What the Minimum Wage Hike Means for Employers
by Sue M. Bendavid & Nicole Kamm
Governor Jerry Brown signed into law Assembly Bill 10 on Wednesday, increasing California’s hourly minimum wage from $8.00 per hour to $9 per hour as of July 1, 2014 – and to $10.00 per hour as of January 1, 2016. The last minimum wage hike for the state of California was in 2008.
The bill amends current California Labor Code section 1182.12. For certain counties, the rates are even higher. For example:
- The minimum wage for employees in San Francisco has been $10.55 per hour since January 1, 2013.
- The minimum wage for employees in San Jose has been $10.00 per hour since March 11, 2013.
The wage increase won’t just affect non-exempt employees. For employees to be properly classified as exempt, the employee must earn at least twice minimum wage on a salaried basis (as well as meet the other elements of the exemption). Effective January 1, 2014, the minimum salary for exempt employees will increase from $33,280 to $37,440 annually. In January 2016, exempt employees must earn at least $41,600 per year, to qualify for exempt status.
This bill also has a direct impact on certain inside sales employees. Under certain wage orders (Orders 4 and 7), inside commissioned sales employees may qualify for a limited overtime exemption if they earn at least 1.5 x minimum wage (and if they satisfy other elements of the exemption). With the increase in minimum wage, this necessarily increases the minimum these employees must earn to qualify for the exemption.
If an employer has voluntary agreements with non-exempt employees to permit credit of meals or lodging against the employer’s minimum wage obligation, those should be adjusted as well.
As always, if you have questions about the new law, wage and hour claims, or other employer compliance questions, please feel free to contact us via email or phone.
Sue M. Bendavid and Nicole Kamm are Wage and Hour Defense Attorneys at our Firm. Contact them via email: sbendavid@lewitthackman.com, and nkamm@lewitthackman.com.