Written by Brandon Willenberg
Beach towel - check, sunscreen - check, beach tunes playlist - check, make sure the company complies with California’s July 2014 minimum wage increase - che...wait, what?! You ask, “how is it possible that a California employment law is now part of my summer plans?!” And I say, “come on, it’s California and nothing screams summer fun like making sure your company complies with the July 2014 increase in California’s minimum wage.”
Starting July 1, 2014 California’s minimum wage goes up to $9.00 per hour. So for those HR and payroll folks, before you head to the beach, lake, Disneyland, or wherever the warm summer days take you, make sure that come July 1st your hourly employees are making at least $9.00 per hour.
But this new minimum wage not only impacts your hourly workers, it will affect the requirements to classify your employees as exempt (e.g., administrative, executive, or professional) from California’s overtime requirements. Exempt employees in California must make a salary that is at least two times minimum wage for full-time work. This is known as the salary basis test for exemptions. Currently, California’s minimum wage is $8.00 per hour so exempt employees must make at least $33,280 in annual salary. However, starting July 2014, exempt employees will need to make at least $37,440 in annual salary. Also note that starting January 2016, California’s minimum wage goes up to $10.00 per hour which will make the minimum annual salary for exempt employees at that time $41,600.
I wish I could say you were done there. Remember California’s recently enacted (2012) Wage Theft Protection Act - California Labor Code Section 2810.5? You know, the “one” that requires that all employers provide each employee (excluding exempt employees) with a written notice containing specific wage and company information at the time of hire? Well that Act also requires that employers provide its employees (again, excluding exempt employees) with notices of changes in their wage rate. Good news though, if the wage rate is all that is changing, separate written notice is not required. The increased new rate can be reflected on the employee’s itemized wage statement in the next payroll period after the wage increase.
HR and payroll folks that work in California are used to the myriad employment law changes that happen each year in California. This one just happens to be at the height of summer, days before the July 4th weekend. OK, so not the best timing. So, before the days of summer come knocking down the door and people are running off on vacation, HR folks should huddle up with management and payroll and make sure all the necessary protocols place to ensure the Company is set for compliance with the July 1, 2014 minimum wage increase. And as always, give your trusted employment lawyer a call when those inevitable questions arise.
Have a great summer!!!