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Paul Zimmerman

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Federal and SoCal Employment Law Update

Several significant, new employment laws have or will go into effect in 2016, and in order to ensure full compliance, employers should immediately review their policies, procedures, and handbooks. Below are just a few of the new laws, at both the Federal and Southern California regional levels, that will substantially impact employers.

New Federal Overtime Rule for White Collar Workers

The U.S. Department of Labor has published a Final Rule that dramatically changes the salary level required for “white collar” employees to be exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act.  The Final Rule requires  executive, administrative, and professional  employees to earn a salary of $913 per week or $47,476 annually, more than double the prior salary level, to qualify for exempt status.  The new salary level will be updated annually based on Bureau of Labor Statistics data.  The Final Rule also addresses compensation for certain Highly Compensated Employees and the use of nondiscretionary bonuses and incentive payments (including commissions) to satisfy the new salary level.  A separate “duties” test also applies for exempt status, but remains unchanged by the Final Rule.

These and other important changes in the new regulations go into effect on December 1, 2016.   Employers should promptly review their exempt classifications to ensure that white collar employees meet the requirements of the Final Rule. 

The Defend Trade Secrets Act

President Obama recently signed into law the Defend Trade Secrets Act of 2016 (“the DTSA”).  The law became effective on May 11, 2016, and amends the Economic Espionage Act to create a private civil cause of action for trade secret misappropriation.  It has been widely referred to as the most significant expansion of federal intellectual property law since the Lanham Act was passed seventy years ago to protect trademarks.  The law allows employers to file suit in federal court for trade secrets misappropriation claims, and, controversially, allows ex parte seizures of property if an employer can meet a certain standard of proof.  The DTSA is closely aligned with the Uniform Trade Secrets Act, but does not preempt existing state laws. 

The DTSA grants immunity to employees and contractors for disclosure of trade secrets under certain circumstances.  The law requires that employers provide notice of this immunity right “in any contract or agreement that governs the use of a trade secret or other confidential information” with employees and contractors, or by cross-referencing a document that sets forth the employer’s reporting policy for a suspected violation of the law.  Employers that fail to comply with the DTSA’s notice requirement will be unable to take advantage of the provisions of the DTSA allowing recovery of exemplary damages (up to two times actual damages) and attorney’s fees for willful or malicious violations. 

Confidentiality and proprietary agreements must be reviewed to ensure compliance with the DTSA. 

Los Angeles and San Diego:  Minimum Wage and Paid Sick Leave

Ordinance 184320 of the Los Angeles Municipal Code, effective July 1, 2016, provides paid sick leave rights to employees in Los Angeles.   The Ordinance provides more expansive paid sick leave rights than those provided under the California Paid Sick Leave law that went into effect in July 2015. Employers have the option of either: 1) providing 48 hours of paid sick leave to an employee yearly; or 2) providing one hour of paid sick leave per every 30 hours worked, with a 48 hour accrual limit.  Accrued unused paid sick leave shall carry over to the following year of employment, with a cap of no less than 72 total hours.   This is a significant expansion of current paid sick leave rights, as it effectively doubles the amount of paid sick leave hours required by California law

The Ordinance also increases the minimum wage for workers in Los Angeles to $10.50 per hour, though employers with 25 or fewer employees (or non-profits) may defer the wage increase until July 1, 2017.  Further increases scheduled by the Ordinance will bring the minimum wage for Los Angeles employees to $15.00 per hour by 2021.   

On June 7, 2016, San Diego voters approved Proposition I, requiring employers to provide five days of paid sick leave and a minimum wage of $10.50 (increasing to $11.50 on January 1, 2017, with indexed increases thereafter).  The law went into effect on July 11. 

Employers in Los Angeles and San Diego must update their policies accordingly.  

This blog post is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.