California’s Minimum Wage Increase
California employers must remember that starting on January 1, 2017, the state Minimum Wage will increase to $10.50 per hour. This is the first stage of the law that was passed in April 2016 which mandates that California adopt a $15 state minimum wage by 2022.
The change in minimum wage to $10.50 per hour on January 1st applies to businesses with 25 or more employees. The state minimum age will increase annually until it reaches $15 per hour in 2022.
Delayed Compliance for Small Businesses
The new law acknowledges small business contributions, defined as those companies with fewer than 25 employees, to the state’s economy, and will permit these businesses more time to adopt the wage increases for their staffs. The increase will be delayed a year for employers with 25 or fewer employees, from January 1, 2018, increasing annually to $15 on January 1, 2023.
Exceptions to California’s Minimum Wage Increase
There are some exceptions for employees exempt from the minimum wage law. This includes outside sales representatives; those persons who are the parent, spouse, or child of the employer; and apprentices regularly indentured under the State Division of Apprenticeship Standards.
In addition, there is an exception for learners. These are individuals of any age in their first 160 hours of employment in occupations in which they have no previous similar or related experience. Learners may be paid not less than 85% of the minimum wage rounded to the nearest nickel during that time period.
The law also has granted exceptions for employees who are mentally or physically disabled (or both) and for non-profit organizations, such as sheltered workshops or rehabilitation facilities that employ disabled workers. These individuals and organizations may be issued a special license by the Division of Labor Standards Enforcement authorizing employment at a wage less than the legal minimum wage.
Also, the scheduled increases may be temporarily suspended by the Governor if certain determinations are made.
Federal and State Minimum Wage
The majority of California business owners and employers are subject to both the federal and state minimum wage laws. Plus, some cities and counties may also enact their own minimum wage rates. Several cities, like Berkeley, Cupertino, Emeryville, Los Altos, Mountain View, Oakland, Palo Alto, Richmond, San Francisco, San Jose, San Mateo, Santa Clara, and Sunnyvale in Northern California have enacted higher minimum wages.
In situations where there are multiple, conflicting requirements for minimum wages in effect for an area by different government sources, the employer is required to follow the stricter standard—in other words, the wage that is the most beneficial to the employee. As a result, because California’s current law requires a higher minimum wage rate than is required by federal law, all employers in California who are subject to both laws must pay the state minimum wage rate, unless their employees are exempt under California law. Likewise, if a city or county has adopted a higher minimum wage, employers must pay their employees the local wage where it’s higher than the state or federal minimum wage rates.
The minimum wage is a statutory requirement for company owners; it can’t be waived or bargained away by any agreement. That includes collective bargaining agreements.
The California Department of Industrial Relations reports that there are about 7 million hourly workers in California, and roughly 2.2 million of these workers earn the minimum.
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If you have questions about the new minimum wage law, business management, entrepreneurship, and business opportunities in and around Sacramento, Andrew can help answer your questions. Take some time to speak with Andrew about business transactions or visit our website Services. Contact Andrew via email or call him at (916) 570-2674.