With the new year comes new labor and employment law requirements, including an increase in the state’s minimum wage.  Starting from January 2, 2018, the minimum wage has increased as follows:

  • For employers with 25 employees or less: $10.50 per hour
  • For employers with 26 employees or more: $11 per hour

Over the next few years, the minimum wage in California will continue to increase, culminating in a minimum wage of $15 per hour in 2023 for all employers, regardless of size.  These increases are part of an incremental step-up approved by Governor Jerry Brown in 2016.

Schedule for California Minimum Wage rate 2017-2023

DateMinimum Wage for Employers with 25 Employees or LessMinimum Wage for Employers with 26 Employees or More

Date Minimum Wage for Employers with 25 Employees or Less Minimum Wage for Employers with 26 Employees or More
January 1, 2017 $10.00/hour $10.50/hour
January 1, 2018 $10.50/hour $11.00/hour
January 1, 2019 $11.00/hour $12.00/hour
January 1, 2020 $12.00/hour $13.00/hour
January 1, 2021 $13.00/hour $14.00/hour
January 1, 2022 $14.00/hour $15.00/hour
January 1, 2023 $15.00/hour

For employers in Los Angeles, Pasadena, and Santa Monica, the new increase should not pose any concerns – those cities have separate minimum wage thresholds that already required $12 per hour for large companies (26 employees or more) and $10.50 for smaller companies (25 or less). However, for employers in those cities, it should be noted that another increase is scheduled for July 2018: $13.25 per hour for large companies and $12 per hour for smaller companies.

Be Careful of Overtime & Exempt Employees

When instituting the wage increase, employers should make sure that the new rate is calculated into not just regular pay, but also overtime calculations.  In the event that an employer has employees that fall under an “exempt” classification (executive/managerial, administrative, computer professional, commissioned inside salesperson, outside salesperson), employers should also reevaluate the minimum salary threshold paid to those employees, as those thresholds will increase with each minimum wage increase.  Employers should also take care that the most current minimum wage rate is listed on the required labor notices posted in the workplace.  A current copy of the minimum wage posting (as well as other required postings) can be found and downloaded here:  http://www.dir.ca.gov/wpnodb.html

It’s important that employers keep track of these increases, as failure to pay employees the minimum wage can lead to massive penalties on top of back pay, including liquidated damages in an amount equal to the back pay owed, and attorney fees and costs.  In the event that you believe that you have missed or incorrectly calculated the minimum wage, it’s important to speak to an attorney as soon as possible in order to avoid or minimize your liability.

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