Image

RECENT MINIMUM WAGE HIKE HAS MULTIPLE DERIVATIVE CONSEQUENCES


As most readers know, the California minimum wage increased from $10.50 to $11.00 an hour as of January 1, 2018 for employers with 26 or more employees. Employers with 25 or fewer employees must pay a minimum wage of $10.50 an hour. Employers should remember that minimum wage increases have multiple consequences that are discussed in Section 6.4(b) of the Wage And Hour Manual For California Employers, 21st Edition, which has been updated for 2018.

 

For example, the increase in the minimum wage impacts (1) the minimum salary that must be paid to exempt employees, (2) the minimum hourly rates that union employees must receive to qualify for the state overtime and paid sick day rule exemptions, (3) the minimum sums commissioned employees covered by Wage Orders 4 and 7 must receive to qualify for the state overtime exemptions, (4) the split-shift premium rate, (5) the meal and lodging credits that are available, (6) the hourly rates paid employees who are exempt from the tool and equipment rules because their trade or craft customarily requires them to provide tools and equipment, (7) the uniform maintenance allowance, (8) the minimum rates that must be paid employees of organized camps, and (9) the minimum rate that must be paid to employees compensated on a piece-rate basis for non-productive time. Employers who are covered by any of these rules should examine the effect of the minimum wage increase.

 

An illustration is the minimum salary that must be paid to employees under the state executive, administrative, and professional exemptions. It increased from $840 to $880 per week as of January 1, 2018. Failure to adjust salaries, as needed, can result in claims that employers have misclassified employees as exempt or not paid the requisite salary levels. Of course, employers must continue to meet the duties and responsibilities test set forth in the law.

To read more articles like this one, subscribe to the ALERT Newsletter today!