2022 brought several significant decisions from the California Supreme Court, from decisions about meal and rest period penalties to burden shifting for whistleblower retaliation claims.

Here are some of the cases currently pending before the state’s high court that employers should be watching and what they mean for employment law in the Golden State.

PAGA & Arbitration

Estrada v. Royalty Carpet Mills

In the underlying case, plaintiffs brought a Private Attorneys General Act (PAGA) claim and class claims primarily based on purported meal and rest period violations. The trial court dismissed the PAGA claim as “unmanageable” due to the number of individualized issues.

The Court of Appeal found courts do not have the discretion to strike a PAGA claim based on manageability. The Court of Appeal held doing so would also interfere with PAGA’s purpose as a law enforcement mechanism by placing an extra hurdle on PAGA plaintiffs that are not placed on the state.

Estrada was decided after another district in the California Court of Appeal held that trial courts do have inherent authority to narrow or strike PAGA claims based on manageability. The California Supreme Court’s decision will remedy the split between districts. If the Court overturns Estrada, it will provide employer-defendants with a powerful tool in PAGA actions.

Quach v. California Commerce Club, Inc.

At the trial level, the defendant, California Commerce Club, Inc., filed a petition to compel arbitration after 13 months of discovery.

Quach argued that Commerce Club had waived its right to arbitrate by waiting 13 months to move to compel arbitration, and by engaging in extensive discovery during that period. Quach claimed the delay prejudiced him by forcing him to expend time and money preparing for litigation.

The trial court agreed, finding Commerce Club had waived the right to arbitrate by propounding a “large amount of written discovery,” taking Quach’s deposition, and expending “significant time meeting and conferring.”

The Court of Appeal disagreed with the trial court, stating that the California Supreme Court has made clear that participation in litigation alone cannot support a finding of waiver, and fees and costs incurred in litigation alone will not establish prejudice on the part of the party resisting arbitration.

The California Supreme Court granted review on the question and is expected to resolve California’s test for waiver of the right to compel arbitration in light of the United States Supreme Court’s decision in Morgan v. Sundance, Inc., which held a party is not required to show prejudice to establish an opposing party’s waiver of its right to arbitrate.

The decision in Quach will provide clarity on the waiver issue and on the application of Morgan in the state courts.

Ramirez v. Charter Communications, Inc.

In this matter, Ramirez and Charter Communications, Inc. (Charter) were parties to an arbitration agreement. After Charter terminated Ramirez’s employment, Ramirez filed suit alleging claims under the Fair Employment and Housing Act. Charter moved to compel arbitration. Finding the arbitration agreement unconscionable, the trial court denied Charter’s motion and Charter appealed.

On appeal, Charter contended the trial court erred in concluding the arbitration agreement was unconscionable and in refusing to sever any provisions the court considered unconscionable.

The Court of Appeal affirmed the trial court’s order denying the motion to compel arbitration due to unconscionability, taking particular issue with the agreement’s provision for an award of attorney’s fees to the prevailing party on a motion to compel arbitration.

The California Supreme Court granted review on the question: did the Court of Appeal err in holding that a provision of an arbitration agreement allowing for recovery of interim attorney’s fees after a successful motion to compel arbitration was so substantively unconscionable that it rendered the arbitration agreement unenforceable?

The decision by the California Supreme Court will affect future enforcement of employment arbitration agreements, especially where the agreement’s terms include fee-shifting provisions. Regardless of the decision’s outcome, employers will need to review their agreements to ensure the terms cannot be interpreted as unfairly one-sided. Arbitration agreements should also contain severability clauses compliant with existing law.

Turrieta v. Lyft

In 2018, Plaintiffs Olson, Seifu, and Turrieta each filed a representative action against Lyft under PAGA. They alleged that Lyft misclassified its California drivers as independent contractors rather than employees in violation of multiple provisions of the Labor Code. Following mediation in 2019, Turrieta and Lyft reached a settlement.

After Turrieta moved for court approval of the settlement, Olson and Seifu sought to intervene in the matter and object to the settlement. They argued that Lyft had engaged in a “reverse auction” by settling with Turrieta for an unreasonably low amount and that the settlement contained other provisions that were unlawful and inconsistent with PAGA’s purpose. By settling Turrieta’s PAGA claims, encompassing all employees similarly aggrieved by Lyft’s alleged misclassification, Lyft foreclosed Olson and Seifu from pursuing their own PAGA suits on the same grounds.

The trial court rejected the appellants’ requests to intervene, finding that the appellants lacked standing.

The Court of Appeal agreed with the trial court that Olson and Seifu’s status as PAGA plaintiffs in separate actions does not confer standing to move to vacate the judgment or challenge the judgment on appeal.

The Supreme Court limited review to the following issue: do plaintiffs who brought representative actions under PAGA have the right to intervene, object, or move to vacate a judgment in a separate PAGA case that would effectively terminate their own actions?

The decision will greatly affect the future handling of competing or overlapping PAGA actions and the strategies defendants may employ to efficiently resolve them.

Discrimination, Harassment & Retaliation

People ex rel. Garcia-Brower v. Kolla’s Inc.

In this case, a complainant filed a timely retaliation complaint with the Division of Labor Standards Enforcement (“DLSE”) alleging that when she complained to her employer about non-payment of wages, her employer threatened to call immigration authorities and fired her. The DLSE determined that respondents had violated several Labor Code sections, including section 1102.5, which prohibits retaliation for “disclosure” of a violation of law to a governmental agency, to “a person with authority over the employee,” or to “another employee who has the authority to investigate …” the alleged violation of law.  The DLSE ordered the respondents to pay lost wages and civil penalties for violation of sections 1102.5 and 98.6. The respondents did not comply.

On October 17, 2017, the Labor Commissioner filed an enforcement action against the respondents under Labor Code section 98.7(c)(1). Respondents did not file an answer, and the Labor Commissioner sought to take a default judgment.

The trial court ruled that the Labor Commissioner had not stated a claim under section 1102.5 because the complainant had not approached a governmental agency until after her termination.

The Court of Appeal disagreed with the trial court’s reasoning, but nevertheless affirmed the denial of the section 1102.5 claim on the basis that the DLSE did not properly allege “disclosure” to her supervisor. The court reasoned that it was obvious from the context that the employer already knew about the violation, and thus no “disclosure” was made.

The question before the California Supreme Court is limited to whether section 1102.5(b) protects employees from retaliation for disclosing unlawful activity when the information is already known to that person or agency.

Depending on the direction the California Supreme Court takes, its holding will affect the type of complaints that can serve as grounds for a whistleblower action and the defenses available to employers.

Bailey v. San Francisco District Attorney’s Office, et al.

In the underlying case, an employee with the San Francisco District Attorney’s Office alleged discrimination, harassment, and derivative claims based upon a single incident in which a co-worker allegedly used a highly offensive racial slur. At the trial level, the District Attorney’s office was awarded summary judgment. The court ruled this single incident by a non-supervisor was not severe or pervasive enough to permit the plaintiff’s claims to proceed to a trial. The California Court of Appeal affirmed the decision.

In a rare less-than-unanimous vote, the California Supreme Court granted review on whether the Court of Appeal properly affirmed summary judgment in the defendant’s favor on the plaintiff’s claims.

Employers should watch this case for how the decision will affect the standards for hostile work environment claims and the level of severity required to establish a hostile work environment.  

Wage and Hour

Iloff v. LaPaille

In this case, the plaintiffs filed wage claims with the Division of Labor Standards Enforcement (DLSE) against defendants Cynthia LaPaille and Bridgeville Properties, Inc. (BPI) for unpaid wages in violation of the Labor Code. The plaintiffs received a favorable order from the Labor Commissioner, and BPI appealed to the superior court. In the subsequent superior court action, the plaintiffs were represented by the Labor Commissioner’s office.

Following a de novo trial on the wage claims, the court found plaintiffs were entitled to unpaid wages and certain penalties but rejected the plaintiffs’ unfair competition law claims under Business and Professions Code § 17200 (the UCL). The court declined to award the plaintiffs liquidated damages, penalties for violations of sick leave notice requirements, and did not impose personal liability on BPI’s CEO, Cynthia LaPaille.

On review, the Court of Appeal reversed the trial court, holding that LaPaille may be held personally liable due to her managerial role with BPI under Labor Code § 558.1(a), which expressly permits personal liability for individuals “acting on behalf of an employer.” 

The Court of Appeal affirmed, however, the denial of liquidated damages for failure to pay minimum wages under Labor Code § 1194.2(a). This statute allows the court to reduce or eliminate such damages where the employer can show it acted in “good faith” with “reasonable grounds” for believing it did not violate the law. Here, because the plaintiffs initiated the idea of working in exchange for rent, rather than wages, as an independent contractor, and the unsettled status of the law on this subject at the time, the trial court acted within its discretion in finding the defendants acted in good faith.

The Court similarly affirmed the denial of awards under the UCL. Because the UCL provides only for equitable relief, the trial court had discretion as to whether such an award would be in the interest of justice, even where Labor Code violations exist. Because the parties appeared to lack understanding as to the plaintiff’s entitlement to wages for the services they performed for BPI, the Court of Appeal found the trial court properly exercised its discretion.

The Court of Appeal also held Plaintiffs do not have a private right of action for sick leave penalties, which require independent action by the Labor Commissioner or Attorney General’s office. Even though the plaintiffs were represented by the Labor Commissioner in their superior court action, this did not suffice to permit their pursuit of sick leave penalties.

 The California Supreme Court granted review limited to the following issues:

(1) Must an employer demonstrate that it affirmatively took steps to ascertain whether its pay practices comply with the Labor Code and Industrial Welfare Commission Wage Orders to establish its “good faith” defense to liquidated damages?

(2) May a wage claimant prosecute a paid sick leave claim in a de novo wage claim trial conducted pursuant to Labor Code section 98.2?

Employers should watch this matter for not only how it may affect potential damages in wage and hour litigation for seemingly innocent violations, but also the effect it could have on appeals from Labor Commissioner decisions.

Workplace Safety

Kuciemba v. Victory Woodworks

In the matter of Corby and Robert Kuciemba vs. Victory Woodworks, Inc., Mr. and Mrs. Kuciemba both tested positive and were hospitalized with COVID-19. Though Mr. Kuciemba was no longer an employee of Victory Woodworks at the time he tested positive, he claimed that he contracted the virus from his former worksite and filed a claim for workers’ compensation. Mrs. Kuciemba also filed a lawsuit against Victory Woodworks on various negligence theories.

The district court rejected Mrs. Kuciemba’s argument, finding that she failed to plead a plausible claim. Specifically, the Court found the employer’s duty was only to provide a safe workplace to its employees.  The Court found this duty did not extend to nonemployees who are later found to have contracted a viral infection away from the workplace.

The Kuciembas appealed to the 9th Circuit of the U.S. Court of Appeals. The 9th Circuit asked the California Supreme Court to weigh in on two questions:

1. If an employee contracts COVID-19 at his workplace and brings the virus home to his spouse, does California’s derivative injury doctrine bar the spouse’s claim against the employer?

2. Under California law, does an employer owe a duty to the households of its employees to exercise ordinary care to prevent the spread of COVID-19?

Employers should watch this case, as the California Court of Appeal recently decided in a separate but similar case that an employer may be sued for an employee’s exposure to COVID-19. The decision by the California Supreme Court will clarify employers’ potential liability to not only employees but their households for exposure to COVID-19 in the workplace.

Jackson Lewis continues to track California case law affecting employers. If you have questions about any of the cases pending before the California Supreme Court or related issues, contact a Jackson Lewis attorney to discuss.

On December 15, 2022, the Cal/OSHA Standards Board held its final meeting of 2022 and adopted the COVID-19 Prevention Non-Emergency Regulations. The COVID-19 Emergency Temporary Standards (ETS)will continue to remain in effect while the Office of Administrative Law (OAL) reviews the non-emergency standard.

Once approved by OAL, the non-emergency standard will remain in effect for two years.

Changes from ETS

  • Modified Masking Requirements. Certain mask requirements have been removed from the permanent standard. For example, the definition of an “exposed group” still contains a “momentary pass-through” exception. Previously, this exception required that all individuals be masked to take advantage of this exception.  Now, it has been broadened to include individuals who are not masked. As re-defined, the momentary pass-through exception applies to a place where persons momentarily pass through without congregating.
  • Reduced Reporting Requirements. Employers will no longer be required to report outbreaks to the local health department under the permanent standard. Moreover, a COVID-19 outbreak can be deemed over when “one or fewer” new cases are detected in the exposed group for a 14-day period. An investigation, review, and correction of hazards following an outbreak no longer will be required to be “immediate” following an outbreak.

Continuation from ETS

  • Testing and Notice Requirements Remain. Under the new permanent standard, employers will still be required to provide testing and employee notices after exposure. This is in line with recent legislation extending certain COVID-19 exposure requirements until 2024.
  • Recordkeeping Requirements.  Employers will still be required to maintain records of workers’ infections, but they will not need to maintain records of employees deemed a close contact.
  • Updated Definition of “Close Contact.”  The definition of “close contact,” which is important for purposes of notice, also continues to be linked to the California Department of Public Health definition.

Exclusion Pay

As currently drafted, the new standards do not require employers to provide exclusion pay.  During the December 15th hearing to adopt the new standards, the Standards Board members expressed dissatisfaction with this change.  The Board indicated that it would add exclusion pay to the Board’s January 2023 agenda. Employers will have to wait to see if this provision is added back to the new non-emergency standard.

Jackson Lewis will continue to track COVID-19 regulations and requirements into the endemic phase. If you have questions about the Cal/OSHA COVID-19 Standards or related workplace safety issues, please reach out to the Jackson Lewis attorney with whom you often work or any member of our Workplace Safety and Health Team.

Over the summer, several cities considered and even passed a $25.00 minimum wage for healthcare workers.

The Cities of Inglewood and Duarte sent the ordinances for consideration to voters. Only the City of Inglewood measure was successful.

The new $25.00 minimum wage applies to private-sector healthcare workers who work in hospitals, integrated health systems, and dialysis clinics in Inglewood.

The new minimum wage will apply to clinicians, nurses, certified nursing assistants, aides, technicians, maintenance workers, janitorial or housekeeping staff, groundskeepers, guards, food services workers, laundry workers, and pharmacists but does not include managers or supervisors.

The ordinance will then have to go through the process of being affirmed by the City Council and will take effect 30 days after approval by the Council.

Since the summer, Los Angeles and Long Beach’s health worker minimum wage have been suspended pending ballot measures in 2024.

Jackson Lewis will continue to track changes in state and local regulations affecting employers. If you have questions about the healthcare minimum wage ordinances or related issues, contact a Jackson Lewis attorney to discuss.

At the start of 2022, a new version of California’s COVID-19 Supplemental Paid Sick Leave (SPSL) was passed and initially planned to expire on September 31, 2022. But before it could expire, the legislature extended SPSL with some minor changes to continue through the end of 2022.  

The question many employers have as the year runs out is, will SPSL be extended further?

The answer at this point is no. The California legislature did head back early for a special session, but thus far, no legislation has been proposed to extend the statewide SPSL. And in October, Governor Newsom announced a plan to end the COVID-19 State of Emergency on February 28, 2023, highlighting the state’s view of plan to move out of a crisis stage.

While it appears that the state SPSL will expire, there are still local COVID-19 supplemental paid sick leave ordinances in effect in the Cities of Oakland, Long Beach, Los Angeles, and the County of Los Angeles.

All of the ordinances except Long Beach specify they will expire 2 weeks after the “COVID-19 local emergency” expires, which is separate from the state of emergency. The Long Beach City Council will determine the sunset date based on quarterly reports from the City Manager. The City of Los Angeles has announced it will lift its state of emergency on February 1, 2023, which would mean the City of Los Angeles’ supplemental paid sick leave would expire on February 15, 2023. No other cities have indicated when they will lift their local emergency.

In addition to local SPSL, in October San Francisco voters passed a new Public Health Emergency Leave Ordinance (PHELO), which provides leave for employees of employers with 100 or more employees worldwide related to public health emergencies. Currently, COVID-19 continues to qualify as a public health emergency for purposes of the PHELO.

Jackson Lewis will continue to track leave laws that affect California employers. If you have questions about COVID-19 SPSL or related leave issues, contact a Jackson Lewis attorney to discuss.

As defined by Labor Code section 350, a “tip” or “gratuity” includes any money that has been paid, given to, or left for an employee by a patron of a business over and above the actual amount due to the business for services rendered. Tips or gratuities are distinguishable from “service charges,” which are amounts a patron is required to pay based on a contractual agreement or a specified required service amount.

Labor Code section 351 provides that employers may not take or receive an employee’s tips. Unlike federal law, California law also prohibits employers from using tips as a “credit” towards the obligation to pay minimum wage.  Federal regulations relating to “tip credits” do not apply in California.

Because tips and gratuities are additional amounts left by customers and not payments for services rendered, they are not included in the calculation of an employee’s regular rate of pay used in overtime pay and meal or rest period premiums.

While employers may not take or receive tips, the California Labor Commissioner and California courts have opined that mandatory tip-pooling policies are permissible.  The tip pool may not be used to compensate owners, managers, or supervisors of the business.   There is no per se rule regarding the percentage of tips that an employer can mandate be contributed to a pool.  Issues such as which employees may participate in the tip pool are fact-specific and generally dependent on things like the chain of service and industry norms.  In general, employees who have no customer or client interaction and are not “in the chain of service” should not be included in the tip pool.

If you have questions about handling employee tips and tip pooling, contact a Jackson Lewis attorney to discuss.

On December 31, 2022, Cal/OSHA’s COVID-19 Emergency Temporary Standards (ETS) finally sunset. However, the Standards Board has been working to pass a permanent standard to ensure it is in place before the expiration of the ETS. The Board has announced it will be voting on the permanent standard at its upcoming meeting on December 15th.

Of note, while it is called a permanent standard, the proposed standard includes a two-year sunset, consistent with the recognition that COVID-19 is now moving into its endemic phase.

As employers prepare for a permanent standard here are some of the highlights of what will stay the same and change from the ETS.

Changes from ETS

  • End of Exclusion Pay.  One of the biggest changes in the permanent standard is that exclusion pay will no longer be required to compensate employees who miss work due to an employer-caused COVID-19 exposure.
  • Modified Masking Requirements. Certain mask requirements have been removed from the permanent standard. The definition of an “exposed group” still contains a “momentary pass-through” exception. This exception is being broadened to include individuals who are not masked. As re-defined, the momentary pass-through exception applies to a place where persons momentarily pass through without congregating, provided that it is not a work location, working area, or a common area at work.
  • Reduced Reporting Requirements. Employers will no longer be required to report outbreaks to the local health department under the permanent standard. Moreover, a COVID-19 outbreak can be deemed over when “one or fewer” new cases are detected in the exposed group for a 14-day period. An investigation, review, and correction of hazards following an outbreak no longer will be required to be “immediate” following an outbreak.

Continuation from ETS

  • Recordkeeping Requirements.  Employers will still be required to maintain records of workers’ infections, but they will not need to maintain records of employees deemed a close contact.
  • Updated Definition of “Close Contact.”  The definition of “close contact,” which is important for purposes of notice, also continues to be linked to the California Department of Public Health definition.

Jackson Lewis will continue to track COVID-19 regulations and requirements into the endemic phase. If you have questions about the Cal/OSHA COVID-19 Standards or related workplace safety issues, please reach out to the Jackson Lewis attorney with whom you often work or any member of our Workplace Safety and Health Team.

In early 2021, the 9th Circuit upheld federal preemption of California’s meal and rest break laws for interstate motor carrier drivers, in the consolidated case of International Brotherhood of Teamsters v. Federal Motor Carrier Safety Administration. In that matter, the 9th circuit held the Federal Motor Carrier Safety Administration (FMCSA)’s determination that federal law preempts California’s meal and rest break rules for interstate motor carriers subject to the FMCSA’s rest break regulations was a permissible interpretation.

The 9th Circuit panel revisited the issue in Valiente v. Swift Transportation.  The issue presented was whether the decision in International Brotherhood of Teamsters barred plaintiffs from proceeding with lawsuits that commenced before the decision was issued.

The plaintiffs argued against the retroactive application. The 9th Circuit applied a two-step test for retroactivity, holding under the first step that because Congress clearly intended for the FMSCA to have the power to halt enforcement of state laws, and because the FMSCA intended for this particular preemption determination to apply to pending lawsuits, the FMSCA’s decision prohibits present enforcement of California’s meal and rest break rules regardless of when the underlying conduct occurred.

The 9th Circuit did not reach the second step of the test for retroactivity of a decision.

This ruling means that any case filed after the FMCSA’s determination in 2018, and continuing through the present, would be barred by the 9th Circuit’s prior decision in International Brotherhood of Teamsters.

Jackson Lewis continues to track case law applicable to California employers. If you have questions about the application of this case or related issues, contact a Jackson Lewis attorney to discuss.

2023 was supposed to be the year that all California employers would be subject to the same minimum wage of $15.00 per hour.  However, inflation has triggered a further increase. Effective January 1, 2023, the state minimum wage for all California employers will be $15.50.

Some cities and counties raised the minimum wage rate that may be paid in their jurisdictions on July 1, 2022.  In addition, several local municipalities will also increase their minimum wage rates at the start of the new year.  Those localities include the following:

LocaleRate
Belmont$16.75
Burlingame$16.47
Cupertino$17.20
Daly City$16.07
East Palo Alto$16.50
El Cerrito$17.35
Foster City$16.50
Half Moon Bay$16.45
Hayward$15.50 (1-25 employees)
$16.34 (26 or more employees)
Los Altos$17.20
Menlo Park$16.20
Mountain View$18.15
Novato$16.32 (100+ employees
$16.07 (26-99 employees)
$15.52 (1-25 employees)
Oakland$15.97
Palo Alto$17.30
Petaluma$17.06
Redwood City$17.00
Richmond$16.17
San Carlos$16.32
San Diego$16.25
San Jose$17.00
San Mateo$16.75
Santa Clara$17.20
Santa Rosa$17.06
Sonoma$16.00 (1-25 employees)
$17.00 (26 or more employees)
South San Francisco$16.70
Sunnyvale$17.95
West Hollywood$17.00 (1-49 employees)
$17.50 (50 or more employees)

Employers should ensure that their minimum wage postings are updated appropriately to reflect the upcoming state and local increases.

To ensure your company has up-to-date minimum wage information, subscribe to Jackson Lewis’ Minimum Wage Watch, which provides alerts on changes in the minimum wage in California and around the country.

If you have questions about complying with state or local minimum wage laws, contact a Jackson Lewis attorney to discuss.

Today, November 29, 2022, the Los Angeles City Council passed the Fair Work Week Ordinance on the second reading. The ordinance now goes to the mayor for final approval. If approved by the mayor, it will take effect on April 1, 2023.

Covered Employers

Under the ordinance, covered employers are defined as those businesses identified as a retail business under the North American Industry Classification System (NAICS) and employ 300 employees globally. Individuals employed through staffing agencies, and employees of certain subsidiaries and franchises count towards the 300-person total.

Covered Employees

Anyone working in the City of Los Angeles two hours or more per week for a covered employer and who is entitled to minimum wage under the state Labor Code and Wage Orders is covered by the new ordinance.

Obligations of Covered Employers

The ordinance sets forth specific requirements for covered employers in the handling of scheduling practices and procedures. The following is an overview of some of the requirements:

  • Covered employers shall provide each new employee before hiring a written good faith estimate of the employee’s work schedule.
  • Covered employers shall provide a written good faith estimate of the employee’s schedule within 10 days of an employee’s request.
  • Employees have a right to request a preference for certain hours, times, or locations of work. Covered employers may accept or decline requests, provided the employer notifies the employee in writing of the reason for any denial.
  • Covered employers shall provide an employee with written notice of the employee’s schedule at least 14 calendar days before the start of the work period.
  • Before hiring a new employee, covered employers shall first offer the work to current employees.
  • An employer shall not schedule an employee to work a shift that starts less than 10 hours from the employee’s last shift without written consent. Covered employers shall pay an employee a premium of time and a half for each shift not separated by at least 10 hours.
  • Covered employers shall post notice informing employees of their rights under the ordinance.

Predictability Pay

Under the new ordinance, employers shall provide predictability pay when a covered employee has agreed to a change in their work schedule after the advance notice requirements under the ordinance. The employee is entitled to one additional hour of pay at their regular rate for each change to a scheduled date, time, or location that does not result in a loss of time to the employee or does not result in additional work time that exceeds 15 minutes. An employee is entitled to one-half of the employee’s regular rate of pay for the time the employee does not work if the employer reduced the employee’s work time listed by at least 15 minutes.

Penalties and Right to Cure

Employees will be required to give employers written notice of any alleged violations and an opportunity to cure them before filing a claim with the City of Los Angeles. Employers will have 15 calendar days to cure alleged violations after notice.

The City of Los Angeles can recover up to $500 per violation per employee.

If you have questions about the Los Angeles Fair Workweek Ordinance or related issues, contact a Jackson Lewis attorney to discuss.

In order for an employee to be deemed exempt from overtime regulations under California law, the employee must fit into a category of work that is deemed exempt. The most common exemption is the executive, administrative, and professional exemption, which includes workers who are employed in administrative, managerial, executive, or professional capacities. There are also detailed requirements as to the amount of work performed in certain areas and most employees must also meet a minimum salary threshold, which for most of the exempt categories, is no less than two times the state minimum wage for full-time employment (40 hours).

However, for certain exempt categories, the Department of Industrial Relations (DIR) sets the minimum monthly salary based on increases to the California Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI). Under Labor Code section 515.5, certain computer software employees are one of the professions that must be paid a statutorily specified rate in order to be deemed exempt from overtime regulations.

Effective January 1, 2023, the minimum hourly rate for computer software employees to meet the exemption will be $53.80, with a minimum monthly salary of $9,338.78 (annually $112,065.20). The current rates are $50.00 per hour, $8,679.16 minimum monthly salary, and $104,149.81 annually.

Similarly, under Labor Code section 515.6, certain licensed physicians and surgeons must be paid a statutorily specified rate to be deemed exempt from overtime regulations.  Effective January 1, 2023, the minimum hourly rate for licensed physicians and surgeons to meet the exemption will be $97.99. The current hourly rate is $91.07

If you have questions about overtime exemption requirements or related issues, contact a Jackson Lewis attorney to discuss.