California Employment Law Update – February 2019

California

Payroll Processors and Paycheck Errors

On February 7, 2019, California Supreme Court decision in Goonewardene v. ADP, LLC, Cal. (No. S238941) found that an independent payroll service provider (payroll company) may not be held liable by employees for paycheck errors. This case presented the question of whether, when an employer hires a payroll company to take over all the payroll tasks that would otherwise be performed by an internal payroll department, the employee may bring a civil action against not only his or her employer but against the payroll company as well. The court found an employee cannot bring a civil action against the payroll company.

According to Cal. Labor Code § 1194, an employee who believes he or she has not been paid the wages due under the applicable labor statutes and wage orders may bring a civil action against his or her employer. The court held that “[i]t is neither necessary nor appropriate to impose upon a payroll company a tort duty of care with regard to the obligations owed to an employee under the applicable labor statutes and wage orders and consequently that the negligence and negligent misrepresentation causes of action lack merit.” In other words, employees may not bring suit against a payroll company for their unpaid wages under the following tort claims because the processor is not their employer:

  • Breach of contract with the employer;
  • Negligence; or
  • Negligent misrepresentation.

The court further clarified that employees are not third-party beneficiaries who may bring a claim against a payroll company for a breach of contract between the processor and the employer for wage payments.

Read the case

Daly City Minimum Wage Enacted

On January 14, 2019, the City Council of Daly City adopted the Daly City Minimum Wage Ordinance (Ord. No. 1425) that increases the local minimum wage to $15 by 2021. The local minimum wage will increase at a faster pace than the state minimum wage schedule and is as follows:

  • $12 per hour effective February 13, 2019.
  • $13.75 per hour effective January 1, 2020.
  • $15 per hour effective January 1, 2021.
  • From January 1, 2022 and thereafter, the minimum wage will annually adjust based on the regional Consumer Price Index.

This local minimum wage applies to all businesses and employees that work two or more hours per week within the boundaries of Daly City.

See the city’s minimum wage page and read Ord. No. 1425

Agricultural Workers and Required Overtime Compensation

On January 1, 2019, the California Industrial Welfare Commission released an updated Wage Order No. 14-2001 (IWC No. 14-2001) regulating the wages, hours, and working conditions of employees in agricultural occupations. Under IWC No. 14-2001, employers of more than 25 employees in agricultural occupations must comply with the following overtime compensation requirements:

  1. Starting January 1, 2019, an employee may not work more than nine and one-half hours per workday or 55 hours per workweek unless the employee receives one and one-half times his or her regular rate of pay for all hours worked over nine and one-half hours in any one workday or more than 55 hours in any one workweek.
  2. Starting January 1, 2020, an employee may not work more than nine hours per workday or fifty hours per workweek unless the employee receives one and one-half times his or her regular rate of pay for all overtime hours worked over nine hours in any one workday or more than 50 hours in any one workweek.
  3. Starting January 1, 2021, an employee may not work more than eight and one-half hours per workday or 45 hours per workweek unless the employee receives one and one-half times his or her regular rate of pay for all hours worked over eight and one-half hours in any one workday or more than forty-five hours in any one workweek.
  4. Starting January 1, 2022, an employee may not work more than eight hours per workday or work in excess of 40 hours per workweek unless the employee receives one and one-half times his or her regular rate of pay for all hours worked over eight hours in any workday or more than 40 hours in any workweek and double the employee’s regular rate of pay for all hours worked over 12 hours in any one workday.

The wage order requires the following for employers with 25 or fewer employees in agricultural occupations to comply with the following overtime compensation requirements (in direct correlation to the above bulleted list):

  1. Starting January 1, 2022, the overtime standards and compensation in Bullet #1 applies to any employee who works over the specified threshold hours in any one workday or workweek.
  2. Starting January 1, 2023, the overtime standards and compensation in Bullet #2, applies to any employee who works over the specified threshold hours in any one workday or workweek.
  3. Starting January 1, 2024, the overtime standards and compensation in in Bullet #3, applies to any employee who works over the specified threshold hours in any one workday or workweek.
  4. Starting January 1, 2025, the overtime standards and compensation in Bullet #4, applies to any employee who works over the specified numbers of hours in any one workday or workweek.

The wage order took effect on January 1, 2019.

Read IWC No. 14-2001