As part of California’s ongoing efforts to promote workplace pay transparency, Senate Bill 1162, which amends Labor Code section 432.3 and Government Code section 12999, went into effect on January 1, 2023. On December 27, 2022, the California Labor Commissioner’s Office released FAQs on the new pay scale disclosure requirements. This blog discusses the guidance provided by those FAQs, and provides takeaways for employers faced with the implications of SB 1162 as we ring in 2023.
On October 11, 2022, the U.S. Department of Labor (DOL) issued a new proposed rule that is more aligned with judicial precedent than a previous proposal regarding whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). The proposed rule would rescind the Independent Contractor Rule (2021 IC Rule) promulgated by the Trump administration on January 5, 2021, which has been criticized by some for making it easier for businesses to classify workers as independent contractors.
This is the DOL’s second attempt to rescind the 2021 IC Rule, after a Texas federal court ruled that the DOL’s first revision failed on procedural grounds. The DOL’s latest proposal may also face legal challenges when it is made final. The proposal is subject to a 45-day comment period beginning October 13, 2022, the date of publication in the Federal Register.
In 2022, California Gov. Gavin Newsom signed many laws impacting California employers. Some of the new laws became effective immediately and others, including some that were signed into law just weeks ago, take effect January 1, 2023, or later. These new laws address several topics, including supplemental paid sick leave, pay transparency, leaves of absence and fast-food restaurant employment standards.
As a reminder, the minimum wage in California is increasing to $15.50 per hour on January 1, 2023, for all employers — regardless of the number of workers employed by an employer. Also, many cities and local governments in California have enacted minimum wage ordinances exceeding the state minimum wage.
On September 28, California Governor Gavin Newsom signed SB 1162 into law, effectively amending Section 12999 of the Government Code and Section 432.3 of the Labor Code, which expands pay data reporting obligations, requires certain-sized employers to provide the pay scale for an open position in job postings and imposes new record-keeping requirements. It will become effective on January 1, 2023.
Employers increasingly rely on computer-based tools to assist them in hiring workers, monitoring worker performance, determining pay or promotions, and establishing terms and conditions of employment. Automatic resume-screening software, hiring software, chatbot software, video interviewing software, analytics software, and employee monitoring and worker management software allow employers to find efficiencies in day-to-day employee management. Software may scan resumes and prioritize the use of certain keywords, rate employees based on their keystrokes, facial expressions or speech patterns, and obtain information about qualifications and cognitive abilities before a hiring manager ever takes a second look.
On May 12, 2022, the U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Justice (DOJ) issued separate guidance addressing employers’ use of algorithms and artificial intelligence (AI) in employment-related decision-making. Both technical assistance documents focus specifically on how employers’ use of these technologies may adversely impact individuals with disabilities and violate the Americans with Disabilities Act (ADA).
California is among the first states to propose expressly regulating employers’ use of algorithms and artificial intelligence. In a March 25, 2022 virtual public meeting, the California Fair Employment and Housing Council discussed proposed regulatory changes that would address employers’ and third parties’ use of artificial intelligence in employment practices. While the proposed regulations remain a work in progress, they provide a glimpse into how policymakers are approaching these issues — and they could prove influential to other states (and even, potentially, the federal government) contemplating their own regulations in this space.