On July 10, 2023, Governor Gavin Newsom signed Assembly Bill 102 into law (“AB 102”). This is the first time in almost 20 years that the Industrial Welfare Commission (“IWC”) has received funding from the state. The IWC, originally established in 1913 to regulate the working conditions of women and children in California, is now one of the state administrative agencies responsible for regulating wages, hours, and working conditions in California workplaces. The passage of AB 102 is a significant development for California employers given that the IWC was defunded in July 2004 and has not convened as a regulatory body since that time.
Appropriation bills such as AB 102 provide authorization to spend funds on specific government departments, agencies and programs. While these appropriation bills are typically of little interest to private employers, AB 102 is a notable bill for private employers as it allocates a full $3,000,000 to the IWC, effectively reviving the agency.
The IWC previously developed and issued 18 industry-specific wage orders that set forth many important requirements California employers must follow related to the wages and working conditions of its employees. The IWC wage orders provide additional restrictions and exemptions to California wage and hour laws for specific industries, such as manufacturing (Wage Order No. 1), mercantile (Wage Order No. 1), and agriculture (Wage Order No. 14), among others. Although the IWC was defunded in 2004, the wage orders it implemented remain in effect today.
The IWC wage orders have not been updated in over twenty years (since 2001). AB 102 specifies that the funding shall be available for the IWC to convene industry-specific wage boards and adopt new and revised orders. 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.
Employers should expect material pro-employee changes in 2024, given that the law specifies that any such orders “shall not include any standards that are less protective than existing state law.” We expect that these changes will provide more restrictions for California employers. In addition, it is possible that the IWC will be used to increase the state minimum wage, either statewide, or in certain industries.
Conclusion
AB 102 revives a layer to the ever-evolving and challenging legal landscape for California employers. The appropriation language under AB 102 brings the IWC back from oblivion, but limits the administrative entity’s authority to revise and update the outdated wage orders due to the language “provided that such orders shall not include any standards that are less protective than existing state law.” The limitation adds to the already difficult wage and hour requirements faced by private-sector California employers.
We will closely follow the developments of the IWC in 2024, and keep our readers and subscribers posted on what is happening with the wage orders.
