but the focus of this article prevents discussion of those laws here. Because of recent employment law changes, you should update your handbook.
Back in 2018, the California minimum wage was either $10.50 or $11.00 per hour, depending on how many employees a business had. Now, the minimum wage for all California employers is $15.50 per hour. Many cities have higher minimum wage rates. For instance, the City of San Diego requires all employers to pay at least $16.30 per hour. Finally, when the state minimum wage is at $15.50 per hour, the minimum salary for an exempt employee in California is $64,480.00.
The minimum amounts of paid sick leave for California and San Diego have remained the same since 2018, 24 hours and 40 hours per year, respectively. Some hourly employees who work few hours may accrue less, depending on the terms of the sick leave policy. Even though sick leave laws have not drastically changed, the California legislator made a significant change to the law that took effect this year. The law now allows an employee to designate someone outside the employee’s family as a person for whom the employee may take sick leave, as if that person were a family member.
Employers need not offer vacation to California employees, but if they do, they must follow the rules they set up in vacation policies. Vacation is an earned wage which is used at a later time. Because it is a wage, unused vacation must be paid to an employee when the employee quits or is terminated. However, in recent years, some employers have been offering “unlimited vacation”.
An unlimited vacation policy does not accrue vacation time because the employee can take as much as he or she wants at any time, at least theoretically. Consequently, a true unlimited vacation policy need not be paid as an earned wage at the time of termination. An employer electing to have an unlimited vacation policy must make sure it follows the requirements set out in the case McPherson v. EF Intercultural Foundation, Inc., 47 Cal.App.5th 243 (2020).
Most employers and employees know about the Assembly Bill 5 (AB5) and the ABC test. As a quick refresher, AB5 is a relatively new California test that determines whether a worker is an employee or independent contractor. That test was designed to qualify more workers as employees and fewer as independent contractors.
Since AB5 was first passed, the California legislature has passed more exemptions to the ABC test because workers in certain industries would suffer too greatly under that test. Also, in 2020, the California voters passed a ballot measure, Prop 22, that exempt companies like Uber, Lyft, DoorDash, and Instacart from AB5. Prop 22 opponents filed a lawsuit challenging its constitutionality. In March of this year, an appeals court upheld most of Prop 22, so App based drivers can continue to work as independent contractors.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111