This is the first post of a new monthly series of CDF’s Labor & Employment Law Blog providing California employers with wage and hour compliance tips and best practices.

California’s reputation as a breeding ground for wage and hour litigation – the state is responsible for a disproportionally large share of such lawsuits nationwide - seems set to continue. With that, as the first month of 2023 comes to a close, California employers should ensure that they have complied with new minimum wage requirements to avoid potential costly litigation.  

As of January 1, 2023, California’s minimum wage increased to $15.50 per hour, regardless of the size of the workforce.

Here’s a checklist of some important workplace issues that the minimum wage increase affects:  

1. Update Posters:   Make sure your workplace posters are up-to-date and reflect the correct minimum wage requirements.
2. Exempt Position Salary Requirements:  Under federal and state law, employees who meet certain exemptions (i.e., executive, administrative, or professional) are exempt from minimum wage and overtime requirements if they meet the applicable exemption tests. The threshold minimum salary requirement for exempt employees is at least two times the state minimum wage. As such, effective January 1, 2023, the minimum salary for an employee classified as exempt under the executive, administrative, or professional category, must be paid a minimum annual salary of $64,480.00.
3. Local Minimum Wage Ordinances:  There are a multitude of local ordinances in California that require employers to pay more than the state minimum wage to non-exempt employees, as well as industry-specific requirements. Many of these ordinances update and become effective annually in July. Employers should set a reminder to check for mid-year updates to ensure compliance. This is particularly important given the increase in remote work environments where an employee’s work location may no longer be in-office and instead, located within a city or county that has a local ordinance that requires an hourly rate higher than California’s minimum wage. California employers should remain vigilant about compliance without relying blindly on an outside payroll company to avoid wage and hour pitfalls that result in costly litigation, that employers typically bear alone. There are specific nuances of potentially overlapping regulations and realities of today’s remote or hybrid work environments. Thus, whether California’s minimum wage requirement is met is not always the end of the inquiry. Click here to read a previous CDF blog post on this topic.
4. Maintaining Labor Code Exemptions:  While few exemptions from the California Labor Code exist, in the context of a Collective Bargaining Agreement (“CBA”), parties may agree to certain wage and hour conditions that would otherwise run afoul of the state’s Labor Code. For example, Labor Code 514 provides an exemption from daily overtime if an employee’s wages, hours of work, and working conditions are covered by a valid CBA that also provides for premium wage rates for all overtime hours worked and a regular hourly rate of pay for those employees of not less than 30 percent more that the state minimum wage.  Employers in unionized work environments should consider whether they want to take advantage of this exemption. 
5. Annual Wage and Hour Compliance Checks:  CDF team members regularly conduct California wage and hour compliance checks on a variety of issues in order to help ensure compliance and minimize risks of wage and hour liability in California