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California Minimum Wage – More to Think About

Posted on February 21, 2017

On January 1, 2017, the California minimum wage increased to $10.50 an hour, up from the current $10.00 an hour. Employers should review any pay practices that could be affected by the minimum wage increase.

Did you know that employers with under 25 employees have 1 additional year to implement state minimum wage increases? See the chart below:

Hourly Rate26 Employees or More25 Employees or Less
$10.50/hourJanuary 1, 2017January 1, 2018
$11/hourJanuary 1,  2018January 1, 2019
$12/hourJanuary 1, 2019January 1, 2020
$13/hourJanuary 1, 2020January 1, 2021
$14/hourJanuary 1, 2021January 1, 2022
$15/hourJanuary 1, 2022January 1, 2023

The City and County of Los Angeles, City of San Diego and City of Santa Monica have passed minimum wage ordinances that differ from the state requirements. We recommend you contact those cities directly for their current minimum wage requirements.

These special city ordinances apply not just to employers who are based in the cities, but also employees who work in the city. This can include salespeople who have accounts with the cities, technicians or repair people who visit an area within the city, attendance of work meetings at a site with the cities.

Do you have employees who are required to use their own tools? If so, the tool rate in California is now two (2) times the minimum wage rate, or $21.00 an hour. If you have employees using their own tools, make sure they are signing an acknowledgment to that effect. SeeIndustrial Welfare Commission Order No. 8-2001

California Wage Reminders:

  • The minimum threshold for salary exemption is now $43,680 annually
  • The minimum wage for inside sales exemption rises to $15.76 per hour.
  • Remember that the state minimum wage rate, not any city of county minimum age, governs exempt salary, inside sales and tool rate requirements.
  • Employers should also review and ensure that they employment posters are up to date and reflect the new minimum wage.Remember that California employers must pay employees no less than the state minimum wage per hour for all hours worked.
  • Even though the Federal minimum wage is lower, most California employers must abide by the higher California rate.

The obligation to pay the minimum wage can’t be waived by any agreement, including collective bargaining agreements.

Lauren Sims is the author and a Principal HR Consultant with eqHR Solutions.Whenever you require Human Resources or Payroll advice or help to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, call us for a no obligation consultation.

eqHR Solutions provides tactical and strategic HR support, ADP payroll product training and payroll processing to all size businesses in Southern California.