In California, the New Year Brings New Minimum Wage Requirements
Los Angeles, Calif. (February 6, 2020) - The State of California has a history of increasing its minimum wage, with wage increases occurring at the start of both 2019 and 2018. This new year is no different, with California again increasing its state minimum wage at the start of 2020.
Effective January 1, the state minimum wage for employers of 26 or more employees increased from $12.00 per hour to $13.00 per hour, and the state minimum wage for employers of 25 or fewer employees increased from $11.00 per hour to $12.00 per hour.
California Cities with 2020 Minimum Wage Increases
Cities in California have also enacted their own minimum wage legislation. Several cities enacted increases also effective January 1, including Oakland ($14.14 per hour), San Diego ($13.00 per hour), San Jose ($15.25 per hour), Santa Clara ($15.40 per hour), and Palo Alto ($15.40 per hour).
Other cities will increase their minimum wage on July 1 of this year. These cities include Berkeley ($15.59 per hour), Pasadena ($14.25 per hour), San Francisco ($15.59 per hour), and Santa Monica ($14.25 per hour). Also on July 1, the City of Los Angeles and unincorporated Los Angeles County will increase their minimum wage to $15.00 per hour for employers of 26 or more employees and $14.25 per hour for employers of 25 or fewer employees.
Effects on Other Wage Thresholds
These minimum wage increases have effects on other wage thresholds as well. For example, the statewide salary threshold level to determine whether an employee is eligible as an “exempt employee” has now been raised. For employers of 26 or more employees, that salary minimum is now $54,080 annually ($1,040 weekly), and for employers of 25 or fewer employees, the salary minimum is now $49,920 annually ($960 weekly).
This will also affect commissioned inside salespeople who, in order to maintain their exempt status, must now make more than $19.50 per hour if the employer has 26 or more employees, and more than $18.00 per hour if the employer has 25 or fewer employees.
The increase in minimum wage also impacts the “tool wage” in California, or the minimum hourly wage that must be paid to employees who provide their own tools. This rate has now increased to $26.00 per hour for employers of 26 or more employees and $24.00 per hour for employers of 25 or fewer employees.
Employers throughout California should review their payroll to ensure they are in compliance with these new minimum wage thresholds in order to avoid becoming subject to liability for unpaid wages.
For further information on these minimum wage changes, contact the author of this alert, or visit our Labor & Employment Practice page to find an attorney in your area.
Nicholas Baltaxe, Associate
Ashleigh Reif Kasper, Partner