As if we did not have enough to cope with managing the on-going COVID-19 pandemic and trying to reopen and resume business operations, its important to remember that the next phase of the local minimum wage increase will take effect on July 1, 2020.
While the State of California has set the state-wide minimum wage rate (which changes on January 1st of each year) many cities have their own local minimum wage ordinances which provide for a higher minimum wage. If your business is located in a city that has its own local minimum wage ordinance, you must comply with the local ordinance if it provides for a higher minimum wage than the State of California.
The minimum wage required to be paid to employees is dependent upon the size of the business. California, along with the City and County of Los Angeles, and many other local jurisdictions, have a two-tier wage structure based on the number of employees. Employers with 26 or more are considered “large” employers; those with 25 or less are considered “small” employers. The small employers pay a lower minimum wage rate.
Click here for a chart that details some of the local minimum wage rates in the State of California.
Los Angeles Minimum Wage Ordinance
Many minimum wage increases are dependent on the number of employees. Specifically, in Los Angeles the minimum wage is based on the number of employees employed within the City of Los Angeles: 25 or fewer or 26 or more employees.
It is important to understand that it is the number of employees working within the Los Angeles City limits that is relevant to determine the number of employees for purposes of applying the correct minimum wage. This issue was recently the focal point in a case alleging the failure to pay the proper minimum wage rate as the business had locations both within the Los Angeles city limits and locations in other cities. The City of Los Angeles FAQ’s addressed this issue as FAQ #51. A copy of the FAQ’s can be foundhere.
City of Los Angeles Wage Schedule Chart
Effective Date |
Employers with 26 or more Employees |
Employer with 25 or less employees or Non-Profit Corporations with 26 or more employees with approval to pay a deferred rate |
|
7/1/2020 7/1/2021 |
$15.00 $15.00 |
$14.25 $15.00 |
Overtime Rates Increase As the Local Minimum Wage Rate Increases
The City of Los Angeles mandates employers comply with the following requirements for compliance with the minimum wage (and paid sick leave) ordinance:
- Pay hourly minimum wage and provide paid sick leave for hours worked within the geographic boundaries of the City.
- Post the Office of Wage Standards Wage and Sick Time Notice in a conspicuous place at any workplace or job site in English and any other language(s) spoken by at least five percent (5%) of the Employees at the workplace or job site.
- Keep payroll records for four (4) years.
- Provide employees with the employer’s name, address, and telephone number in writing at the time of hire.
- Not engage in any retaliation against any employee exercising their rights under the Minimum Wage and Office of Wage Standards Ordinances.
Employer with 26 or more employees |
Employer with 25 or less employees |
| Overtime Rate at 1.5x Rate ($15.00 x 1.5 = $22.50)Double Overtime Rate at 2x Rate ($15.00 x 2.0 = $30.00) |
Overtime Rate at 1.5 Rate ($14.25 x 1.5 = $21.375)Double Overtime Rate at 2x Rate ($14.25 x 2x = $28.50) |
CALIFORNIA MINIMUM WAGE RATES
The State’s Minimum Wage increase takes effect of January 1st of each year. Below are the next minimum wage incremental increases:
Dates |
Employers With 26 or More Employees |
Employers With 25 or Fewer Employees |
|
1/1/20
1/1/21
1/1/22
1/1/23
|
$13/hour
$14/hour
$15/hour
$15/hour
|
$12/hour
$13/hour
$14/hour
$15/hour
|
Local Minimum Wage Increase Does Not Impact Exempt Status Employees
To be classified as an exempt employee, the worker must meet the: (a) salary test and (b) the duties test. For an employee to meet the “salary test” for the exemption from overtime the employee must earn a minimum monthly salary of no less than two times the state’s minimum wage for full-time employment. The local minimum wage increase does not impact the salary test for exempt classification. The Chart below sets forth the applicable exempt salary threshold.
EffectiveDate |
Employers With 26 or More Employees |
Employers With 25 or Fewer Employees |
|
1/1/20
|
$4,506.67/month
$54,080/annual
|
$4,160.00/month
$49,920/annual
|
|
1/1/21
|
$4,853.33/month
$58,240/annual
|
$4,506.67/month
$54,080/annual
|
|
1/1/22
|
$5,200/month
$62,400/annual
|
$4,853.33/month
$58,240/annual
|
POSTER REQUIREMENTS
The City and County of Los Angeles have published their Minimum Wage Posters which must be displayed in the workplace (click below for those posters). Employers should check with their cities and counties for the current minimum wage poster to be displayed.Click on the links below for the current posters.
This Newsletter is intended as a brief summary of employment law. While every effort has been made to ensure the accuracy of the information contained herein, it is not intended to serve as “legal advice,” or to establish an attorney-client relationship. If additional information is needed on any of the topics contained herein, please contact our office. All rights reserved. ©2020.