Local Minimum Wages Ratchet Up On July 1

Fox Rothschild LLP

Fox Rothschild LLP

Effective July 1, the minimum wage jumps up yet again in localities throughout California. The minimum wage hikes come in the midst of a pandemic and one of the most difficult economic periods in decades when many employers are already struggling.

The July 1 increase will elevate the minimum wage to $15 per hour for some or all employers in locations including the City and County of Los Angeles and the cities of Malibu, Santa Monica, Pasadena, Alameda City, Fremont, Novato, San Leandro, and Santa Rosa.

Perhaps surprisingly, only two cities in California have delayed their minimum wage hikes scheduled for July 1 due to the economic and operational burdens COVID-19 is imposing on businesses. The city councils of Hayward and San Carlos, each located in the San Francisco area, voted in late March and April, respectively, to delay minimum wage increases that had been previously set for July 1 by their local ordinances.

Although set by their respective ordinances, the County of Los Angeles and the Cities of Los Angeles, Malibu, Santa Monica, and Pasadena share common minimum wage hikes effective July 1. In each of those jurisdictions, employers of 26 or more employees will be subject to an increase in the minimum wage from $14.25 to $15 per hour and employers of 25 or fewer employees will be subject to an increase from $13.25 to $14.25. The new Los Angeles County minimum wage will govern employment in all unincorporated areas of the county.

Of all the minimum wage figures that become effective on July 1, the highest wage rate — $16.84 per hour – becomes the law in Emeryville in Northern California.

The city of Novato in the San Francisco Bay area stands out as the only California jurisdiction having three tiers of minimum wage rates that are increasing as of July 1. In Novato, employers of 25 and fewer employees will be subject to an increase in the minimum wage from $12 to $13 per hour. Employers of 26 to 99 employees will be subject to an increase from $13 to $14 per hour. Employers with 100 or more employees will be subject to an increase from $13 to $15 per hour.

Stepping up local minimum wage rates on July 1 will not have consequence on the minimum monthly salary that must be paid to an employee to maintain exempt status under California law. The minimum salary for that purpose is based on the California state minimum wage, not the minimum wage set by any city or county.

The state-wide minimum wage is now $12 per hour for employees of employers with 25 or fewer employees and $13 per hour for employees of employers with 26 or more employees. The California minimum wage will next increase on January 1, 2021.

Employers should promptly review the hourly wage rates they are paying employees working in any of the local jurisdictions mentioned above and make any adjustments necessary to maintain compliance with local law. Where adjustments in hourly rates are made, corresponding changes to pay stubs must also be made.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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