Wage And Hour Developments That Affect All California Employers

Greenberg Glusker LLP


A. Federal and State Requirements -

The current federal minimum wage is $7.25 per hour. This has been the federal minimum wage for the last six years, and although there are proposals to increase it, it is not currently scheduled to increase. California’s current minimum wage is $9.00 per hour, increasing to $10.00 per hour on January 1, 2016. Because California’s minimum wage exceeds the federal standard, California employers must pay no less than the California minimum wage to their employees. In addition, certain California cities and municipalities have established their own higher minimum wages, and those rates will prevail in those jurisdictions. Although there is no current legislation in effect to increase the minimum wage beyond $10.00 per hour in California, there is a proposal known as the Fair Wage Act of 2016 that will likely be on the ballot next year and proposes a gradual increase in the minimum wage to $15.00 per hour.

B. The City of Los Angeles -

In June, Mayor Eric Garcetti signed into law a measure which will create a special minimum wage for the first time ever in the City of Los Angeles. The law is estimated to impact 600,000 workers and raises the minimum wage for all employers of 26 or more employees to $10.50 per hour on July 1, 2016, $12.00 per hour on July 1, 2017, $13.25 per hour on July 1, 2018, $14.25 per hour on July 1, 2019 and $15.00 per hour on July 1, 2020. Non-profits (regardless of the number of employees they have) and employers who employ less than 25 employees are given a one year reprieve. As such, their employees will not need to be paid $10.50 per hour until July 1, 2017, $12.00 per hour until July 1, 2018, $13.25 per hour until July 1, 2019, $14.25 per hour until July 1, 2020, and $15.00 per hour until July 1, 2021. Thereafter, regular increases are scheduled to occur and will be tied to the Los Angeles consumer price index. The only exception to this is for non-profits with 25 or fewer employees. They can apply for a waiver if their top executives earn less than five times the wage of their lowest paid worker, they provide traditional job programs, serve as childcare providers, or are primarily funded by city, county, state or federal grants. Certain employees covered by collective bargaining agreements are also exempt from the law.

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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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