The California Conundrum: Navigating New Wage, Leave, and Compliance Laws and Their Impact on Business

Businesses across California are still coming to grips with significant changes to wage and compliance laws in 2024. These new regulations are set to reshape the landscape for employers and employees alike. In fact, we’ve made upwards of 25 modifications to our own HR guidelines this year alone.

At FORTIS, we understand the difficulties small business owners face when navigating these changes—it’s a big reason why we released our first-ever salary guide this year. We wanted California businesses like yours to have a road map.

Compensation presents a challenge even without the latest barrage of changes. So in light of the many new wage and compliance laws our state has introduced, let’s delve into the specifics and explore how your business can adapt.

Understanding the New Wage Laws

California has introduced a series of wage increases in 2024. The statewide minimum wage rose to $16 per hour starting January 1, covering all employers, regardless of size. Wages differ by county, of course, so while Orange County adheres to the statewide minimum, changes to your payroll may vary if you operate in Los Angeles or elsewhere.

The Golden State also saw higher wage floors for specific industries. For example, fast food workers employed by chains with more than 60 locations saw their minimum wage jump to $20 per hour in April. Additionally, just this month, healthcare workers in various facilities received tiered wage increases, ranging from $18 to $23 per hour.

These wage increases present a multifaceted challenge for businesses. Companies must find ways to manage the higher labor costs. Many are expected to respond by raising prices, which could impact consumers. Some businesses may also reduce staff hours or cut down on the number of employees to stay financially viable. The push towards automation is another anticipated trend, as companies look for ways to maintain productivity without escalating labor costs.

Beyond the Bottom Line of Wages

In addition to wage increases, new labor laws are shaping the business environment. For example, the Workplace Violence Prevention (SB 553) law, which took effect on July 1. This law requires employers to implement comprehensive workplace violence prevention plans, conduct annual training, and maintain detailed records of all incidents. This measure aims to enhance workplace safety and reduce violence-related incidents.

Another significant regulation is The Reproductive Loss Leave (SB 848) law, which mandates up to five days of unpaid leave for employees who experience a reproductive loss, such as a miscarriage or failed adoption. Employers must update their policies to comply with this new requirement and ensure confidentiality for those requesting leave.

Relief in the Form of “New PAGA”

Plenty of California business owners are already familiar with the Private Attorneys General Act of the California Labor Code (PAGA), and few other things scare us as much as a PAGA claim. Under this 2004 law, an employer’s pay stub must accurately reflect all hours worked, including overtime, availability of sick time, vacation, and a laundry list of other details. If these conditions aren’t met, a claim can be filed against said employer. Many class action lawsuits have occurred as a result of PAGA claims.

On July 15, PAGA underwent a long-awaited reform process, commonly referred to as “New PAGA.” According to SHRM, the law has undergone changes to provide “…further guidance and new opportunities for employers with respect to plaintiff standing; cure, remediation, and early settlement opportunities; and adjusted default penalty amounts.”

This is a big development for small business owners. For most violations, employers can now cure PAGA claims by:

• Correcting the issue and following Labor Code rules
• Paying back any unpaid wages to affected employees for up the three years (with 7% interest)
• Covering any extra damages and attorney fees as decided by authorities

This is just one clarification introduced by New PAGA. There’s a lot to absorb, and if employers don’t pay attention, the results may be costly.

Strategies for Navigating Change

Businesses must adopt proactive strategies to navigate these legislative changes successfully. One essential step is to review and update policies. Employee handbooks should reflect the latest laws, including wage adjustments and leave policies. Implementing thorough training programs will ensure that employees understand their rights and the new procedures, particularly regarding workplace violence prevention.

If your business isn’t equipped with dedicated HR staff, you should consider hiring someone, full-time or fractionally. Now is the time to upgrade your HR talent, whether it’s your first hire or an expansion of your existing team.

From a financial perspective, businesses need to reevaluate their budgets to accommodate increased labor costs. This might involve adjusting pricing models or investing in new technologies to enhance productivity and reduce reliance on human labor. Maintaining open communication with employees is also crucial. Engaging with staff about the changes and providing support during transitions can help mitigate the impact of reduced hours or other operational adjustments.

How FORTIS Can Help

Navigating these new wage laws and labor regulations can be complex and challenging. This is where FORTIS can be of service. With a deep understanding of California’s labor landscape, we can help your businesses adapt to these changes efficiently. In fact, we offer a comprehensive range of staffing and consulting services tailored to meet your specific needs as the hiring climate changes.

FORTIS has helped countless companies hire all manner of HR help, from their very first generalist to fractional CHROs. For companies of any size, it can be difficult to keep up with wage and hour compliance. New initiatives can emerge monthly, and it’s not always feasible to keep up all by yourself. If you need help with HR strategies and employee handbooks, be sure to give FORTIS a call.

California’s new wage laws are designed to improve the standard of living for workers but also pose significant challenges for businesses. By staying informed and proactive, companies can navigate these changes effectively, balancing compliance with operational efficiency and employee satisfaction.

Getting accustomed to these changes won’t necessarily be easy, but with the right strategies and a commitment to adaptability, businesses can continue to thrive in California’s dynamic economic landscape.

For additional support, download the 2024 FORTIS Salary Guide to make sure your California compensation is on point: