As a result of Senate Bill 3 being signed by Governor Jerry Brown on April 4, 2016, California’s minimum wage will increase on January 1, 2017 and will increase each year until reaching $15 per hour in 2022. This change in employment law not only raises the minimum hourly rate affected employers are required to pay employees, but also results in a change in which employees will be considered “exempt” from the requirement of paying overtime. When an employee is misclassified as exempt, substantial legal liability arises for the employer. This means keeping up with the changes by the new minimum wage increase law is important.
Currently, the minimum wage in California is $10 an hour. The new law sets the first increase to take place on January 1, 2017 and it only applies to employers who employ 26 or more employees. Affected employers will be required to pay at least $10.50 per hour. The is a separate schedule for employers that employ less than 26 employees so it is important that employers know when and how much each increase is.
If you are an employer in California it is critical that you understand how the change in minimum wage will affect your business. It is in your best interest to consult with an employment law attorney that is able to assess your current payroll structure and advise you on any changes that you will be required to make. Employers need to consider the exempt classification issues. Making sure they meet the minimum salary test and also consider the FLSA standard which is currently higher than California for exempt employees.The change will apply in several different scenarios with how employees are paid so consulting a lawyer is advisable.
The employment law attorneys at Arata, Swingle, Van Egmond & Goodwin represent employers in communities throughout the San Francisco Bay Area and Northern California. Contact us if you are an employer and have any questions about the change in minimum wage and how it may affect your company.