SAN DIEGO EMPLOYMENT LAW CHECKLIST
By Ward Heinrichs Esq., San Diego Employment Attorney
Update to the 2018 Checklist for Employers and Employees – 2023
- Employee Handbooks
- Minimum Wage
- Sick Leave
- Vacation
- PTO-(see Vacation)
- Exempt Employees-(no significant change)
- The ABC’s of Independent Contractors
As stated in my 2018 article below, 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.
San Diego Employer Laws – 2018
San Diego employment attorney Ward Heinrichs is back on Big Blend Radio’s Success Express show, to share a checklist for San Diego employers and employees who want to understand their duties and rights.
Quick Checklist for San Diego Employers and Employees Who Want to Understand Their Duties and Rights
- Employee Handbooks
- Minimum Wage
- Sick Leave
- Vacation
- PTO
- Exempt Employees
- The ABC’s of Independent Contractors
Employee Handbooks are a road map for an employer’s policies and procedures. The employer must include certain policies in the handbook but should describe many other policies to provide clarity and fairness to employees. A good handbook can also provide defenses to employment claims. If the employer is small, it may decide not to have a handbook, but it still must have certain policies in writing. Even then, a handbook is still a good idea.
All employees, with very few exceptions, must receive minimum wage. Employers who fail to pay minimum wage face lawsuits in which the employee may recover the difference between what they were paid and the minimum wage, liquidated damages equal to the amount of unpaid minimum wage, and attorneys’ fees. Those lawsuits can be very costly, especially if more than one employee did not receive minimum wage. In California, the Minimum wage is $11 per hour for employers with 26 or more employees and $10.50 per hour for those who employ fewer than 26 employees. In the City of San Diego, the minimum wage is $11.50 per hour for all employers. Next year, the minimum wage for both California and San Diego will increase. At that time, California’s minimum wage may be larger than San Diego’s, but time will tell.
California requires a minimum of 24 hours of paid sick leave per year for all employees. Depending on how the employer implements its sick leave policy, employees can accrue more than 24 hours of sick leave in a year. In contrast, San Diego requires a minimum of 40 hours of sick leave and allows for accrual of additional sick leave hours, depending on the sick leave policy.
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 the employee when the employee quits or is terminated.
Paid Time Off (PTO) normally describes a hybrid of leave time for personal use (often vacation) and sick leave as defined by the PTO policy. Now that California and San Diego require paid sick leave, most employers should reconsider PTO policies. Sick leave is not a wage, so when an employee stops working for an employer, the employer need not pay the accrued sick leave to the employee. When a PTO policy combines vacation with sick leave, all of the PTO, including any amounts that may be used for sick leave, are a wage that must be paid out during employment or at the end of employment when the employee has a PTO balance. Most employers should now have separate polices for vacation and sick leave.
Exempt employees are those employees who are paid salaries and perform the higher-level work of a company. Think of managers, administrators, and professionals. They must use independent discretion and judgment when performing their jobs and must be relatively free to work under general direction and guidelines. They also must be paid a salary that equals at least two times the minimum wage. The general rule for payment of salary is: exempt employees must be paid for each week in which they perform any work. An employer may deduct a full day of an exempt employee’s salary when the employee does not work an entire day for personal reasons or when the employee misses an entire day for sickness and has no accrued sick leave, assuming the employer has a bona fide sick leave policy. An employer may also have a policy that requires employees to use vacation when the employee misses work for personal reasons or sickness, when the employee has no paid sick leave remaining. If the employer does improper deductions from a salary, the employee may be reclassified as non-exempt, and the employer may owe back wages and face other employment law violations.
In previous interviews and blogs, I have discussed the new ABC test for independent contractors. For that reason, I will not explain the details of it here. The new test will undoubtedly require more independent contractors to be classified as employees. The main reason for this is the “B” prong of the three-part ABC test: “That the worker performs work that is outside the usual course of the hiring entity’s business.” Now, I believe, the drivers for Uber will definitely be employees of Uber, not independent contractors as Uber has argued. Many similar situations to Uber exist in the San Diego and California economies.
Based in San Diego, California the Employment Law Office of Ward Heinrichs represents both employers and employees in almost all areas of labor law. He and his firm litigate cases that have been filed in many different parts of California. Visit www.BestEmploymentAttorneySanDiego.com
