It is imperative that employers understand and comply with the California minimum wage. Additionally, some cities and counties have enacted local laws that are more restrictive than the California minimum wage. Therefore, it is important to comply with local laws to the extent that the local laws are more protective of employees than California and federal laws.

The California minimum wage will increase on January 1, 2019, to $12.00 per hour for employers with 26 or more employees. Employers with 25 or fewer employees will still enjoy a $11.00 per hour minimum wage for another year. Additional increases are scheduled to raise the minimum wage to $15.00 per hour for employers of all sizes by January 1, 2023. These increases will affect employees who supply their own basic tools and employees who are classified as exempt under California law.

California Minimum Wage Schedule of Increases

For more information, visit the Department of Industrial Relations website.

Local Living Wage Ordinances

Many cities and counties have enacted laws regulating the minimum wage, the scheduling of shifts, and/or paid sick leave and other rights for employees. You must comply with local laws to the extent that these local laws are more protective of employees than state and federal laws. Note that some ordinances apply to employees when employees perform work within the local city limits (i.e., San Francisco County and City). We note that these laws are constantly changing, and that some of the local minimum wage laws are higher than California’s minimum wage with increases occurring each January or July. See our prior SHLC blog on this topic which was posted in 2016.

The UC Berkeley Labor Center website provides a helpful list, including links to several local ordinances.

California Minimum Salary Increase for Exempt Employees

The minimum salary for some exempt employees will also increase. Executive, administrative, and professional employees may qualify as exempt under California law “if the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” California Labor Code § 515(a). Full-time employment means a 40-hour workweek.

For 2019, two times the state minimum wage means that employers with twenty-five (25) or fewer employees must pay exempt employees at least $45,760 per year. Employers with twenty-six (26) or more employees must pay exempt employees at least $49,920 per year.

The federal minimum salary requirements remain at $455 per week or $23,660 per year, which means California employers must pay the higher salary required under California law.

See prior SHLC blogs on this topic which were posted in 2017, 2016, and 2015.

Required California Notice to Employees

California Labor Code § 2810.5 requires that employers provide notice to employees of their rate(s) of pay, designated pay day, the employer’s intent to claim allowances (meal or lodging allowances) as part of the minimum wage, and the basis of wage payment (whether paying by hour, shift, day, week, piece, etc.), including any applicable rates for overtime. Notice of a change must be made within seven (7) days if the change is not listed on the employee’s pay stub for the following pay period. Click here to see the form that is available on the DLSE website.

Notice is not required if: (1) the wage rate is the only change and (2) the new rate is shown on the pay stub (itemized wage statement) with the next payment of wages. Therefore, if the only change for employees is an increase in the minimum wage, notice under Labor Code § 2810.5 may not be necessary. Decreases in wage rates can only be made prospectively and not retroactively where work was performed and earned under a specified rate.

Recommendations

• Check the UC Berkeley Labor Center website to ensure you follow local minimum wage ordinances. Please contact your employment attorney for further assistance if you see a city or county where your employees perform services so that your attorney may advise you about whether your current policies and practices meet the local ordinance requirements.
• Determine whether you will need to issue a Labor Code section 2810.5 Notice to Employee.
• Review pay stub for compliance with California Labor Code 226(a). Click here for more information.
• Sign up for Sutton Hague Law Corporation’s upcoming webinar “2019 Legal Update for CA Employers: What You Need To Do Now” scheduled for December 4, 2018 at 12:00 pm (PT). For more information and registration, visit: https://suttonhague.com/events/. All December webinars are Worthy Cause Webinars™, with all proceeds being donated to the National Veterans Foundation. More information about the NVF can be found at: nvf.org.