October 12, 2023

Still, many struggle to educate their managers and employees effectively on pay and pay equity

ARLINGTON, VA, October 12, 2023 – A majority of U.S. organizations are communicating pay information to their employees, according to a new survey by leading global advisory, broking and solutions company WTW (NASDAQ: WTW). The 2023 Pay Transparency Survey found that increasing regulatory requirements are encouraging organizations to communicate their organization’s broader pay policy. However, barriers to pay transparency remain as employers fear increasing questions and are concerned about their effectiveness in educating their workforce on this complex topic.

“

Many U.S. organizations are providing more visibility into their pay programs and practices.”

Mariann Madden | North America Fair Pay co-lead, WTW

The survey found most U.S. organizations are communicating different components of their pay program information to employees. Six in 10 are disclosing job levels to their employees, and almost half (48%) are communicating how individual base pay is determined and progresses. Over one-third of companies (36%) are disclosing individual pay ranges to employees, but an even larger number (46%) are planning or considering doing so in the future.

Regulatory requirements are the most commonly cited (81%) factor for encouraging greater levels of pay program communication. Other commonly cited factors include company values and culture (55%) and employee expectations (54%), followed closely by an environmental, social and governance and diversity, equity and inclusion agenda (53%).

“Many U.S. organizations are providing more visibility into their pay programs and practices,” said Mariann Madden, North America Fair Pay co-lead, WTW. “Boards of directors are taking ownership for pay equity and pay transparency and are looking for organizations to define, monitor and report on their commitments and priorities. Pay equity and transparency are closely linked. It will be very difficult to have confidence in one without the other in place.”

WTW’s survey found 38% of U.S. employers are communicating or planning to communicate publicly a pay equity commitment. A smaller number have communicated their pay transparency commitment; however, 44% of companies are planning or considering what they will share.

While these mandates are still only enacted in less than 10 states, regulatory requirements are driving more employers to communicate pay information. For prospective employees, nearly two in five respondents are communicating or planning to communicate pay rate or pay range information regardless of requirements. Of the 91% of companies communicating or planning to communicate pay ranges, 65% are disclosing a hiring rate/range for the job. A majority of organizations are using a consistent approach to what is shared and what pay range/rate is disclosed.

Half (50%) of employers believe communicating pay rates or ranges will increase questions from current employees. Manager effectiveness concerns are also top of mind for employers (47%). Indeed, although managers are the most common channel for communicating pay program information (84%), only 38% of organizations report being effective at educating managers about this complex topic.

“We are at a tipping point with pay transparency,” said Lindsay Wiggins, North America Fair Pay co-lead, WTW. “Organizations need to get their house in order by developing and actively managing foundational job architecture and leveling frameworks and conducting equal pay, pay gap and pay driver analyses to uncover and address areas of risk. Understanding their current state will support businesses in their efforts toward addressing the various legislative requirements but also in providing greater transparency into their talent and rewards programs and practices.”

About the survey

WTW’s 2023 Pay Transparency Survey was conducted in July 2023. In the U.S., a total of 448 respondents completed the survey. Globally, a total of 1,313 respondents completed the survey.

***** ***** ***** ***** ***** 

Source: WTW

https://www.wtwco.com/en-us/news/2023/10/us-companies-to-increase-levels-of-pay-communication

October 18, 2023 — 03:08 pm EDT

Written by Jody Godoy for Reuters ->

By Jody Godoy

Oct 18 (Reuters) - A U.S. appeals court upheld Nasdaq's board diversity rule on Wednesday, requiring companies listed on the exchange to have women and minority directors on their boards or explain why they do not.

National Center for Public Policy Research and the Alliance for Fair Board Recruitment, a group formed by conservative legal activist Edward Blum, had asked the 5th U.S. Circuit Court of Appeals to block the rule.

The groups sued the U.S. Securities and Exchange Commission (SEC), which approved the rule in August 2021.

The rule requires companies to have one director who identifies as female, a member of an underrepresented racial or ethnic minority, or LGBTQ+ by the end of this year or explain why they do not. Companies would generally need two diverse directors to satisfy the rule by 2026.

Companies also have to disclose annually how board members identify in those categories, although the individuals can decline to answer.

The groups said the rule violates the U.S. Constitution's prohibition of discriminatory laws and restraints on free speech. They argued that those restrictions on government extend to Nasdaq because the SEC could penalize the exchange if it does not enforce the rule.

The SEC and Nasdaq argued that the exchange is a private entity not bound by restrictions on government. They said the rule is not a quota but a disclosure requirement that provides standardized information on board diversity.

Several Republican state attorneys general had weighed in against the rule, while institutional investors and a coalition of Nasdaq-listed companies, among others, filed briefs in support.

The case is Alliance For Fair Board Recruitment v. SEC, 5th U.S. Circuit Court of Appeals, No. 21-60626.

***** ***** ***** ***** ***** 

Source: Nasdaq.com

https://www.nasdaq.com/articles/u.s.-court-upholds-nasdaq-board-diversity-rule

Salary negotiation is one of the most common topics professionals seek content on, but it’s still hard to get a macro understanding of who’s negotiating and who isn’t. Professionals in the Glassdoor community are weighing in on if they negotiated their salary for their most recent job and the data may surprise you. More than 6,500 professionals weighed in and more than half of them (54%) did not negotiate their most recent salary. 

How does that break down by industry? Salary negotiation is most common among advertising, marketing, and tech professionals—with 67%, 62%, and 56% of them negotiating their most recent salary, respectively. Which industries had the least negotiation? Just 22% of graduate students and 37% of accounting and law professionals negotiated their most recent salary. 

What about age? 56% of professionals between the ages of 36-40 negotiated their most recent salary, while 55% of those aged 41-44 and 50% of those aged between 30-35 did the same. Younger professionals are less likely to negotiate pay, with just 27% of those aged 21-25 and 44% of those between 26-29 negotiating their most recent salary. 

And gender? Men and women are equally as likely to negotiate, with 46% of men and women having negotiated their most recent salary.  

Methodology: This poll ran from August 9, 2023 through August 14, 2023 and was answered by 6,673 professionals on Fishbowl by Glassdoor. Respondents could answer with either “Yes” or “No” to the question, “For your most recent job, did you negotiate your salary?” 

***** ***** ***** ***** ***** 

Source: Glassdoor

https://www.glassdoor.com/research/conversation-starter-more-than-half-of-professionals-did-not-negotiate-salary-for-most-recent-job

September 25, 2023 09:28 AM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--Today, Mercer, a global leader in redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being, and a business of Marsh McLennan (NYSE: MMC), released the results of its August 2023 Mercer QuickPulse™ US Compensation Planning Survey. According to the survey, employers in the US plan to raise their compensation budgets by 3.5% for merit increases for 2024 and 3.9% for their total salary increase budgets for non-unionized employees. This compares to actual merit increases of 3.8% and 4.1% for total salary increase budgets for non-unionized employees in 2023.i

“While preliminary compensation budgets for 2024 are showing a slight decline, they remain well above pre-pandemic levels, reflecting the ongoing tightness of the labor market and low levels of unemployment. However, if the labor market continues to stabilize and inflation cools further as we move towards the end of the year, compensation pressures are likely to continue to decline. This could prompt further reductions in 2024 compensation increase budgets, as employers adjust their strategies to reflect the changing economic landscape,” said Lauren Mason, Senior Principal, Career, Mercer.

Across industries, Healthcare Services are projecting 2024 budgets that lag other industries, with merit budgets of 3.1% and total increase budgets of 3.4%, as the industry continues to recover from the financial impact of the pandemic. Recent layoffs and financial strain on the high-tech industry also appear to be impacting merit budgets, with projected increases of 3.3%, a reversal of historical trends where high-tech typically led increases across industries. Several industries, including Energy and Consumer Goods, are planning merit budgets above the national average, projecting an increase of 3.7%.

The survey also found that employers are planning to promote less (8.7% of the employee population) and therefore will allocate less of their budget (1.1%) to promotional increases in 2024. In 2023, employers reported that they promoted 10.3% of their population, allocating 1.2% of their salary budget to do so.

Looking back at actual compensation increases over the last year, employer base salary levels increased 5.6%ii on average, despite 2023 merit increase budgets of 3.8%. This is a result of off-cycle pay increases which 59% of employers reported providing in 2023. The top reasons cited for off-cycle increases were to address retention concerns, counteroffers, market adjustments, and internal equity.

Ms. Mason continued, “As employers plan for 2024, it is crucial that they move away from the reactive approach of the past few years and adopt a more strategic approach. This will enable employers to focus their compensation investments on the most critical attraction and retention segments of their workforce, while also ensuring that pay increases are distributed fairly and equitably.”

Note to editors:

Total increase budgets include other base pay increases such as promotional pay increases and cost of living adjustments, in addition to merit increases.

About Mercer’s US Compensation Planning Survey

The August 2023 Mercer QuickPulse™ US Compensation Planning Survey includes data from more than 900 organizations in the US, from small employee bases (less than 500 employees) to very large employee bases (over 20,000 employees) across 15 industries. This study was fielded between July 31st - August 11th. You can review more of the survey findings here.

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with more than 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.

***** ***** ***** ***** ***** 

Source: Mercer

https://www.businesswire.com/news/home/20230925303517/en/US-employers-plan-more-modest-compensation-increases-in-2024

By Dawn Kawamoto - September 7, 2023

U.S. employers made bold moves this year on compensation, pushing salary increase budgets to a 20-year high, despite fears of resurgent inflation and recession, according to a WorldatWork survey released this week. But the momentum is expected to slow by next year.

Increases to salary budgets rose to 4.4% on average this year, slightly higher than earlier projections of 4.1%, and also marking the highest level since the 2001 peak of 4.5%, according to the survey of more than 2,000 U.S. employers. Last year, salary increase budgets stood at 4.1%.

A tight labor market and cautious economic optimism contributed to the increase, Liz Supinski, director of research and insights at WorldatWork, tells HRE.

“While there are still many concerns about recession, there is significant speculation among economists that we might achieve a soft landing,” Supinski says. “A number of economists are now speculating that we might see a novel kind of recession that is not accompanied by the large-scale job loss that we’ve seen in past recessions.”

But despite higher-than-expected salary increase budgets this year and more optimistic outlooks on the economy, budgets are expected to slightly drop next year, to 4.1%, according to the survey.

Supinski characterizes the shift as a migration back to what was seen as “normal”: 3%-3.5% salary increases that largely prevailed for most of the last 20 years, until 2022.

The forecasted 2024 decline, she adds, may also be the result of an easing of the intensity of the labor market pressures as the impact of economic policy decisions filters out.

This year, salary hikes were more impacted by labor market pressures than recessionary fears, though the increases were still moderate, she notes.

HR can address those labor market pressures by looking beyond base salaries.

“Variable pay continues to play an important role in compensation and allows organizations greater flexibility in responding to business and economic conditions than do base salary increases,” Supinski says. “So, [this] will continue to be a focus for many employers.”

Notable salary increase budgets around the world

WorldatWork’s report found higher-than-anticipated salary boosts around the world this year. In the United Kingdom, for instance, the average salary increase rose 4.5% compared with a projected 3.9%, according to the survey.

One country posting consistent growth in salary increase budgets was Mexico. In 2021, the average rose to 4.7%, then 5.7% the following year and last year jumped to 6.3%.

India, meanwhile, garnered the largest increase of the 18 countries where employers were surveyed. The average salary increase in India was a hefty 9.8% this year, bringing it closer to the pre-pandemic level of 9.9%. Last year, however, employers there doled out salary increases that averaged 10.1%.

Meanwhile, in the U.S., all states are expected to experience a decline in 2024, which is anticipated to range from a 0.1% drop in salary increase budgets in Arizona and California to a 0.4% fall in Alaska and North Dakota.

Layoffs may be even lower in 2024

In addition to salaries rising across the globe this year, employers are scaling back on layoffs, according to the WorldatWork survey.

This year, 70% of employers worldwide reported no layoffs and a whopping 91% expect the same for 2024, states WorldatWork in its report.

And in the U.S., 61% of employers report no layoffs this year and 87% have similar expectations for next year.

Despite that, Supinski cautions HR not to read too much into the numbers.

“It was a broad, exploratory question, intended mostly as a screener to identify what portion of organizations were repurposing savings from layoffs for salary budget increases,” she notes.

***** ***** ***** ***** ***** 

Source: Human Resource Executive

https://hrexecutive.com/u-s-salary-increase-budgets-hit-20-year-high/?oly_enc_id=1127F6638590B7V  

Newly Expanded Participant Pulse Report Also Finds Health Savings Account Balances Up Nearly 12% This Year

August 8, 2023 at 8:00 AM Eastern

CHARLOTTE, NC – Today, Bank of America released its Q2 2023 Participant Pulse (PDF)(MAP5773977), which found average 401(k) balances increased by $7,250 (9.6%) since the end of 2022.1  The report also found that a growing number of 401(k) participants are initiating withdrawals from their plans. The number of participants taking hardship distributions increased 36% year-over-year,1 following increases in Q12 this year. In addition, the percent of participants borrowing from their workplace plan in Q2 also increased (2.5%, up from 1.9% in Q1).1

The Pulse monitors plan participants’ behavior in Bank of America recordkeeping clients’ employee benefits programs, which is comprised of more than 4 million participants as of June 30, 2023.

“The data from our report tells two stories – one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America. “This year, more employees are understandably prioritizing short-term expenses over long-term saving. However, it’s critical that employees continue to invest in life’s biggest expense – retirement.”

Amid rising 401(k) plan withdrawals, employee contributions remained steady, with the average rate remaining at 6.5% throughout the first half of 2023.1 Meanwhile, more participants increased their rate than decreased their rate (10.2% vs. 2.2%) in Q2,1 which was led by Gen Z3 and Millennial3 employees (19.3% vs. 2.6% and 11% vs. 2.6%, respectively).

Health Saving Account and Financial Wellness Trends

To provide a more holistic look at confidence around financial preparedness, Bank of America has expanded the quarterly Participant Pulse report series to examine engagement across Health Saving Accounts (HSA)4 and overall feelings of financial wellness, in addition to 401(k) trends. Key HSA and financial wellness findings include:

• HSA account balances increased by 11.9% over year-end 2022. Average HSA account balances increased from $3,931 to $4,397 in the first six months of 2023.4
• Many HSA account holders continue to save their contributions for future expenses. Nearly 4 in 10 account holders contributed more than they withdrew in Q2, consistent with year-end 2022.4
• Baby Boomers invested their HSAs at higher rates than other generations. On average, only 12% of account holders invested their HSAs for future growth in Q2, with Baby Boomers3 leading at 15%. In addition, more men invested than women (18% vs. 11%).4
• Feelings of financial wellness declined slightly. Out of a possible 100 points, the average financial wellness score for employees was 56, down one point from 57 at year-end, with women trailing men (52 vs. 59).1

Read the full report and methodology (PDF) to learn more.

***** ***** ***** ***** ***** 

Source: Bank of America

https://newsroom.bankofamerica.com/content/newsroom/press-releases/2023/08/bofa-report-finds-average-401-k--balances-up-nearly-10--in-2023-.html

U.S. companies across a range of industries seek to gain an edge in an unusually tight labor market by increasing pay.

Published Aug. 15, 2023 by Jim Tyson, Senior Reporter

Dive Brief:

• Roughly three out of every four CEOs (74%) plan to boost wages by at least 3% during the next year, with most top executives identifying wage growth as the sharpest spur to inflation during the coming 18 months, according to a quarterly survey by the Conference Board and Business Council.
• “Attracting qualified workers remained difficult for the majority of companies,” Conference Board Chief Economist Dana Peterson said in a statement.
• “The competition for talent is fierce,” she said, noting that two out of five CEOs “are maintaining the size of their workforce — a sign of labor hoarding in an extremely tight labor market.” The two-week survey of 127 CEOs concluded July 24.

Dive Insight:

U.S. companies for months have faced challenges hiring and retaining workers, with unemployment falling last month to 3.5% from 3.6% in June and available jobs far exceeding the number of workers seeking employment, according to the Labor Department.

Aiming to attract and retain workers, companies increased hourly wages after inflation by 0.3% last month in the fifth consecutive month of pay hikes. Yet demands for higher pay persist — inflation-adjusted hourly earnings have risen only 1.1% during the past 12 months amid the worst inflation in 40 years.

“There’s still a lot of pressure upwards” on wages, HireQuest CEO Richard Hermanns said during a second quarter earnings call on Thursday, noting “a constant shortage” of workers.

“I was flying through Minneapolis the other day, and you’ve got a restaurant in the middle of the airport closed until two o’clock because they didn’t have enough people,” Hermanns said. HireQuest provides temporary staff services.

CEOs at a broad range of industries — from financial institutions, to cinemas, to transportation firms — are using layoffs, technology and other streamlining to cope with rising labor costs, several top executives said during recent Q2 earnings calls.

UPS reduced compensation and benefits by $205 million during the second quarter by trimming management staff by 2,500 year-over-year, CFO Brian Newman said in an earnings call on Tuesday. The cuts helped blunt a 6.5% increase in average union wage rates during recent labor negotiations, he said.

“One thing that was very important for Teamsters leadership was to front-load some of the wage inflation,” UPS CEO Carol Tomé said. “We agreed to do that, so that does put a little pressure on the margin.”

“We’ll have a bit of pressure for the next year — June to August of next year — but then inflation is very manageable,” Tomé said.

TFI International, a transportation company, recently agreed to a 3% average annual salary increase for five years after cutting its year-over-year shipping costs by 15% compared with last year, CEO Alain Bédard said during a quarterly earnings call on Aug. 1.

ARKO, a convenience store operator, faced a 6.5% rise in personnel costs during Q2 compared with the same period last year, CFO Donald Bassell said during an earnings call on Tuesday.

“We, like others in the industry, have faced wage inflation,” Bassell said. “Our overtime has decreased a tremendous amount and that goes towards, I think, quality of life that we’re getting with people and also getting temp services.”

Still, “the biggest unknown is going to be labor,” he said.

Cinemark Holdings, an operator of cinemas, faced a 12% surge in global salaries and wages during the quarter, on a year-over-year basis, CFO Melissa Hayes Thomas said during an Aug. 4 earnings call. Yet such costs fell 1.6% as a proportion of revenues thanks to higher attendance and streamlining.

“We are still seeing some wage rate pressure,” she said, pointing to higher minimum wage requirements in some states rather than a “labor market dynamic.”

The increase in pay and retirement savings at many companies has buoyed performance at Principal Financial Group, a provider of insurance and manager of retirement assets.

“We are uniquely positioned, that when inflation plays through, especially when it plays through on salary levels, we do get benefits,” Principal CFO Deanna Strable said during a July 28 earnings call. “That plays through from a revenue perspective.”

Yet Principal is also buffeted by labor market headwinds. “We have had to increase salaries because of that inflationary pressure and war for talent,” Strable said.

***** ***** ***** ***** ***** 

Source: HR Dive

https://www.hrdive.com/news/ceos-plan-raise-wages-3-percent-conference-board-inflation-labor-pay/690889/

The employer allegedly calculated the rate of overtime pay incorrectly for nonexempt workers, thereby shorting staff of wages, per court documents.

Published Aug. 10, 2023 by Caroline Colvin, Reporter

A federal judge on Tuesday signed off on a $8,369,000 settlement agreement between Google LLC and 6,517 workers, resolving an overtime compensation lawsuit.

The class action suit, originally filed in 2021, concerned violations of the Fair Labor Standards Act, along with California state law. The two groups in the suit are the California class and the FLSA collective, including workers in and out of the state.

The California class includes all non-exempt Google employees who worked in the state from December 22, 2017, through June 5, 2022, and were awarded restricted stock units and/or received a sign-on bonus at that time. The FLSA collective includes Google employees who worked at the tech company from December 22, 2018, through June 5, 2022, and were also awarded restricted stock units and/or received a sign-on bonus.

Workers alleged that the company incorrectly calculated the regular rate of pay by excluding commission and stock unit payments, which led to an incorrect calculation of the overtime pay rate. 

Attorneys at Nichols Kaster, one of two firms representing plaintiffs in the cases, said this miscalculation “gave Google the benefit” of paying hourly employees at lower rates than required. 

The U.S. District Court for the Northern District of California’s decision comes after a March 2023 preliminary approval for the nearly $8.4 million settlement.

This isn’t the first overtime class action brought against Google in recent memory. In 2018, the tech company and a staffing agency agreed to shell out about $5.5 million to settle claims it failed to properly pay recruiters and sourcing professionals. At the time, Michael Palmer, a partner at the law firm representing the Google recruiter who filed the 2016 case, said Google restricted the hours recruiters could report, “knowing that they must work overtime to meet performance goals.”

***** ***** ***** ***** ***** 

Source: HR Dive

https://www.hrdive.com/news/google-overtime-class-action-8-million/690565/

“It’s never too early or too late to bridge the gap,” an attorney said regarding the report.

Published Aug. 8, 2023 by Caroline Colvin

Dive Brief:

• Not only do the majority of Americans not have a will, but most people would be more willing to create one if their employer aided the process, LegalShield’s Aug. 8 report on estate planning revealed. 
• A medical diagnosis or health concern would prompt about half of Americans to make a will; 42% would make a will if they reached an increase in wealth. Retirement or “age milestones,” marriage, death of a loved one, a house purchase and the birth of a child were the next motivators, more than employer-offered benefits.
• Still, nearly 60% said that if their employer offered legal services to help them create a will, they would. 

Dive Insight:

The report also revealed that a gap in understanding exists among workers regarding what benefits packages entail. While 42% said their company doesn’t provide estate planning benefits and 8% said it does, the rest of U.S. workers surveyed could not confirm whether their employer offered voluntary estate planning benefits. 

Since the pandemic, conversations about benefits have expanded. Conversations about mental health and wellbeing have come to the fore, along with long COVID considerations and benefits as both attraction and retention strategy.

While events such as illness diagnoses or life transitions were cited as the catalyst for creating a will, as Ashley Higginbotham, attorney with Deming, Parker, Hoffman, Campbell & Daly LLC said in the report’s announcement: “It’s never too early or too late to bridge the gap.”

***** ***** ***** ***** ***** 

Source: HR Dive

https://www.hrdive.com/news/worker-estate-planning-benefits/690300/

By Anthony Zaller on August 10, 2023

POSTED IN WAGE & HOUR LAW

California’s Department of Finance provided a letter to Governor Newsom as required under Labor Code section 1182.12 to reflect the adjustment in the state minimum wage each year.  The Department announced that California’s minimum wage will increase by 3.5% to $16.00 per hour for all employers as of January 1, 2024. This Friday’s five reviews how the increase impacts California’s employers:

1. White Collar Exemptions – Salary Requirement Tied to State Minimum Wage

California’s employment laws classify employees into two main categories: exempt employees and nonexempt employees. Federal and state laws exempt certain employees from wage and hour requirements. An exempt employee is an individual who is exempt from any overtime pay or minimum wage requirements. The “white collar” exemptions are: Professional, Executive and Administrative. To qualify as an exempt employee, the employer bears the burden to meet the requirements of a two-part test the employees must meet to be exempt: (1) the salary basis test and (2) the duties test. The salary basis test requires that the employee must be paid a salary that is at least two times the state minimum wage, which will increase as California’s minimum wage increases.

With the increase to the California minimum wage on January 1, 2024, the minimum annual salary to meet the white-collar exemption increases to $66,560 per year, and $5,546.67 per month (increasing from $64,480 per year in 2023).  For more information on exempt employee classifications, see our prior article here.

2. Computer Professional Exemption Salary Requirement Increases in 2024

Labor Code section 515.5 sets forth that certain computer software employees are exempt from overtime requirements under the Labor Code. One aspect to meet this exemption is a minimum salary.  For 2023, California’s Department of Industrial Relations adjusted the computer software employee’s minimum hourly rate of pay exemption from $50.00 to $53.80, the minimum monthly salary exemption from $8,679.16 to $9,338.78, and the minimum annual salary exemption from $104,149.81 to $112,065.20 effective January 1, 2023.  The DIR will be announcing the increase for computer professionals in October 2023. 

3. Local Minimum Wage Ordinances

There are over 35 local minimum wage ordinances throughout California.  Employers are required to comply with the higher of the state or local minimum wage that applies to them.  Many of the local minimum wage rates increase on July 1 of each year, but there still are some that have a January 1 increase date.  Employers must carefully review all applicable local minimum wage (and paid sick leave) requirements.

4. Industry Specific Minimum Wages

• Hotel Workers:

In addition to state and local minimum wage rate, some localities also have industry specific rates. The employers should always check their local ordinances that might apply to their workforce/industry. There are some cities that apply specific rates for hotel workers. For example, the City of Long Beach and the City of West Hollywood have adopted ordinances requiring a higher minimum wage for these workers.

• FAST Act – Fast Food Workers:

As we have written about on this blog, on September 5, 2022, California Governor Gavin Newsom signed into law AB 257, termed the Fast Food Accountability and Standards Recovery Act or FAST Recovery Act.  The law proposes to establish a Fast Food Sector Council to regulate California’s fast food restaurants and set the minimum wage rate, among other workplace regulations, for the fast food industry. However, the law has been challenged and a coalition, the Save Local Restaurants Coalition, submitted over one million signatures on December 5, 2022, in opposition to the FAST Act and now the bill will be on the November 2024 ballot as a referendum for California voters to decide the fate of the law.

5. Planning For Minimum Wage Increases

As employers start to prepare for 2024, some best practices for ensuring compliance with all minimum wage requirements include:

• Review all exempt employee classifications and specifically list which exemption they qualify for and ensure they are paid the statutorily required salary.
• Develop a chart listing all nonexempt employees by location and ensure compliance with the location where the employee is working.
• Audit your payroll processing company to ensure they are updating the minimum wage and salary payments to employees. Do not rely on your payroll company to know or understand the minimum wage requirements here in California.

Finally, there is an initiative that qualified for the November 2024 ballot that would increase California’s minimum wage to $18 per hour and then increase each year based on the cost of living.  Employers will need to continue to monitor this initiative in 2024.

***** ***** ***** ***** ***** 

Source: Zaller Law Group, PC 

https://www.californiaemploymentlawreport.com/2023/08/california-minimum-wage-soars-to-16-per-hour-in-2024/