• Minimum Wage Increase Effective July 1, 2014 - What You Need To Know
  • July 7, 2014
  • Law Firm: Hill Farrer Burrill LLP - Los Angeles Office
  • Although many employers are aware of the upcoming change to the California state minimum wage, here is one last reminder. The California state minimum wage will increase to $9.00 an hour starting July 1, 2014. It will increase again to $10.00 per hour on January 1, 2016.
    Unlike federal law, California's minimum wage rate must be separately paid for "each hour worked" rather than as the average of the compensation for all hours worked in a week. As a result, "piece rate" compensation systems must ensure that each category of employee work time is generating sufficient compensation to comply with the new hourly minimum wage.

    Please remember this change in the minimum wage also impacts exempt employees. In July 2014, the minimum salary for the Executive, Administrative, and Professional overtime exemptions will increase from $33,280 to $37,440 annually. In January 2016, the minimum salary will increase to $41,600 annually for those exemptions.

    Also, the "regular rate of pay" for exempt commissioned inside salespeople is pegged at 1.5 times the minimum wage and will thus increase in 2014 and 2016 to $13.50 and $15.00, respectively. If you have any questions as to who qualifies as an inside salesperson, you can contact us to help you make that determination.

    Finally, employers with collective bargaining agreements with different overtime premiums than authorized by the Wage Orders should verify that their union employees are earning at least 30 percent more than the new California state minimum wage.