How CA’s Minimum Wage Increase Will Impact Your Business

On September 25th 2013, the State Legislature passed a bill into law that will raise minimum wage for all non-exempt California employees.  The new law, codified at Labor Code 1182.12, mandates two separate one dollar increases to the minimum wage, the first occurring on July 1st, 2014 and the second on January 1st, 2016.

So, how will this change in law impact your business?

Well, in addition to the obvious effect it will have on employees currently receiving the minimum wage of $8 per hour, the new law may impact certain overtime-exempt employees, as well.  This is because most overtime-exempt positions require payment of a salary equal to at least twice the minimum wage for a 40-hour work week.   Presently, this amounts to a weekly salary of no less than $640, but the 2014 minimum wage increase will boost this number to $720 and the 2016 increase with further boost this number to $800.  Paying an overtime-exempt employee less than the requisite minimum salary will void the exemption with potentially disastrous consequences for the employer.

Beginning July 1st, 2014, all employers must also update the labor law posters in their workplace to reflect the increase in minimum wage.  Although compliance with this requirement may seem trivial, failing to have up-to-date posters can result in the imposition of several thousand dollars in fines.

Critics of the minimum wage increase say it will place an unfair burden on employers.  However, with the last increase to California’s minimum wage coming back in 2008 – when the average cost of gas was just $3.25 a gallon – proponents say it is overdue.

Regardless of your political opinion concerning the increase, compliance is essential.  Knowing what you need to do and preparing for it in advance will help to ensure that your business runs smoothly through 2016.