The California Industrial Welfare Commission (IWC) was established to regulate wages, hours, and working conditions in California. Importantly, the IWC adopted “wage orders,” which establish specific rules for various industries. California has not funded the IWC since 2004, and it has not been in operation. This is likely to change.

California Governor Gavin Newsom signed Assembly Bill 102 (AB 102) into law in July 2023. AB 102 allocates $3 million for the IWC “to convene industry-specific wage boards and adopt orders specific to wages, hours, and working conditions in such industries, provided that any such orders shall not include any standards that are less protective than existing state law.” Additionally, AB 102 provides that the IWC “shall prioritize for consideration industries in which more than 10 percent of workers are at or below the federal poverty level.” Under AB 102, the IWC “shall convene by January 1, 2024, with any final recommendations for wages, hours, and working conditions in new wage orders adopted by October 31, 2024.”

Given AB 102’s dictates, the IWC is likely to recommend changes to a number of California wage orders. Employers should monitor developments in this area and work with experienced counsel regarding any questions they have about the implications of AB 102.

Governor J.B. Pritzker signed into law HB 3129, an amendment to the Illinois Equal Pay Act that changes how employers can advertise for position openings in Illinois, on August 11, 2023. The amendment goes into effect January 1, 2025, and requires all employers with 15 or more employees to provide pay scale and benefits information in all open job postings.

Read the full Update here.

In August 2023, the U.S. District Court for the District of Arizona joined “the growing number of courts that have concluded” that judicial approval of Fair Labor Standards Act (FLSA) settlements “is neither authorized or necessary.” In Evans v. Centurion Managed Care of Arizona LLC[1], the plaintiff asserted individual claims under the FLSA for unpaid overtime and failure to pay minimum wages. Following the parties’ settlement of the plaintiff’s claims on an individual basis, the parties moved for approval of the settlement, submitting to the court a redacted version of the settlement agreement and a joint motion to file portions of the settlement agreement, including the settlement amount, under seal.

The U.S. Department of Labor (DOL) published a Notice of Proposed Rulemaking on August 30, 2023, which proposes revisions to the regulations issued under the Fair Labor Standards Act (FLSA). The proposed rule seeks to increase the federal minimum salary threshold required for employees to qualify as exempt employees to roughly $55,000 per year.

A federal court in Arizona recently rejected a defense for Arizona employers seeking to avoid liability for unpaid wages under the Arizona Wage Act. In Arrison v. Walmart, the district court held that there is no “employer knowledge” requirement under the AWA, rejecting Walmart’s attempt to defeat an unpaid wages class action against the company by arguing that it did not know or have reason to believe that its employees were working following a pre-shift COVID-19 screening.

Read the full Update here.

Effective January 1, 2024, California’s minimum wage will increase to $16.00 per hour for all employers, regardless of size. Under California’s Labor Code, by August 1 of each year, the director of finance will determine if the minimum wage must be adjusted for inflation and, if so, calculate the increase in minimum wage by the lesser of 3.5 percent.

As a result, on July 31, 2023, California Department of Finance Director Joe Stephenshaw officially certified that “minimum wage shall increase by 3.5 percent to $16.00 per hour” for all employers (from $15.50 per hour).

The increase in the minimum wage rate also impacts the minimum salary amounts for full-time exempt employees. Beginning January 1, 2024, the minimum salary for a full-time exempt employee will be $66,560 per year.

Even though California’s minimum wage increased across the board, California employers should be mindful of the various cities and counties that have adopted their own, higher minimum wage rates. Employers with questions about the applicable rates should contact experienced counsel with questions.

Governor J.B. Pritzker signed into law HB 2862 on August 4, 2023, which amends the Illinois Day and Labor Services Act by adding new equal pay obligations and safety and training requirements for employers who hire temporary workers and for staffing agencies that place them—all of which are effective immediately.

Read the full Update here.

In the latest development in California’s evolving independent contractor laws, the Los Angeles City Council approved a new ordinance that provides protections for certain independent contractors providing services in Los Angeles. Beginning on July 1, 2023, the Freelance Worker Protections Ordinance (Ordinance) requires that any contract between a hiring entity and a freelance worker valued at $600 or more (either by itself or when combined with previous written or oral contracts between the parties in a given calendar year) be in writing and include, among other things: (1) an itemization of all services the freelance worker provides, (2) the value of the services to be provided pursuant to the contract, and (3) the date by which the entity must pay the contracted compensation or the manner by which that payment date will be determined. Under the Ordinance, a freelance worker is an individual natural person, or an entity whose interests are entirely held by and whose work is performed entirely by no more than one individual natural person. A hiring entity is defined as an entity regularly engaged in business or commercial activity, including a nonprofit business, but excluding companies that hire app-based transportation and delivery drivers to provide prearranged services.