Thelen Reid Brown Raysman & Steiner LLP

The 2006 session of the California Legislature produced several new laws that will impact the state's private sector employers. Below is an overview of the bills, signed by Gov. Schwarzenegger, that are most significant. The laws took effect on January 1, 2007.


Minimum Wage Increases

A.B. 1835 raises the state's minimum wage rate over two years from the current $6.75 an hour to $7.50 an hour on January 1, 2007, and to $8 an hour on January 1, 2008. The governor vetoed a more expansive proposal, S.B. 1162, that would have required automatic annual increases in the minimum wage rate indexed to inflation. Notably, these increases have the effect of increasing the minimum "salary basis" requirement to satisfy certain overtime exemptions (such as the administrative and executive exemptions).

For more information about minimum wage increases and their consequences for California employers, click here to read "California Raises Its Minimum Wage to $8.00 Per Hour." For a list of other states raising their minimum wage, click here.


'Supervisors' Subject to Sexual Harassment Training

A.B. 2095 amends Government Code §12950.1 to clarify the extent of mandatory sexual harassment training required under the statute. The law provides that employers must train their "supervisory employees." Confusion arose as to whether supervisors located outside California who supervise employees within the state were subject to the training requirements. This amendment clarifies that only supervisors located in California must receive the mandated training.


Accounting for Overtime Hours on Payroll Statements

A.B. 2095 amends Labor Code §204, which specifies the periods required for payment of wages. The statute provided that all wages earned by employees are due and payable twice each calendar month on days designated by the employer. However, "wages earned in excess of the normal work period" (overtime wages) may be paid by no later than the next consecutive payday. This statute was inconsistent with Labor Code §226 (a), which requires that employers provide each employee at the time of each payment of wages an itemized statement showing, among other things, the total hours worked by the employee during that pay period. AB 2095 reconciles these two conflicting requirements. The amendment essentially provides that an employer is in compliance with Labor Code §226 (a) if overtime hours worked in a current pay period but paid in the next consecutive period are "itemized as corrections on the paystub for the next regular pay period." The amendment further requires that such corrections state "the inclusive dates of the pay period for which the employer is correcting its initial report of hours worked."


State Discrimination and Harassment Materials Available Online

A.B. 1806 amends Government Code §12950 to require that the California Department of Fair Employment and Housing make available online its employment discrimination poster (Form 162) and sexual harassment information sheet (Form 185). Employers must post the poster in a prominent and accessible location in their facilities and distribute the harassment sheet to all employees. These materials may be downloaded from the DFEH Web site.


Bills Vetoed

A number of other bills of significant interest to California employers were vetoed by Gov. Schwarzenegger. These bills include:

		AB 2555: Increased Penalties for Gender Pay Equity Violations. This bill would have increased the civil penalties to employers for violating gender pay equity statutes and would have required employers of 50 or more employees to provide employees with a written statement setting forth their job title, wage rate and an explanation as to how the their wages are calculated.
		AB 1884: Unemployment Compensation for Strikers. This bill would have allowed strikers and employees locked out as a result of a labor dispute to receive unemployment insurance benefits.
		SB 1745: Anti-Discrimination Protection for Domestic Violence Victims. This bill would have prohibited an employer or its employees from subjecting a victim of domestic violence, sexual assault or stalking to harassment or discrimination in employment because of that status.
		SB 840 and 1414: Employer-Funded Universal Health Care. These two Senate bills would have established a single-payer universal health care system in California, funded in part by contributions from large employers.

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For more information about the issues covered in this report, please contact Linda S. Husar in our Los Angeles office at 213-576-8017 or at lshusar@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.





©2007 Thelen Reid Brown Raysman & Steiner LLP