January 1st rang in the New Year, as well as the new laws that took effect in California which will impact how businesses classify, pay and onboard workers.
Here are the most significant laws that were enacted at the beginning of the year:
- AB-5:
The AB-5 Law imposes a stricter standard in classifying workers as independent contractors or 1099s. Companies whose 1099 contractors do not meet the ABC Test criteria, which the law enforces, could be penalized with fines and back payroll taxes. Though this law has been in effect as of January 1, there are oppositions from companies that regularly hire “gig” workers such as Lyft and Uber who are challenging the components of the law, so it may be subjected to changes. (SoloPoint)
- Fair Labor Standards Act Overtime Provisions:
By raising the standard salary level from $455 to $684 a week, this rule will make all employees who earn less than $35,568 annually—or some 1.3 million workers—eligible for overtime pay of at least time-and-a-half under the Fair Labor Standards Act. The salary threshold hasn’t been raised in more than 15 years, and many workers argue that this hike still isn’t high enough. (SHRM)
- New Minimum Wage:
On January 1, 2020, the minimum wage increased to $13 per hour for employers with 26 or more employees and $12 per hour for employees with 25 or fewer employees. The minimum wage shall be adjusted on a yearly basis through 2023 according to the pre-set schedule shown above. (DIR)
- AB-51:
California employers will no longer be able to require employees to sign mandatory arbitration agreements forcing discrimination, harassment and wage claims into arbitration. Applicants and employees may choose not to sign such agreements, and the employer may not retaliate. Litigation intended to invoke pre-emption of AB 51 by the FAA is expected, so employers are encouraged to watch for new developments. (SHRM)
- New W-4 Form:
The new design reduces the form’s complexity and increases the transparency and accuracy of the withholding system. While it uses the same underlying information as the old design, it replaces complicated worksheets with more straightforward questions that make accurate withholding easier for employees. (IRS)
SoloPoint Solutions aims to provide updates on state and federal legislation that may affect the hiring and recruitment of engineering professionals. To make sure you receive an alert for any new employment updates, sign up for our monthly newsletter today: