2016 brought with it a host of new legislation for California employers. With the passage of the Fair Pay Act, new piece rate legislation, family time off, and the expansion of Unruh to give stronger protection to immigrants, to name a few, it is understandable if employers are having a hard time keeping up. Unfortunately, while understandable, “we can’t keep up” is not a defense to an employment claim. With that in mind… It is important for all California business owners to remember that the minimum wage has increased this year.
As of Jan. 1, the state minimum wage has increased from $9 per hour to $10 per hour. This change not only impacts non-exempt workers, but the classification of most exempt workers. In addition to strict “duties tests” for administrative, executive and professional wage and hour exemptions, a salary of at least twice the state minimum wage must be paid to meet the “salary basis test.” To satisfy the “salary basis” test, an employee must be paid (1) on a guaranteed, minimum salary basis that cannot be reduced no matter how many hours are actually worked; and (2) a minimum salary of at least two times the state minimum wage. This raises the annualized exempt salary requirement to $41,600, up from $37,440. The retail industry is also impacted, as the inside-sales exemption requires employees be paid at least 1.5 times the state minimum wage, and at least half of their other earnings be from commissions.
The minimum wage was not only increased on a state level. Indeed, a number of municipalities have upped the minimum wage for companies who employ workers in their jurisdiction. For businesses with a Los Angeles office of 26 or more employees, the minimum wage will increase to $10.50 per hour in July 2016, and will increase annually up to $15 per hour by July 1, 2021. Employers in San Francisco experienced a minimum wage increase from $11.05 to $12.25 in May 1, 2015. The minimum wage will incrementally increase to $15 per hour by July 1, 2018. Furthermore, living wage laws may require higher minimum wages be paid as a condition of contracting with local, state or federal agencies. As always, employers should work closely with an experienced employment attorney to monitor each of the requirements to assure compliance.
For more information on the 2016 minimum wage increase, or any other updates to California employment law, contact attorney Drew E. Pomerance today.