As we approach 2025, California employers must gear up for a series of significant legal and financial adjustments. These changes range from minimum wage hikes to increased salary thresholds for exempt employees, and they impact various industries across the state. Staying ahead of these updates is crucial to ensure compliance and maintain smooth operations. Here are the top five increases California employers must prepare for in 2025.

1. California’s Minimum Wage Increases

Effective January 1, 2025, California’s minimum wage will increase to $16.50 per hour. While Proposition 32, which proposed raising the minimum wage to $18 per hour, was rejected by voters, employers must still comply with higher rates set by local ordinances. Cities like San Francisco and counties such as Los Angeles often have their own minimum wage requirements, and businesses must adhere to the highest applicable rate.

For more context, read the Los Angeles Times’ analysis on Proposition 32.

2. Increased Minimum Pay for Exempt Employees

California law requires exempt employees to meet both a salary basis test and a duties test. With the state’s minimum wage increasing in 2025, the minimum salary threshold for exempt employees will also rise. Starting January 1, 2025, the annual minimum salary to qualify for the white-collar exemption (executive, administrative, and professional) will increase to $68,640 (or $5,720 per month), up from $66,560 in 2024.

Employers must ensure compliance with these thresholds to avoid misclassification issues. For additional details on exempt employee classifications, see our previous article.

3. Fast Food Worker Minimum Wage Updates

Fast food workers in California saw a significant wage increase to $20 per hour starting April 1, 2024, under AB 1228. This law applies to national fast-food chains with more than 60 establishments nationwide. Beginning January 1, 2025, the Fast Food Council may further increase this rate based on economic indicators such as the U.S. Consumer Price Index.

Employers covered by AB 1228 should stay alert for announcements regarding the 2025 rate and be prepared to implement any necessary changes by January 1.

4. Adjusted Salary Thresholds for Computer Professionals

Certain computer software employees are exempt from overtime requirements under Labor Code section 515.5, provided they meet specific salary thresholds. For 2025, the Department of Industrial Relations has adjusted these thresholds as follows:

  • Minimum hourly rate: $56.97 (up from $55.58 in 2024)
  • Minimum monthly salary: $9,888.13 (up from $9,646.96 in 2024)
  • Minimum annual salary: $118,657.43 (up from $115,763.35 in 2024)

Employers in the tech sector must review compensation plans to ensure compliance with these updated rates.

5. Updated IRS Mileage Rates

The IRS annually adjusts its standard mileage rates, which impact how employers reimburse employees for business-related travel. For 2024, the rates were:

  • 67 cents per mile for business use
  • 21 cents per mile for medical or moving purposes (for qualified active-duty Armed Forces members)
  • 14 cents per mile for charitable purposes (unchanged)

The IRS is expected to announce the 2025 mileage rates in mid-December 2024. Employers should monitor these updates to ensure accurate reimbursement practices. For further details on mileage reimbursement obligations, see our previous article.

As the holiday season approaches, it’s a great time for employers to revisit their responsibilities when it comes to accommodating holiday leave requests and ensuring proper pay practices. Last week, we discussed important vacation considerations for employers during the holiday season. This week, we are sharing five key reminders about holiday-related policies for California employers:

1. Time Off for Holidays Is Not Mandated in California

California employers are not required to grant employees time off for holidays, except when it involves religious accommodations (discussed below). The California Division of Labor Standards Enforcement (DLSE) clarifies:

“Hours worked on holidays, Saturdays, and Sundays are treated like hours worked on any other day of the week. California law does not require employers to provide paid holidays, close their business on holidays, or give employees time off for specific holidays.”

2. No Obligation for Paid Holidays or Extra Pay for Holiday Work

California employers are not obligated to pay employees for holidays they do not work or to provide additional wages for working on a holiday. While employers can voluntarily implement a “holiday pay” policy, it’s important to clearly outline such terms in the company’s handbook or policies.

Although California lawmakers have proposed bills like the “Double Pay on the Holiday Act of 2016,” which sought to require double pay for certain holiday work (e.g., Thanksgiving), no such legislation has been enacted. Employers should remain informed about potential legislative changes.

3. Religious Accommodations for Holiday Observances Are Required

Employers must provide reasonable accommodations for employees unable to work on specific holidays due to religious observances. Accommodations are evaluated on a case-by-case basis, taking into account the nature of the business and the employee’s request.

For businesses that require employees to work during recognized holidays, such as restaurants, it’s important to communicate these expectations in the employee handbook or other policies.

4. Holiday Pay Benefits Do Not Accrue

If an employer offers paid holidays, they are not required to allow employees to accrue this benefit. For example, if an employee leaves the company before a holiday occurs, the employer does not have to pay for the unused holiday. To avoid misunderstandings, policies should clearly state that holiday pay is contingent on being employed during the holiday. Employers often add conditions, such as requiring employees to work the days immediately before and after a holiday to qualify for holiday pay.

5. Payroll Processing Can Be Delayed for Certain Holidays

If a holiday falls on a scheduled payday and the employer’s office is closed, wages may be processed on the next business day. The DLSE outlines these requirements, and employers should familiarize themselves with the holidays listed in the California Government Code Section 6700, including:

  • New Year’s Day (January 1)
  • Martin Luther King Jr. Day (Third Monday in January)
  • Memorial Day (Last Monday in May)
  • Independence Day (July 4)
  • Veterans Day (November 11)
  • Christmas Day (December 25)

Other holidays, such as Admission Day (September 9) and Native American Day (Fourth Friday in September), are also recognized. Employers should ensure their payroll policies align with these requirements.

Wishing you a happy and successful holiday season! By staying proactive and informed, employers can ensure smooth operations and maintain compliance during this festive time of year.

As employees begin planning for winter vacations and time off to celebrate, it’s a good opportunity for California employers to review the state’s unique rules regarding vacation policies. To help navigate these complexities, this Friday’s Five highlights five critical vacation policy issues that can create challenges for California employers during the holidays:

1. “Use-it-or-lose-it” policies are prohibited.

Under California law, vacation time is treated as earned wages and accrues as employees work. This means employees cannot lose accrued vacation once it’s earned. Policies requiring employees to forfeit unused vacation time at the end of the year or before the holidays are not permitted. Employers must ensure their policies reflect this rule to avoid liability.

2. Reasonable caps on vacation accrual are allowed.

Although “use-it-or-lose-it” policies are illegal, employers may set reasonable caps on vacation accrual. A cap limits how much vacation time an employee can accrue.

The DLSE explains that once the cap is reached, additional vacation does not accrue until the employee uses some of their accrued time. However, the cap must be reasonable and not designed to deny employees their earned benefits. For example, a cap equivalent to 1.75 times an annual accrual has been considered reasonable by the DLSE in the past, but employers must consult counsel when setting a vacation cap. 

3. Accrued vacation must be paid out when employment ends.

With many employers and employees reevaluating roles during the new year, it’s important to remember that any unused, accrued vacation must be paid out as part of an employee’s final paycheck. California law treats vacation as earned wages, and it must be included in final pay under Labor Code Sections 201 and 227.3. Employers should ensure final paychecks are accurate and issued on time to avoid penalties.

4. Final wages cannot include deductions for unaccrued vacation.

Some employees may take vacation time during the holidays before fully earning it. While this is often treated like an advance, California law prohibits employers from deducting any “negative balance” from an employee’s final paycheck. Self-help remedies, such as recovering these unaccrued amounts directly from wages, are not allowed.

5. “Cliff vesting” vacation policies are problematic.

Employers may establish probationary or waiting periods during which employees do not accrue vacation time. However, policies granting a lump sum of vacation only after reaching a specific milestone—like a one-year anniversary—can create legal risks.

The DLSE views such “cliff vesting” as an attempt to avoid paying pro rata vacation if an employee separates before the milestone date. Instead, employers are encouraged to set a waiting period during which no vacation is accrued (e.g., the first six months) rather than using lump-sum grants tied to specific dates.

California law governing vacation policies is stricter than federal laws and those of other states. Employers who understand these rules can better manage holiday schedules, support employees during the winter break, and avoid potential legal pitfalls. By planning ahead, the holiday season can be a stress-free time for both employers and their teams.

When interviewing potential employees, California employers must navigate a complex landscape to ensure their practices are compliant and effective. Here are five essential practices to consider:

1. Understand Prohibited Questions to Avoid Discrimination

California law restricts employers from asking certain questions during interviews that could be seen as discriminatory. Employers must refrain from asking about an applicant’s marital status, children, plans for having children, religion, age, national origin, other protected characteristics, as well as pay history. Even seemingly harmless questions that could be interpreted as discriminatory should be avoided, as they may lead to potential claims. To prevent any missteps, employers should thoughtfully plan and review all interview questions in advance.

2. Prepare Effective Questions to Evaluate Candidates’ Thinking

Crafting questions that encourage applicants to think critically can reveal their problem-solving abilities and how they approach challenges. Some effective questions include:

  • “Tell me something that’s true that almost nobody agrees with you on.” (Peter Thiel)
  • “On a scale of one to 10, how weird are you?” (Tony Hsieh)

These types of questions not only test creativity but also provide insights into the applicant’s personality and how they handle unexpected queries.

3. Implement “Try Outs” Instead of Traditional Interviews

In a concept championed by Seth Godin, traditional interviews can be replaced with practical, hands-on “try out” sessions. This approach involves putting the candidate into real-life scenarios where they collaborate with potential team members or demonstrate their skills in action. For example, if hiring for a copywriting role, have the candidate create content and go through an editing process to see how they respond to feedback.

However, California employers must take caution to ensure these “try out” periods comply with wage and hour laws. The Division of Labor Standards Enforcement (DLSE) states that these sessions should be:

  • Focused on skill testing, not training.
  • Non-productive for the employer (i.e., the work isn’t sold or used for profit).
  • Limited in duration based on the complexity of the task.

The goal is to gain insight into the candidate’s abilities and compatibility without crossing into unpaid labor that may violate compensation laws.

4. Conduct Thorough Reference Checks

Following up with an applicant’s provided references can be a useful tool in the hiring process. This step helps verify the candidate’s work history and performance. However, I’ve changed my opinion on reference checks recently, as any applicant will not list anyone who may not provide a positive reverence for them. Therefore, employers should also considering searching publicly available information online, and this could provide a broader view of the applicant’s background. It is essential, however, to approach online searches carefully and ensure compliance with privacy laws and non-discrimination practices.

5. Exercise Caution with Background Checks

Background checks are a common part of the hiring process, but employers must proceed with caution due to strict regulations. Under both federal and California laws, including the Fair Credit Reporting Act (FCRA), the Investigative Consumer Reporting Agencies Act (ICRAA), and the Consumer Credit Reporting Agencies Act (CCRA) , employers have detailed obligations they must follow. Failure to comply with these rules can lead to significant legal exposure, as demonstrated in previous lawsuits involving improper background reporting.

Employers should familiarize themselves with these complex regulations or seek legal counsel to ensure they comply when conducting background checks. For more in-depth guidance, you can refer to the comprehensive article on navigating employment background checks in California here.

By following these practices, California employers can navigate the interview process effectively while maintaining legal compliance and fostering a positive candidate experience.

By Yaron Tilles

Under California law, non-exempt employees are entitled to one unpaid 30-minute meal period and two paid 10-minute rest breaks during a typical 8-hour shift. However, California’s meal and rest break rules (“MRB rules”) do not apply to interstate truck drivers.

If you’re asking yourself why truck drivers do not get the benefits of California’s more generous meal and rest break rules, the answer is federal preemption.

Background

The Motor Carrier Safety Act of 1984 empowers the Secretary of Transportation to “prescribe regulations on commercial motor vehicle safety,” including regulations ensuring “the responsibilities imposed on operators of commercial motor vehicles do not impair their ability to operate the vehicles safely.” (49 U.S.C. § 31136(a).) The Secretary delegated its rulemaking and preemption authority to the Administrator of the Federal Motor Carrier Safety Administration (FMCSA).

In 2011, the FMCSA revised the federal hours-of-service (HOS) regulations and adopted the rules on breaks for truck drivers including one 30-minute rest break for every eight hours worked. This break requirement supplemented longstanding federal regulations prohibiting a driver from operating a commercial motor vehicle if too fatigued or unable to safely drive.

Preemption (Federal Law v. California Law)

The HOS regulations on breaks and California’s MRB rules are very different. On the one hand, California’s Wage Order 9-2001, which applies to “all persons employed in the transportation industry,” guarantees employees two 10-minute rest breaks and one 30-minute lunch break during a typical 8-hour shift. California employers who fail to provide a such breaks must pay the employee one additional hour of premium pay, at the employee’s regular rate of compensation, for each day the meal or rest break is not provided. On the other hand, that same employee would only be entitled to one 30-minute break for that same 8-hour shift under the FMCSA’s HOS regulations.

This conflict between federal and state law created chaos for trucking companies and made compliance unreasonably burdensome. In response, the American Trucking Associates (ATA) petitioned the FMCSA to preempt California’s MRB rules.

In December 2018, the FMCSA examined the issue and determined that California’s MRB rules were preempted under 49 U.S.C. 31141(c) because they “caused an unreasonable burden on interstate commerce.”

In 2021, the Ninth Circuit upheld the FMCSA determination and confirmed that California’s more rigorous MRB rules for interstate truck drivers were preempted by the federal HOS regulations. (International Brotherhood of Teamsters, Local 2785 v. Federal Motor Carrier Safety Administration, 986 F. 3d 841 (9th Cir. 2021)). This decision affected truck drivers everywhere since, as the Ninth Circuit noted, 50% of the nation’s total container-cargo volume enters this country through California’s three major ports.

The FMCSA determination and Ninth Circuit decision in Int’l Brotherhood of Teamsters, Local 2785 was clear that the preemption applied to long-haul drivers (drivers that generally complete trips outside of a 150-mile radius from their work location).

In 2022, the California Court of Appeal in Espinoza v. Hepta Run, Inc. addressed the open question of whether the FMCSA preemption order also covers short-haul drivers. (Espinoza v. Hepta Run, Inc., 74 Cal. App. 5th 44 (2022))  Plaintiff Espinoza worked as a short-haul truck driver. He filed a lawsuit alleging, among other things, that he was not provided meal periods and rest breaks in compliance with California law.  His employer, Hepta Run, Inc., filed a motion for summary adjudication asserting that Espinoza’s meal and rest period claims were preempted by FMCSA’s preemption order.  The trial court denied the employer’s motion and Espinoza prevailed at trial. On appeal, the Second District Court of Appeal held that short-haul drivers are also covered by the FMCSA preemption order and, therefore, not governed by California’s MRB rules.

Possible Change: California Seeks Preemption Waiver

In November 2023, the California Attorney General and Labor Commissioner filed a petition requesting waiver of the FMCSA’s order preempting California’s MRB rules as applied to drivers of commercial motor vehicles subject to the HOS regulations (Docket ID FMCSA-2019-0048). Petitioners contend that California’s MRB rules “provide substantial health and safety benefits to drivers and the public and there is no tangible evidence that their enforcement has weakened the national supply chain.”

In response to the petition, the FMCSA requested comments by February 26, 2024, and that commentators address the following four issues:

  1. Whether and to what extent enforcement of a State’s meal and rest break laws with respect to intrastate property-carrying and passenger-carrying CMV drivers has impacted the health and safety of drivers;
  2. Whether enforcement of State meal and rest break laws as applied to interstate property-carrying or passenger-carrying CMV drivers will exacerbate the existing truck parking shortages and result in more trucks parking on the side of the road and whether any such effect will burden interstate commerce or create additional dangers to drivers and the public;
  3. Whether enforcement of a State’s meal and rest break laws as applied to interstate property-carrying or passenger-carrying CMV drivers will dissuade carriers from operating in that State; and
  4. Whether enforcement of a State’s meal and rest break laws as applied to interstate property-carrying or passenger-carrying CMV drivers will weaken or otherwise impact the resiliency of the national supply chain.

The FMCSA has received 52 comments, but its disposition remains pending as of October 28, 2024. The FMCSA has not issued its determination of California’s petition for waiver of the preemption order and there is no indication as to when a decision will be made.

Take Away

At present, the FMCSA’s preemption of California’s meal and rest break rules applies broadly to the trucking industry. California’s meal and rest break rules do not apply to truck drivers subject to federal HOS regulations, regardless of whether they are long-haul or short-haul drivers. However, that may change depending on the FMCSA’s decision on California’s pending waiver petition.

Trucking companies and companies that have logistical functions should review their meal period and rest break policies and consult with legal counsel if they have specific questions about the applicability of the FMCSA preemption order to their drivers.

With the return of Donald Trump to the presidency, California employers should evaluate how key workplace issues could be influenced under a Trump administration. Here’s an analysis of how these critical areas may be affected:

1. Immigration and Enforcement

Under a Trump administration, there could be an intensified focus on immigration enforcement. This might include stricter oversight and increased workplace audits, which could significantly impact sectors that rely on immigrant labor. Employers would need to be prepared for heightened compliance measures and potential disruptions to their workforce. For California businesses, this could mean ramping up internal audits and ensuring that their employment practices are in line with federal immigration laws to avoid penalties.

2. EEOC Pay Data Reporting: EEO-1 Component 2

The Trump administration’s track record has shown a general reluctance to implement stringent regulatory measures, and it is likely that under a renewed presidency, the EEOC would deprioritize federal pay data reporting requirements, such as EEO-1 Component 2. This could mean fewer obligations for employers at the federal level regarding wage reporting. However, California’s state pay data requirements, which are due on May 14, 2024, are more rigorous and California employers still must comply with these requirements.  

3. Diversity, Equity, and Inclusion (DEI) Initiatives

The Trump administration has historically taken a critical stance on DEI initiatives, aiming to restrict or even ban training and policies perceived as “divisive.” Employers in California could see a pushback on federally driven DEI requirements, aligning more with the recent efforts by 13 Republican attorneys general who issued warnings to Fortune 100 companies about DEI policies. Shortly after this letter was published, 21 Democratic attorneys general sent a letter to the Fortune 100 companies encouraging diversity programs.  However, under the Trump administration’s critical view on these programs could have companies reevaluate and potentially limit DEI initiatives based on potential federal repercussions. Nonetheless, differing state views on this issue will lead to a complex environment for employers navigating state versus federal priorities.

4. Labor Relations and Unionization Efforts

The Trump administration could continue efforts to limit the influence of unions, supporting legislative measures or policies that favor employers over organized labor. California employers, who already face strong union presence in certain sectors, would need to monitor federal developments that might embolden management rights or make union organizing more challenging.  However, employers should watch JD Vance’s involvement in this area, as he and Marco Rubio did propose a bill, Teamwork for Employees and Managers Act of 2024, promoting employee involvement organizations, and the blue-collar workers strongly supported Trump helping him get reelected. 

5. Minimum Salary Requirement Under the FLSA and California Law

The Trump administration has typically supported policies that prioritize flexibility for employers, and changes to the Fair Labor Standards Act (FLSA) under Trump could delay or reduce the increases in the federal minimum salary threshold for exempt employees. While the Department of Labor’s set increase in the minimum salary levels for exempt employees to $58,565 by January 1, 2025, would still be expected to proceed, there might be efforts to stall or revise these figures. However, these changes would not impact California employers directly, where the exempt salary threshold is already higher. California’s exempt salary will increase to $68,640 per year by January 1, 2025 (contingent on the outcome of Prop 32, which appears to have failed), state laws will remain the governing force for California employers in this regard. 

6. No Tax On Tips

The Trump administration has shown interest in supporting policies that reduce tax burdens, including the idea of eliminating taxes on tips. This aligns with both Harris’s and Trump’s previous platforms advocating for the removal of tip taxes. While California employers would likely see nominal impact due to existing state wage laws, potential federal legislation, such as the No Tax on Tips Act, could create nationwide standards eliminating tip taxes while maintaining the tip credit in certain states. This could be beneficial for certain employers, but the overall effect would be limited by California’s own stringent labor policies which does not recognize a tip credit.  However, a no tax on tips would still place market burdens on California employers in certain industries that customarily include tips, and there could be advantages in certain tip pooling policies that permit employees to receive additional compensation through tips.    

The Trump administration could introduce changes that lean toward deregulation and policies favoring business flexibility. While this may relieve certain federal compliance burdens, California employers will still need to navigate state-specific requirements that often go beyond federal standards. By keeping a close watch on potential federal shifts, especially in areas like immigration enforcement, labor relations, DEI policies, and wage regulations, California employers can better anticipate and adapt to a potentially evolving legal and regulatory environment.

As the November 5, 2024 election approaches, political discussions in the workplace may become a hot topic, and California employers are considering how best to regulate this sensitive issue. The goal is often to maintain a professional environment without violating employees’ rights. Recently, Elon Musk has taken a public stance by backing two high-profile cases where employees claim they were wrongfully terminated for expressing political views, bringing even more attention to this issue. Here are five essential points California employers should keep in mind when managing political discourse in the workplace:

1. Employers Have the Right to Regulate the Workplace, But Clarity Is Key

California employers can establish workplace guidelines that limit political discourse at the workplace and during working hours. Some companies implement an outright ban on political discussions to avoid distractions or conflicts. However, a complete ban may lead to confusion, as employees may be unclear about which conversations are permitted. For example, informal discussions about the election outcome are common and may not seem problematic to many.

A more effective approach is to articulate specific concerns about political discussions in the workplace, such as emphasizing professionalism and inclusivity. Employers should focus on maintaining a respectful environment where political talk does not disrupt workflow or alienate coworkers with differing views.

2. Contentious Issues Are Inevitable, So an Unbiased Approach Is Crucial

Allowing political discussions in the workplace can spark intense debates, especially in a highly polarized environment. Employers who choose to permit such discussions need to ensure they are conducted respectfully and that all perspectives are fairly represented. Taking a one-sided approach or censoring specific views can expose employers to legal risks, as seen in two cases currently supported by Elon Musk.

In one case, Gina Carano, formerly of “The Mandalorian,” was let go by Lucasfilm in 2021 after posting her positions on political issues on social media. Musk’s company, X Corp, is financially backing Carano’s lawsuit, arguing her termination infringed on rights protected under the California Labor Code. This support highlights Musk’s commitment to protecting employees from workplace repercussions for their political expressions, especially when those political views diverge from those of the employer.

Similarly, X Corp is supporting Major Dustin Whidden, who claims wrongful termination by Form Energy after expressing political views on X and participating in military training. Form Energy allegedly censored Whidden’s social media, an action Musk views as an overreach that infringes upon Whidden’s rights to free speech and his military service obligations. Both Carano and Whidden are basing their lawsuits on protections provided by the California Labor Code, which safeguards employees’ right to engage in political activities outside of work on their own time.

Musk has taken a strong public stance on employees’ rights to political expression, reinforcing his position in a recent post on X:

3. Understand the Boundaries Set by California Labor Codes

California law protects employees’ rights to political expression, particularly in personal or off-duty contexts. For example, Labor Code Section 96(k) prohibits employers from interfering with employees’ lawful conduct outside of work. Labor Code sections 1101 and 1102 further restrict employers from controlling or directing employees’ political activities, or from attempting to influence political choices through threats or coercion. For example, Section 1101 explicitly prohibits employers from “controlling or directing, or tending to control or direct the political activities or affiliations of employees.”

Employers should recognize that employees have the legal right to political expression outside the workplace, free from employer intervention. These laws underscore the importance of allowing employees freedom in personal political matters while setting reasonable boundaries within the workplace.

4. Employees Don’t Have First Amendment Protections in Private Workplaces

While employees may feel they have a constitutional right to free speech, the First Amendment’s protections do not apply to private employers. Courts have consistently upheld that private businesses have the right to regulate or restrict certain types of speech within their walls. For example, the Eisenberg v. Alameda Newspapers, Inc. (1999) case established that a private corporation could discharge an at-will employee due to dissatisfaction with the employee’s expressed views or writings.

Understanding this distinction can help employers clarify that while employees have rights to personal expression, private employers still retain control over workplace discussions.

5. Be Prepared for New Regulations Starting in 2025: The California Worker Freedom from Employer Intimidation Act

As of January 1, 2025, SB 399—the California Worker Freedom from Employer Intimidation Act—will introduce additional protections for employees. Under this new law, employers cannot compel employees to participate in meetings or communications where the employer expresses opinions on religious or political matters. Employees who choose not to attend these meetings must still be paid for the time, and employers who retaliate against employees for their decision could face a $500 civil penalty.

SB 399 highlights the state’s commitment to ensuring employees are free from pressure regarding political or religious issues in the workplace. Employers should prepare for this change by reviewing and, if necessary, adjusting policies and training to ensure compliance with the new requirements.

With the election season underway, California employers face the complex task of regulating political discourse in a way that respects employee rights while preserving a professional environment. By setting clear, unbiased guidelines, respecting legal protections for employees’ off-duty political activities, and staying informed on upcoming changes in state law, employers can manage this delicate balance effectively.

As an employer in California, understanding the non-negotiable rights granted to employees by state law is essential. California’s employment regulations are among the nation’s most detailed and comprehensive. Below are five key employment rights that employers must respect, as they cannot be waived by any agreement:

  1. Minimum Wage
    Labor Code Section 1194 ensures that employees have a right to minimum wage and overtime, which cannot be overridden by an agreement to work for less. This provision enables employees to pursue a private legal action if these rights are violated.
  2. Overtime
    California law mandates that nonexempt employees receive one and one-half times their regular pay for hours exceeding eight per day or 40 per week and double their wages for more than 12 hours in a single day. In Gentry v. Superior Court, the California Supreme Court affirmed that these overtime rights are non-waivable, solidifying public policy to pay overtime for extended hours.
  3. Expense Reimbursement
    Under Labor Code Section 2802, employers must reimburse employees for necessary expenses incurred in their job duties. Section 2804 clarifies that employees cannot waive this reimbursement right, making any attempt to have an employee waive this right null and void.
  4. Right to Receive Undisputed Wages
    Labor Code Section 206.5 prohibits agreements that would waive an employee’s right to receive wages that are undisputed. Furthermore, employers cannot require employees to falsely report hours worked as a condition of payment.
  5. Right to Participate in Private Attorneys General Act (PAGA) Representative Actions
    Initially, California law prohibited employers from including PAGA waivers in arbitration agreements, as determined in Iskanian v. CLS Transportation. However, the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana allowed for PAGA waivers in arbitration agreements, leaving open the issue to be decided by the California Supreme Court. The California Supreme Court took this issue up in Adolph v. Uber Technologies, Inc., and held that even when an employee enters into an arbitration agreement requiring the employee to arbitrate only their individual claims, the employee still has a right to continue to pursue remedies under PAGA, if they are able to win on their individual claims in arbitration. 

Understanding and adhering to these unwaivable employee rights is critical to maintaining compliance and fostering a positive work environment in California.

Mediation is an essential part of litigation, but it can be a confusing process for parties involved in a lawsuit. However, by understanding a few key aspects of mediation, you can approach the process with confidence and clarity. Mediation is a non-binding process where the parties hire an independent mediator, often a retired judge or experienced attorney, to help facilitate a settlement. Below are five critical points to help you navigate mediation successfully:

1. The Mediator’s Role Is to Make You Uncomfortable About Your Case

As I’ve discussed in previous posts, the mediator’s primary job is to get the case settled, not to favor one side or give you a sense of how strong your case is. Mediators aren’t there to be your friend or to validate your perspective—they’re there to find a middle ground between two adversarial parties who both think they’ll win in court. To achieve this, mediators will challenge both sides’ assumptions and highlight the weaknesses in each party’s case.

When a mediator seems to attack your position, it’s important not to take it personally. They are doing the same thing with the other side, working to move both parties toward compromise. Their critiques are strategic and part of the negotiation process—they aren’t necessarily a reflection of the mediator’s actual views on your case’s merit.

2. Set a Bottom Line and a Goal Before Entering Mediation

It’s crucial to establish your “walk-away” number before entering mediation. However, experienced negotiators know that having both a walk-away threshold and a goal is important.  Having a goal for the mediation as well as a walk-away number helps parties negotiate more effectively. 

That said, flexibility is key. While it’s important to know your limits, parties should also be prepared to reevaluate their goals if the case won’t settle within the pre-determined range. Staying open to adjustments during mediation can increase the likelihood of reaching a resolution.

Finally, remember, mediation is not binding.  Parties can end a mediation at any point if they do not agree with the negotiation tactics of the other party, or if they numbers are clearly not within the pre-determined set walk-away number. 

3. Know Your Mediator

Your attorney should have some information about the mediator before going into a mediation.  Often times attorneys have sued the mediator to help revolve prior cases.  Sometimes, if your lawyer has not used the mediator before, your lawyer can gather information about the mediator.  I generally like to know the following about the mediator and prepare my clients what to expect on the following items:

  • What is the mediator’s negotiating style?  Mediator have different styles, some are aggressive and combative (see point #1 above), and that is just their style.  Others take a friendly approach giving the impression that they are on your side and are here to help resolve the case.  However, clients always need to remember point #1 above. 
  • Clients need to understand the mediator’s background.  Is the mediator a retired judge?  If so, where did they preside? What types of cases did they preside over?  If they are an employment attorney, were they typically a plaintiff’s attorney or defense attorney?  If the mediator does not have an employment law background when mediating an employment law case, I think that is very important to know as well. 
  • What tools does the mediator like to use to move through impasses?  Will the mediator move to negotiating brackets? Do they like making mediator proposals?  See below for more information on these tools. 
  • Does the mediator stress facts or do they quickly move into negotiating numbers?
  • If the case does not settle at the mediation, how good is the mediator about following up with parties to try to keep settlement discussions continuing after the mediation? 

4. Understand Different Negotiating Tools Used in Mediation

Before the mediation, work with your attorney to understand the negotiation tactics that may come into play. Mediators often use strategies designed to help the parties move closer together. Here are two common tactics:

  • Negotiating by Brackets: Instead of offering a single number, one party may suggest a bracket.  So instead of offering a number as a counteroffer, the party would offer a range: “If you agree to come down to X, I’ll agree to go up to Y.” The midpoint of the range is typically seen as a hint of where the party is willing to settle. Think carefully about how to respond to such proposals and understand the strategies needed when negotiating brackets.  Some mediators will inform the parties not to look at the mid-points of the ranges, while others will indicate that the mid-points are basically where the party is willing to go to in negotiations. 
  • Mediator’s Proposal: If negotiations hit an impasse, the mediator may make an independent proposal, which is a settlement number they believe both sides might accept—not based on the case’s merit, but as a compromise. Each side responds to the mediator privately with a yes or no, without knowing the other party’s answer. This tactic can sometimes break deadlocks when emotions or posturing block progress.

Understanding the different tools that can be used at the mediation can help you navigate mediation more effectively and respond in ways that serve your interests.  It is also a good practice to understand and learn about these tools prior to the mediation, so that you are not attempting to understand the tools at the same time you are evaluating how to negotiate at the mediation. 

5. Stick to Your “Last, Best, and Final Offer”

Credibility is everything in mediation. If you present a number as your “last, best, and final offer” but continue to negotiate after it’s rejected, you lose credibility with both the mediator and the opposing party. Once credibility is lost, it’s difficult to regain, and the other side will likely push for further concessions.

If you decide to issue a “last, best, and final offer,” be prepared to walk away if it’s not accepted. It’s a tool that should be used sparingly, and only when you are ready to end negotiations.

The Prosper Accelerator retreat hosted by Inspire Brands this week provided a unique space for leaders in the hospitality industry to share insights into building stronger, more people-centered businesses. The Prosper Accelerator program, a signature initiative of the Prosper Forum, is designed to foster emerging leaders in the foodservice and hospitality industry. This year-long program, launched in 2023, brings together experienced industry mentors with exceptional talent to support leadership by developing a robust network of talented individuals to lead the way forward. To learn more about this impactful program and its commitment to empowering 1,000 leaders over the next decade, click here.

Here are five invaluable lessons I took away from the speakers over the last two days this week:

1. Lead with Giving Value

Maria Rivera, CEO of Smalls Sliders, emphasized the point that leaders need to leave with their hands out, not with their hands up.  What she meant by this was that by creating a meaningful connection with team members starts by offering value first, and not focusing on yourself as the leader. Maria emphasized that generosity is one of the most powerful ways to build trust and loyalty. By focusing on genuinely helping others, we naturally cultivate trust and relationships.

2. Learn from Mistakes

Success stories are inspiring, but the journey’s real learning points often come from failures. Leaders shared candid stories of their setbacks and what they learned from these mistakes. This was a great reminder that even leaders need resilience and highlighted the importance of not just recovering from mistakes but actively seeking out what these experiences can teach. It’s through these hard-earned lessons that we adapt and grow.

3. Don’t Require Your Team to Always Be Right, But Require Them to Have a Point of View

Vans Nelson, Senior Vice President of Operations Innovation at Inspire Brands made this point.  Having a stance encourages proactive thinking and ensures that everyone is actively participating in the direction of the team and organization. Allowing for mistakes (and not penalizing for them) cultivates innovation.  By encouraging team members to voice their opinions can help leaders see any potential blind spots, and to consider all alternatives. 

4. Authentically Listen

Many speakers during the retreat underscored the importance of the skill of listening. The best leaders don’t just hear words; they listen to understand, empathize, and respond meaningfully. Authentic listening builds a bridge of respect and trust, creating a culture where everyone feels valued and understood.

5. Even IT is About the People

Finally, a surprising yet poignant takeaway was the reminder that even the most tech-driven areas of business should remain people-centered. Whether we’re talking about IT, logistics, or data analysis, it’s the human element that drives these functions forward. Keeping people’s needs and experiences at the forefront—even in tech-focused roles—strengthens alignment and ensures technology serves its most important purpose: empowering people.

The Prosper Accelerator retreat offered an invaluable opportunity for each Accelerator to learn from experienced leaders and gain meaningful insights into building people-focused, resilient businesses, as well as network with other leaders in the industry. I hope they found the retreat as impactful as I did and that the lessons shared will inspire their growth as leaders. I’m looking forward to seeing each of them continue to grow and make their mark, and I can’t wait to reconnect at the Prosper events in 2025 to celebrate their progress!