[Source: LA Biz] One thing is always certain for California employers at the start of each year — a number of significant employment-related laws will go into effect.
One such area is the continued increase in the state’s minimum wage. Although there are some exceptions, almost all employees in California must be paid the minimum wage.
Increases will continue through 2023
Back in April 2016, California Governor Jerry Brown signed into law an increase to the state minimum wage from $10 to $15 per hour. Although this increase to $15 was not immediate, the law did set a gradual increase until it reaches $15 per hour by Jan. 1, 2022.
For employers with 26 employees or more, the following chart details the scheduled increased in the state’s minimum wage:
- Jan. 1, 2018 — $11
- Jan. 1, 2019 — $12
- Jan. 1, 2020 — $13
- Jan. 1, 2021 — $14
- Jan. 1, 2022 — $15
Businesses with 25 or fewer employees will have an additional year to comply with the new minimum wage law, which means the first increase for these companies began on January 1, 2018 and will continue until January 1, 2023.
The schedule for businesses with 25 employees or less is as follows:
- Jan. 1, 2018 — $11.50
- Jan. 1, 2019 — $11
- Jan. 1, 2020 — $12
- Jan. 1, 2021 — $13
- Jan. 1, 2022 — $14
- Jan. 1, 2023 — $15
To complicate matters for employers in California, this increase in the state minimum wage does not affect higher local minimum “living” wage ordinances throughout the state of California.
California cities and counties have increasingly passed their own minimum wage laws that only apply within their jurisdiction.
As a result, employers will be obligated to pay the higher local rate until the state minimum wage catches up and surpasses it.
By way of example, the Los Angeles minimum wage ordinance will increase the minimum wage for employees working in the City of Los Angeles to $13.25 an hour on July 1, 2018 for employers with 26 or more employees. The minimum wage in the City of Los Angeles will gradually increase until it reaches $15 on July 1, 2022.
Similar to the state minimum wage increase, the increase in for the City of Los Angeles has a different track for those employers with 25 or less employees.
Notably, the Los Angeles specific ordinance defines an employee as any individual who in a particular week performs at least two hours of work within the geographical boundaries of the city for the employer. These employees are covered by this ordinance regardless of whether they are full-time, part time, seasonal or temporary.
As a result, an employer may find itself in a situation where it is paying an employee multiple rates within a pay period.
For example, let’s assume an employee works out of a company’s corporate office in the City of Commerce and is paid minimum wage. During a particular week, that employee is tasked with looking for files in the company’s storage unit located in the City of Los Angeles, and that project takes him four hours to complete.
For those four hours of work, the company would be required to pay this employee at the minimum rate set by the Los Angeles local ordinance. The additional time he worked in that pay period would be compensated based on the minimum wage set by the State of California.
What does this mean for California employers?
With the recent minimum wage increase, there are many things to consider and to be done to ensure compliance with California law. A common misconception for employers is to assume that the state’s minimum wage law only affects non-exempt employees.
For example, the state minimum wage has an impact on the minimum salary threshold for exempt employees. Per California law, exempt employees must earn a monthly salary of at least double the minimum wage.
Other elements of compensation affected by the minimum wage increases include, but are not limited to, meal and lodging deductions, commissioned salesperson exemption pay, as well as the minimum pay for those employees who are required to use their own hand tools at work.
As a result, it is important to act quickly and seek legal counsel to ensure your company’s wage and hour practices comply with California law.
Source: LA Biz
January 8, 2018