Various significant new laws impacting businesses that have California employees take effect January 1, 2008 (or as otherwise noted). These laws are summarized below.

  • Minimum Wage. AB 1835, adopted in 2006, raises the state's minimum wage from $7.50 to $8.00 per hour effective January 1, 2008.

  • Decrease in Minimum Hourly Rate for Exempt, Hourly Paid Computer Software Professionals. In an effort to assist companies employing hourly paid computer software professionals, SB 929 lowers the minimum hourly wage necessary for such employees to maintain exempt status from $49.77 to $36.00. This amount is subject to an annual cost-of-living adjustment by the Division of Labor Statistics and Research, effective on January 1 of every year (as was the case previously).

  • Privacy Laws. AB 1298 amends data notification laws to include medical and health insurance information within the definition of protected personal information. Any business owning or licensing such data must notify all affected California residents (including employees or applicants) of any breach or disclosure that potentially compromises the confidentiality of the information.

  • Leave for Qualified Military Spouses. AB 392 (effective October 9, 2007) provides that all employers with 25 or more employees must give up to 10 days of unpaid time off to spouses of military members who are on leave from deployment in combat, if reasonable advance notice is given. 

  • Health Care “Whistleblowers.” AB 632 amends the Health and Safety Code by expanding specific “whistleblower” provisions to cover physicians and surgeons who complain about unsafe patient care; the law had previously only applied to patients and employees.

  • Alternative Workweek Schedule for Pharmacists. SB 812 provides that the alternative workweek schedule applying to employees in the health care industry and other alternative workweek schedules permitted under Wage Order 4 now also apply to pharmacists. By complying with the complicated legal requirements, California employers may implement a regularly scheduled alternative workweek schedule of not more than 10 hours per day within a 40 hour workweek, without having to pay non-exempt employees overtime premiums for those regular hours.

  • Cell Phone Restrictions. SB 1613, adopted in 2006 but effective July 1, 2008, prohibits use of hand-held cell phones while operating vehicles, unless the cell phone is designed and configured for hands-free listening and talking operation, and is used in that manner while driving.

  • Pay Stub Requirements. Only the last four digits of an employee's Social Security number may appear on an employee's pay stub. This is a change from prior law, which required employers to include the employee's full Social Security number.

  • New Protection Against Workplace Violence. AB 2695, adopted in 2006 but effective January 1, 2008, amends the Code of Civil Procedure to allow employers to seek temporary restraining orders (TROs) on behalf of multiple employees at multiple locations, where appropriate. It also allows employers to seek TROs where an employee who is directly threatened does not want to pursue a TRO.

  • Child Support. AB 2440, adopted in 2006 but effective January 1, 2008, creates stiff penalties of up to three times the amount of the assistance provided, subject to a maximum of the entire support obligation, for employers or other “persons” who assist employees or contractors in avoiding child support obligations. It applies where an employer knew or should have known that the individual has a child support obligation and fails to report the employee's hire, employment, and/or wages to the Employment Development Department.

In addition, state and federal agencies have taken a number of recent actions:

  • Sexual Harassment Training. Last summer, California's Fair Employment & Housing Commission promulgated regulations addressing sexual harassment training. These regulations clarify the requirements for sexual harassment training for supervisors, and also clarify that the 50-employee threshold for employers to be covered by the sexual harassment training law includes employees outside of California.

  • New Employment Eligibility Verification (I-9) Form Required. U.S. Citizenship and Immigration Services (USCIS) has issued a new Form I-9 that employers must use to verify employment eligibility of all new hires or re-verifications.Employers not using the new Form I-9 by December 26, 2007, are subject to penalties. The form only needs to be used for new employees and re-verifications; current employees do not need to complete new forms, unless the employee's status needs to be re-verified on other grounds. The new Form I-9 may be found at

  • New No-Match Letter Requirements (Currently Enjoined). United States Immigration and Customs Enforcement (“ICE”) adopted procedures for employers to follow when receiving “No Match” letters from the Social Security Administration and/or Homeland Security. Employers are required to make affirmative efforts to resolve no-match disputes within 30 days, and to take further action to resolve the dispute if the no-match cannot be resolved within 90 days. Although enforcement of the procedures has been enjoined by Federal District Court Judge Charles Breyer, employers should consult legal counsel when receiving no-match letters.

California employers avoided several employment-related bills that were vetoed by Governor Schwarzenegger:

  • AB 8 would have created a state-wide health insurance purchasing program and required employers to provide health care coverage for eligible employees or to pay funds into a statewide healthcare fund. The Governor has, however, placed health care near the top of his agenda, and continues to negotiate with the Legislature about this issue.

  • SB 836 would have amended the California Fair Employment and Housing Act to cover discrimination based on family status.

  • SB 727 and AB 537 would have expanded family/medical leave rights to cover leave needed to care for parents-in-law, grandparents, grandchildren, adult independent children, or siblings, and to expand the state's paid family leave benefits to employees caring for parents-in-law, grandparents, grandchildren, or siblings.

  • AB 1707 would have fined employers $750 per violation for failing to allow an employee or former employee to inspect personnel records, as required by the Labor Code.

  • SB 622 would have fined employers up to a maximum of $25,000 for intentionally misclassifying employees as independent contractors.