Minimum Wage Alert: Employers Must Comply with New Local Increases by July 1, 2020

On January 1, 2020, the State of California increased the minimum wage to $13 per hour for employers with 26 or more employees and to $12 per hour for employers with 25 or fewer employees.

This is only part of the story, though. Local cities and counties have imposed their own separate minimum wage rules, with regular yearly increases.

On July 1, 2020, several Southern California counties and cities are increasing minimum wage for employees who work within their geographical boundaries. These increases vary by city and county and have a tiered minimum wage increase, depending on the employer’s size.

Southern California Minimum Wage Increases in Selected Cities and Counties

Many of our clients have employees working in the Los Angeles Metropolitan area, particularly Los Angeles County and City of Los Angeles. On July 1, 2020, minimum wage for employees working in the City of Los Angeles shall increase to $15/hour for larger employers (26 or more employees) and $14.25/hour for smaller employers (25 employees or less). The same rates apply for the County of Los Angeles (unincorporated areas), as well as other nearby cities like Malibu, Pasadena, and Santa Monica.

Exempt employees

Minimum wage rules also have an impact on salaried exempt employees. The exempt salary threshold in California is tied to the State minimum wage (not City) and must reflect a salary of two times the State’s minimum wage, assuming a 40-hour workweek. By way of calculation, in 2020, salaried exempt employees must be paid at least $54,080 per year (or $1,040 per week) for employers of 26 or more employees or $49,920 per year (or $960 per week) for employers of 25 or fewer employees.  In January, this shall increase to $58,240 for employers with 26 or more employees and $54,080 for employers of 25 or fewer.

Conclusion

Employers should continue to carefully track and timely comply with these changes and make sure to adjust payroll in advance of the increases taking effect.

As difficult as it is to stay on top of rapidly and consistently changing wage requirements, employers must remain vigilant and compliant to avoid costly claim exposure in later wage and hour matters. Please contact Lewitt Hackman if you require assistance in navigating these ever-changing wage requirements.

Sue M. Bendavid is a Shareholder in our Employment Practice Group.