Employers need to take action in response to legislation effective in 2023 that impacts California wage laws, wage requirements and related matters. This blog will discuss three bills: Senate Bill (SB) 3, passed in 2016 with provisions effective January 1, 2023; SB 1162, passed in 2022 and effective January 1, 2023; and a third bill, Assembly Bill (AB) 257, passed into law in 2022 but suspended pending a referendum in the November 2024 election.
Employers must be aware of the requirements enacted by SB 3 and SB 1162. They should review employment policies and procedures to ensure compliance and reposition as needed. While employers may be inclined to wait until the referendum vote is cast to take action regarding AB 257, it would be wise to prepare in advance for the possible changes it would implement.
Employers with California wage and hour questions may contact Southern California employer attorney Susan A. Rodriguez to discuss their changing responsibilities under these laws.
California Wage Laws Impacting Employers
Senate Bill 3 raised the minimum wage in California annually, with the 2023 wage requirements applying to employers of all sizes. Senate Bill 1162 amended section 12999 of the California Government Code and section 432.3 of the California Labor Code, enacting new requirements for recordkeeping and pay transparency.
If AB 257 survives the referendum, the Fast Food Accountability and Standards Recovery Act, or FAST Recovery Act, will become effective. The Act would create a Fast Food Council responsible for establishing standards of operation for fast food restaurants, including requirements related to wages, hours and working conditions. The law also contains provisions related to retaliation and discrimination.
California Minimum Wage Changes under SB 3
SB 3 mandated annual increases in the minimum wage in California, beginning in 2017. The minimum wage requirement of $15.50 per hour effective in 2023 applies to businesses with any number of employees in California. Wage increases after 2023 are to be based on the Consumer Price Index. In previous years, employers with 25 employees or fewer were permitted to pay a lower minimum wage than employers with 26 employees or more.
Some municipalities in California have mandated a minimum wage within their jurisdictions that may be higher than required under California wage laws. The University of California Berkley Labor Center maintains a list of these wage requirements. Employers must pay the highest minimum wage required by the laws and ordinances that govern the jurisdiction where an employee works.
California Employer Responsibilities under SB 1162
SB 1162 implemented multiple requirements for employers of various sizes regarding pay transparency and records related to positions and wages. First, employers with 15 or more employees must include a pay scale in all job postings, including those posted or shared by a third party. This requirement applies if the position may be filled in California, whether the employee works on-site or remotely. Additionally, an employer must provide an employee with the pay scale for the position he or she holds if requested.
California employer responsibilities now include keeping job titles and wage history records for all employees while employed and for three years after employment ends. The Labor Commissioner may inspect these records to evaluate or identify wage discrepancy patterns related to race, ethnicity or sex. An employer’s failure to keep proper records establishes a rebuttable presumption in favor of an employee wage claim.
Private employers with 100 or more employees must submit a pay data report to the Civil Rights Department of the Business, Consumer Services and Housing Agency. These reports must be filed by the second Wednesday of May each year, beginning in 2023.
California Wage Laws and AB 257: Act Now or Wait and See?
Although the provisions of AB 257 have been suspended pending a referendum vote in the November 5, 2024 election, employers would be wise to evaluate their positions and plan ahead for the vote’s outcome. If the amendments to the Labor Code are approved by vote, the FAST Recovery Act will become effective.
The Act would establish a Fast Food Council responsible for establishing standards for the fast food industry. Cities and counties with a population of more than 200,000 will be permitted to create local councils that may make recommendations to the state council.
The Fast Food Council will have the authority to raise the minimum pay for fast food workers to as much as $22 per hour, with annual increases on the cap based on inflation. This and other standards established by the Fast Food Council will apply to restaurants with at least 100 locations throughout the US.
While AB 257 applies specifically to employers with businesses defined as “fast food restaurants” by the criteria outlined in the bill, mandatory wage increases and other requirements for fast food restaurants would likely put pressure on the restaurant industry in general to increase wages or modify operations to retain employees and keep pace.
Businesses that may be impacted by this law should take steps to evaluate their options and make adjustments that may help offset the potential challenges posed by AB 257. Southern California employer attorney Susan A. Rodriguez can help employers determine their next best steps and answer their California wage and hour questions.
Contact Attorney Susan Rodriguez with Your California Wage and Hour Questions
As a Southern California employer attorney at the Law Offices of Susan A. Rodriguez, APC, Susan Rodriguez has advised and represented employers in California for more than 30 years. She helps clients stay up-to-date on changes to California employer responsibilities regarding wages and much more. To discuss recent and pending updates to California wage laws or other employment law matters, contact Susan by calling (213) 943-1323 or completing the law firm’s online contact form.
Posted by Susan A. Rodriguez, Esq.
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For legal advice, contact an attorney at Law Offices of Susan A. Rodriguez, APC or an attorney actively practicing in your jurisdiction.
