California’s minimum wage rose earlier this year to $10.50 per hour for employers with 26 or more employees. In recent years, however, many cities and counties have enacted their own minimum wage rules. As a result of the proliferation of local minimum wage ordinances, employers seeking to comply with minimum wage laws need to be familiar not only with the state minimum wage, however, but also any local minimum wage laws that may be applicable to them.
Compliance with local ordinances can be complicated, because some ordinances apply only to businesses that are based in the city in question, while others apply to all employees who work some minimum number of hours in the city.
On July 1, 2017, the minimum wage payable to non-exempt employees increased in several cities, including San Jose, San Francisco, Los Angeles and Emeryville. The new minimum wages in effect in these cities are:
|San Francisco||$14.00 per hour|
|San Jose||$12.00 per hour|
|Los Angeles||$10.50 per hour for employers with 25 or fewer employees; $12.00 per hour for employers with 26 or more employees|
|Emeryville||$14.00 per hour for employers with 55 or fewer employees; $15.20 per hour for employers with 56 or more employees|
Unlike the increase in the state minimum wage that went into effect on January 1, 2017, increases in local minimum wages do not affect employees who qualify as exempt from overtime compensation rules under the so-called “white collar” exemptions for executive, professional and administrative employees. California’s white collar exemptions require employers to pay exempt employees an annual salary of at least twice the state minimum wage. As a result, employers evaluating the exempt status of their white collar employees should focus on whether the employee’s salary is equivalent to at least twice the state minimum wage, rather than any minimum wage that may be applicable by virtue of local ordinances.
Aa a result of the increases in the State of California’s minimum wage on January 1, 2017, exempt white-collar employees must earn salaries of at least $41,600 if they work for employers with 25 or fewer employees and $43,680 if they work for employers with 26 or more employees. While most exempt employees in the Bay Area earn salaries in excess of $43,680, some exempt employees who work on a part-time basis are paid salaries at or near the minimum level.
What Should Employers Do Now?
- Identify any local ordinances that may be applicable – Employers should check to see if local minimum wage ordinances are in effect in any of the cities in which they operate, or in which their employees work.
- Determine whether local ordinances apply only to employers who are based in the city, or to employees who work in the city – Once they identified a local ordinance may apply, employers should determine whether the ordinance applies to employees who perform some minimum number of hours of work in the city, or only those who are based in the city.
- Pay the required minimum wage, and beware of increases as they occur – Having identified the local minimum wages ordinances applicable to them, employers should assure that they pay at least the minimum wage required by local law to their non-exempt employees, and also be alert to further increases as they occur.
- Comply with posting requirements – Most minimum wage laws include provisions requiring employers to post notice of the applicable minimum wage in the workplace.