This article briefly summarizes federal and state employment law changes that will affect employers in January of 2020. State information is included for Arizona, Colorado, California, and New Mexico. There are no significant changes on the books for early 2020 in Utah and Wyoming.
Amendments to the FLSA
Effective January 1, 2020, a final rule issued September 24, 2019, by the US Department of Labor (DOL) amends the Fair Labor Standards Act (FLSA) regulations to:
- Increase the minimum annual salary for most exempt employees paid on a salary basis from its current level of $455 per week (or $23,660 per year) to $684 per week (or $35,568 per year);
- Allow employers to count nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the standard salary level test, as long as they are paid annually or more frequently; and
- An increase from $100,000 to $107,432 the minimum annual salary for highly compensated employees who face a looser duties test.
The DOL estimates an additional 1.3 million workers who are currently overtime-exempt are projected to become eligible for overtime unless their employers reorganize to avoid payment of overtime pay.
New W-4 form
All New Hires Must Be Provided Redesigned IRS Form W-4
Arizona’s minimum wage increases to $12.00 an hour, except in Flagstaff, where it increases to $13.00 per hour.
The minimum wage rate in Colorado increases from $11.10 to $12.00 on January 1, 2020, as required by the state constitution.
The minimum direct cash wage for tipped employees increases from $8.08 to $8.98.
Denver hiked its local minimum wage to $12.85 per hour effective Jan. 1, becoming the first local government in Colorado to set its minimum higher than the statewide level per a new statute passed by the legislature in 2019.
Equal Pay for Equal Work Act
Governor Polis signed the Equal Pay for Equal Work Act in May 2019.
- The law forbids discrimination between genders based on pay and includes a newly created right for employees who have suffered such discrimination to sue their employer. The law also requires that companies post all job openings internally and list a salary range for the position, and forbids employers from asking about salary history.
- The new law permits employees who have been discriminated against to recover back pay for a period of up to three years, and further awards additional damages equal to the amount of back pay owed unless the employer can demonstrate that they acted in good faith. The law does include a provision stating that any Pay Equity Analysis that an employer undertakes within two years of a lawsuit will be taken as evidence of the employer’s good faith.
- The law does not take effect until January 2021, but employers would be wise to start preparing now.
Employees who believe this law has been violated can begin filing lawsuits in court on January 1, 2021.
Effective January 1, 2020, the Colorado wage payment law is amended to provide that an employer that willfully refuses to pay wages or other forms of compensation due to an employee commits wage theft. Wage theft will be considered a felony (previously a misdemeanor) if the amount not paid is $2,000 or more. Payment of less than the minimum wage will be regarded as theft.
These penalties will apply to all employers subject to the federal Fair Labor Standards Act, and foreign labor contractors and migratory field labor contractors or crew leaders (excluding federal, state and local government entities), in addition to any other applicable penalties.
The amendments also define an employee as anyone who performs labor or services for the benefit of an employer (subject to already existing exclusions) and provide factors relevant for determining whether a worker is an employee under the Colorado Wage Claim Act.
Organ Donor Tax Break
Under the Living Organ Donor Support Act, an employer that chooses to provide employees with a paid leave of absence for the purpose of organ donation is eligible for an income tax credit that is equal to 35 percent of the expenses incurred in paying an employee during his or her leave of absence and for the cost of temporary replacement help, if any, during the employee’s absence.
The leave of absence may not exceed ten working days (or the hourly equivalent of ten working days) per employee. The tax credit does not apply to a leave period in which an employee uses any employer-provided annual leave or sick days or to an employee who is paid $80,000 or more during the tax year.
The law is effective August 8, 2018, and applies to income tax years beginning on or after January 1, 2020, but before January 1, 2025.
Unclaimed Wages law is amended
The following amendments to the state unclaimed wages reporting requirements take effect July 1, 2020:
- Amounts loaded onto paycards are considered wages for purposes of unclaimed wages.
- The date that triggers the requirement to file a report will change to July 1, from June 30.
- The amount of unclaimed wages that triggers the employee-notification requirement will change to $25 or more, from $50 or more.
- The time within which an employer must notify an employee that the employer is holding unclaimed wages before filing a report with the Colorado Treasury Department will change to 180 days, from 120 days.
- Small employers and tax-exempt organizations are no longer exempt from reporting requirements.
Employers in California are again subject to a host of legal changes concerning their workplaces for 2020. Please see below for a sample of some significant legal changes taking place in California starting on January 1, 2020.
Employers Council will offer a live and recorded webinar to spotlight specific legal changes for California employers on December 12, 2019, from 11:00 a.m. to 12:30 p.m. MST. For more information, click here, or contact CAInfo@EmployersCouncil.org or Registration@EmployersCouncil.org.
Please note that the list below is not exhaustive of all the upcoming changes but highlights the immediate changes that will occur in January 2020 and the changes that we anticipate will impact our members most. Our webinar will cover the rest.
Employers Council maintains a listing of current and future minimum wage rates as they apply to various California localities for members. Please refer to this listing for specific information on the many different minimum wage rates in effect in California for 2020.
Civil Penalties for Unpaid Wages
SB 688 expands the Labor Commissioner’s citation authority to include situations where an employer has promised to pay an employee more than minimum wage but failed to do so. Previously, the citation mandate was limited to situations where employees were paid less than minimum wage.
Penalties for Failure to Pay Wages
AB 673 will authorize an employee to pursue a private right of action to recover penalties for the late payment of wages through the Private Attorneys General Act and will remove the authority for the Labor Commissioner to recover civil penalties in an independent civil action. The bill will prohibit the employee from also recovering statutory penalties for the same violation.
Discrimination, Harassment, and Prevention Training Requirements
California continues to add and refine their new complex requirements for sexual harassment training.
In August, Governor Newsom announced that the deadline for compliance with the new sexual harassment training mandates would be extended until January 1, 2021, from the original January 1, 2020 (SB 788).
AB 547 requires the Department of Industrial Relations to convene an advisory committee to identify qualified organizations that janitorial employers must use for in-person training on sexual violence and harassment prevention for janitorial employees.
SB 530 sets the discrimination and harassment prevention training requirements for the construction industry.
Racial Discrimination under FEHA/CROWN Act
The CROWN (Creating a Respectful and Open Workplace for Natural hair) Act becomes effective January 1, 2020, and amends the California Fair Employment and Housing Act (FEHA)’s definition of “race” to prohibit discrimination based on “hair texture and protective hairstyles.” Such protected hairstyles include “braids, locks, and twists.”
Statute of Limitations for Discrimination and Harassment Claims
On January 1, 2020, the statute of limitations period for employees to file discrimination and harassment claims against their employer with the California Department of Fair Employment and Housing (DFEH) extends from one year to three years. Moreover, employees have an additional one year to file a lawsuit in civil court after receiving a right-to-sue notice from DFEH.
AB 51 prohibits employers from requiring an applicant or employee, “as a condition of employment, continued employment, or the receipt of any employment-related benefit,” to waive their rights under the California Fair Employment and Housing Act (FEHA), including the right to file a civil lawsuit.
SB 142 expands California’s lactation accommodation requirements in the workplace. In addition to providing a room or other location, besides a bathroom, in close proximity to the employee’s work area to express breast milk, this law will require employers to provide lactating employees access to a sink with running water and a refrigerator suitable for storing milk in close proximity to the employee’s work area. It also requires that lactation rooms meet specific requirements.
One of the most controversial bills, AB 5, codifies the ABC test set out in Dynamex Operations West, Inc. v. Superior Court of Los Angeles County (Cal. 2018) to determine whether an individual can be properly classified as an independent contractor for a business. There will be a presumption that an individual will be an employee unless the hiring entity can establish all of the three following elements:
- The person is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- The person performs work that is outside the usual course of the hiring entity’s business; and
- The person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Certain individuals are exempt from this law, such as attorneys, real estate agents, and physicians.
California Consumer Privacy Act
AB 25 exempts employers for one year from collecting certain information from applicants and employees under the 2018 California Consumer Privacy Act ( ), which takes effect January 1, 2020. Employers are exempt from tracking, maintaining, and complying with requests for disclosure of certain information from job applicants, employees, business owners, directors, officers, medical staff, or contractors for purposes of employment until January 1, 2021. However, not all information is exempt, and therefore, employers still have certain obligations beginning January 1, 2020.
Paid Family Leave
SB 83 expands paid family leave (PFL) benefits from a maximum of six weeks to eight weeks under California’s State Disability Insurance (SDI) program. The law will take effect on July 1, 2020.
Notice Regarding Flexible Spending Account (FSA) deadline
AB 1554 requires employers to notify employees of any deadline to withdraw funds from healthcare, dependent care, or adoption assistance flexible spending accounts before the end of the plan year. Employers are required to notify employees in two ways, one of which may be electronic. Strangely, the law gives no indication when the notification should be made or if it must be made at termination of employment.
Arbitration Agreement Fees/Costs
SB 707 requires an employer or drafter of an arbitration agreement to pay the costs and fees associated with the arbitration. Failure to pay the fees could result in a breach of the agreement, or the employee could withdraw the claim from arbitration, or be entitled to attorney’s fees and costs. The bill also requires a private arbitration company to collect and report demographic data regarding the ethnicity, race, disability, veteran status, gender, gender identity, and sexual orientation of all arbitrators.
“No Rehire” Provisions Void
AB 749 prohibits and voids “no rehire” provisions in a settlement agreement, with numerous, notable exceptions. Such exceptions include when an employer has made a “good faith determination” that the individual engaged in sexual harassment. An organization is also not required to rehire an individual if there is a legitimate non-discriminatory or non-retaliatory reason for terminating employment or refusing to rehire.
Beginning January 1, 2019, minimum wage rates across New Mexico will increase according to the following schedule:
- Albuquerque: $9.35 (January 1, 2020);
- Bernalillo County: $9.20 (January 1, 2020);
- Las Cruces: $10.25 (January 1, 2020);
- Santa Fe: $9.00 (January 1, 2020);
- Santa Fe County: Adjusted for Inflation / To Be Determined (March 1, 2020)