2020 Labor Law Changes - Stay in Compliance with California Employer Law!
One of the fastest growing areas of litigation involves employment practices. Religious organizations are not immune from being sued, and must understand how the various state and federal laws regulating employment practices apply, or do not apply, to them. 
- "Legal Issues," ELCA Resource Repository

Congregations, as employers, are responsible for staying in compliance with both Federal and State labor regulations. The new California State labor regulations detailed below are of particular importance to religious bodies, but it's important for churches to stay abreast of all regulations affecting employment. If your congregation has questions about employment practices and wages, you should contact your Workers Compensation Insurance Provider or a law firm specializing in non-profit or religious organization employment practices.

AB 5 and Independent Contractors
Many of you may have already received a notice from the Employment Development Department of California regarding the new labor law, Assembly Bill 5 (AB 5). This new law may change how you classify employees and independent contractors in your congregations. 
While there is no set definition of the term “independent contractor,” congregations need to look at the interpretations of the courts and the agencies in California that govern labor standards and practices.
In 2018, the California Supreme Court in a decision in Dynamex Operations West, Inc, v Superior Court established the “ABC” test. The ABC test requires all three of the following conditions to be met for an individual to be classified as an independent contractor:
  1. The individual must be free from the control and direction of the congregation reading the performance of work.
  2. The work is outside the usual course of the congregation’s “business”.
  3. The individual is customarily engaged in an independently established trade, occupation or business.
The most usual case congregations will encounter will be their musicians . Let's look at that scenario to illustrate the use of the ABC test. Is the congregations musician free from the control and direction of the congregation regarding the performance of work? If your musician is required to show up at a specific time, and play specific music, using an instrument provided by the church, then the answer is no and test A is not met for an independent contractor. Is the work being performed outside the usual course of the congregations business? Music is part of worship, and worship is most definitely part of the usual business of the congregation. The answer to test B is also no. Is your musician usually engaged playing music outside of the church setting or in other venues? Potentially yes and this might satisfy test C. Since the court requires all three to be yes, then you are looking at your musician as being an employee of the church.
Does it matter if I have a contract with the person? No, the courts have determined that even if the person has a contract, unless they meet all three condition of the ABC test, then they are still employees.
Another situation which could end up being trouble is compensating volunteers. If you are thinking about being generous to someone volunteering at the congregation and give them a monetary gift, the best answer is DON’T. This now becomes compensated work and your volunteer has now become an employee of the congregation.

What if we are having a work day and the congregation buys everybody lunch? You are A-OK in this situation.
And remember, if your independent contractors are now turning into employees, do not forget to have them fill out a W-4 form.
For further information, go to labor.ca.gov/employmentstatus/

Mike Metzger
SWCA Synod Treasurer
California Minimum Wage
California Minimum Wage Increases

Starting January 1, 2017, the minimum wage for all industries in California started to increase yearly. Through January 1, 2022, the minimum wage increases annually for employers employing 26 or more employees. This increase is delayed one year for employers employing 25 or fewer employees, from January 1, 2018, to January 1, 2023. 

Therefore, starting January 1, 2020, the minimum wage for employers with 25 or fewer employees is $12/hour, and the minimum wage for employers with 26 or more employees is $13/hour. Please note that in 2021, the minimum wage for employers with 25 or fewer employees will be $13/hour, and the minimum wage for employers with 26 or more employees will be $14/hour.

2020 California Salary Increases for Exempt Employees

The change to the California Minimum Wage also effects the minimum salary for exempt employees. For individuals to qualify as exempt employees, California requires that:

  • They perform exempt duties more than 50% of their work time, and
  • Exempt executive, administrative, and professional employees earn a salary of no less than two times the state minimum wage for full-time employment. The minimum annual salary is based on the current state minimum wage, calculated as follows: minimum wage x 2 x 2080 hours.

Accordingly, effective January 1, 2020, the minimum salary threshold for these exemptions is as follows:

  • $54,080 per year (or $1,040 per week) for employers of 26 or more employees
  • $49,920 per year (or $960 per week) for employers of 25 or fewer employees

California City and County Minimum Wages

Cities, counties, and localities may have local ordinances setting minimum wages higher than the state rate. For example, as of 7/1/19, the minimum wage in the City of Los Angeles for employers with 25 or fewer employees was $13.25, and $14.25 for employers with 26 or more employees. As of 7/1/2020 those rates increase to $14.25 and $15.00, respectively.

Southwest California Synod of the ELCA| (818) 507-9591| news@socalsynod.org| www.socalsynod.org