WORKPLACE LAW - Increase in
California's
Minimum Wage
Question:
I know that a new bill was signed that is going to raise the minimum wage in California. Can you tell me when this will go into effect, and if there is anything else I need to know about the change in the wage or any requirements that there might be for employers?
Answer:
As you stated, the law regarding California’s minimum wage has changed. On September 12th, Governor Schwarzenegger signed SB 1835, which will raise the 2007 California minimum wage to $7.50 an hour on January 1, 2007, and to $8.00 an hour on January 1, 2008. This change obviously has the most impact on hourly employees, whose pay rates will need to be adjusted accordingly on January 1 st of the next two years.
However, the increase will also affect exempt executive, administrative and professional employees whose minimum salary requirements are based on the state minimum wage. The California Wage Orders require that, in order for an employee to be classified as “exempt” from the Wage Orders’ meal and rest period and overtime requirements, he/she must receive a monthly salary that is equivalent to no less than two times the state minimum wage for full-time employment. So, for example, a full-time hourly employee will, as of January 1, 2007, be entitled to minimum wages of $7.50/hour. Assuming that employee works a 40-hour workweek, he/she would earn $300/week, which translates to $1,300/month. Therefore, in order to remain exempt under the Wage Orders, exempt employees’ minimum salaries will increase to $2,600 per month ($31,200 per year) on January 1, 2007, and to $2,773.33 per month ($33,280 per year) on January 1, 2008.
In addition to making the required salary and wage adjustments, employers will also need to post new California Employer Posters that reflect the new California minimum wage increase. In order for an employer to remain compliant with California and federal law, these posters must be put up in the employer’s place of business no later than January 1, 2007. These posters can be obtained from the California Chamber of Commerce.
Employers should be aware that they can face significant penalties for failing to comply with the state’s minimum wage requirements. California Labor Code section 1197 provides for a $100 penalty for each underpaid employee for each pay period that he/she is underpaid. For each subsequent violation for the same offense, the penalty increases to $250 per employee. Each pay period during which an employee receives less than minimum wage is considered to be a separate violation for which an additional penalty may be imposed. Additionally, waiting time penalties may be imposed on the employer in the amount of the employee’s daily wages for up to a maximum of 30 days. Employees may also, via civil litigation, seek liquidated damages in the amount of their unpaid wages, plus interest, and may be entitled to recover attorneys’ fees as well as costs associated with their lawsuit.
California ’s minimum wage requirements apply to virtually all employers and employees in the state. While there are some exceptions to the requirement, they are very narrow and apply in only a handful of limited circumstances. Generally speaking then, employers should ensure that they are in compliance with the rules regarding minimum wage, and should be aware of the changes that the newly increased wage will bring about.- - - - - - - - - - - - - - - - - - - - - - - - - -
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