The California minimum wage will increase in two separate $1 increments. The first increase will bump the rate from $8 to $9 in July 2014, and the second increase, to $10, will come in January 2016.
This latest legislation – which amends Labor Code section 1182.12 – ushers in the first increase to California’s minimum wage in six years. The newly minted law increases the take-home pay for many non-exempt hourly workers in California, but employers need to be mindful of the new law’s impact on lower-salaried exempt employees and other potential pitfalls.
The bill will affect approximately three million California employees now earning the minimum wage in both full-time and part-time employment in the private and public sectors. The most immediate effect of the increased minimum wage will be wage compression for those employees currently earning between $8 and $10 per hour. Employers will have to decide whether those individuals - who may have achieved wage increases in that range due to merit, seniority, or some other combination of factors - should be awarded a pay increase that takes their pay above the new minimum wage.
Checklist - Planning for Employers
Employers who have employees earning the minimum wage must plan their budgets accordingly for the July 1, 2014 wage increase.
Employers paying part of their work force the minimum wage should consider what response to give those employees now earning over $8, but less than $10, per hour, if they inquiry what will happen to their wages in light of the minimum wage increase.
If specific rates of pay are referenced in memos to or for employees, or in employee handbooks, employers must check to see whether these documents need to be amended or updated to reflect the rising rates of pay.