A flurry of new laws went into effect at the start of the New Year, but the one that likely will have the biggest impact on tri-county employers has been long expected.
California’s minimum wage was raised to $10 an hour on Jan. 1, which has some businesses rethinking strategies. While proponents argue that higher wages would stimulate local economies, companies caution that the new law could lead to job cuts.
The increase not only affects hourly wages, but benefits packages, the minimum salary for exempt employees, commission workers, sick pay and other costs as well, said Trevor Large, a founding partner at Santa Barbara-based Buynak, Fauver, Archbald & Spray, which deals with employment law.
“I think that you may see fewer hirings, especially when it comes to summer months when retail or hospitality services typically staff up,” he told the Business Times. “There has been a lot of chatter from the fast-food chains and restaurants. We’ll see if automation creeps in and starts to replace workers.”
Take Firestone Walker Brewing Company. Adam Firestone is in the midst of expanding his Paso Robles-based brewing operations to Venice with a new taproom, but he will do so with fewer employees than once planned.
Firestone Walker eliminated its bar-backs and bussers. The company has replaced 10 employees with two “palletizers” – machines that load kegs onto pallets. Firestone said he plans to add one more machine.
“We used to hire high school football players who needed to work out during the summer lifting kegs. They loved it, they did squats all day,” Firestone said at the 2015 Ventura County Forecast in December. “This machine can run 24 hours a day, it doesn’t get overtime, it doesn’t get PTO, it can’t sue us.”
While California boasts a temperate climate, the hourly boost adds to the state’s less-than-enticing business environment, Firestone said.
The minimum wage hike is a result of legislation signed by Gov. Jerry Brown in 2013. Prior to 2014, it had been six years since a wage increase, according to the California Department of Industrial Relations.
The city and county of Los Angeles have pre-empted the wage hike with their own that would incrementally raise the rate to $15 an hour by 2020. That could prove to be a boon for neighboring counties and cities.
Brian Gabler, Simi Valley’s director of economic development and assistant city manager, said he’s talking to a handful of companies in LA that are looking to relocate to Simi and possibly elsewhere in Ventura County.
Also coming into play this year is the Fair Pay Act, which aims to close loopholes in existing anti-gender -discrimination laws to ensure equal pay between genders.
Not only would the bill, penned by Sen. Hannah-Beth Jackson, D-Santa Barbara, allow the discussion of pay among co-workers, it would force bosses to honestly respond to an employee’s inquiry on peers’ wages.
It also requires that men and women must be getting the same pay for “substantially similar” work. It is the employer’s responsibility to demonstrate that wages are comparable across related fields.
Substantially similar work could be housekeeping versus janitorial jobs — as long as they require similar skill, effort and responsibility, and are performed under comparable conditions.
The definition of “substantially similar” could be a sticking point, Large said.
“I would expect to see an increase in litigation as a result of this,” he previously told the Business Times.
The bill stipulates that bosses would have to explain and substantiate wage differentials through seniority, merit, quality or quantity of production, education, training and/or experience.
There is also a new law mandating that employers must pay piece rate workers for rest and meal periods, which must now be included on pay stubs.
The bill, authored by Assemblymember Das Williams, D-Santa Barbara, provides an estimated $200 million in back wage payments and also establishes a safe harbor for employers against lawsuits.
There has been an uptick in wage and hour lawsuits in Santa Barbara County, Large said, including ongoing claims filed against Vons and Sansum Clinic.
New non-employment laws
Some of the other non-employment related laws going into effect include Assemblymember Jacqui Irwin’s legislation that requires state agencies to evaluate their networks for cybersecurity threats and beef-up preventative measures.
Several other bills were signed resulting from the Refugio oil spill. Jackson’s SB 295 requires the California Fire Marshall to review oil pipeline conditions every year, instead of every two or more years.
SB 414, which would allegedly make oil spill response faster and more effective, was also signed.
Williams’ AB 864 requires intrastate pipelines in environmentally and ecologically sensitive areas along the coast to use the best technology, such as leak detection systems and automatic shutoff valves
• Contact Alex Kacik at [email protected]