New Minimum Wage

While you may still be celebrating the federal ruling that put a halt to the Department of Labor’s new overtime rule, don’t let this good news take your focus away from other obligations that will arise on January 01, 2017. Effective January 01, 2017, California minimum wage will increase from $10.00 per hour to $10.50 per hour for businesses employing 26 or more employees. If you have 25 employees or fewer, you have an additional year to comply.

What does this mean for effected businesses? You must ensure that your non-exempt employees are paid at least $10.50 per hour for regular work hours and a minimum of $15.75 per hour for overtime work hours.

It also means that some exempt employees may still get a raise. Consistent with California law, exempt employees must meet both a “duties” test and a “salary” test. The salary test for most exempt positions is two times minimum wage multiplied by 2080 hours. The old minimum annual salary requirement was $41,600.00. As of January 01, 2017, the minimum annual salary requirement will increase to $43,680.00 for most exempt positions in companies that employ at least 26 employees. Please note these changes also effect inside sales commissioned employees and employees who are required to provide and maintain their own hand tools as customarily required by their trade or craft.

Finally, there are several local ordinances within California that require a higher minimum wage, regardless of company size, and you should familiarize yourself with the cities that have instituted such ordinances if you have a transient workforce.  If you don’t make the adjustments, you are likely to face penalties and fines from the labor commissioner or a court of law.