Employer Alert: Minimum Wage Increases
Posted in Staff Infection

On January 1, 2019, the state minimum wage increased to $12.00 per hour for employers with at least 26 employees, and $11.00 per hour for smaller employers.  The state minimum wage governs the exempt employee threshold salary, which has increased accordingly.  The new minimum salary for employees exempt from overtime is $49,920 annually for employers with at least 26 employees, and $45,760 annually for employers with fewer than 26 employees.

Further, a number of California municipalities will raise their minimum wage rates on July 1, 2019.  Employers should take care to note these changes because the pace of minimum wage increases in these locations will surpass increases in the California state minimum wage in the race to reach $15.00 per hour.

In determining whether a given increase applies, employers should know that it is not where an employee lives, or where an employer is based, that determines the minimum wage that must be paid.  Rather, it is where the employee works that matters.  In most of these locations, if an employee works as few as two hours in the city in a week, that municipality’s minimum wage applies to the time worked there.

Southern California municipalities that will raise their minimum wage rates on July 1, 2019, unless another date is noted, are as follows:

Location: Employers with at least 26 employees: Employers with fewer than 26 employees:
City of Los Angeles $14.25 (currently $13.25) $13.25 (currently $12.00)
County of Los Angeles (unincorporated areas) $14.25 (currently $13.25) $13.25 (currently $12.00)
Santa Monica $14.25 (currently $13.25) $13.25 (currently $12.00)
Malibu $14.25 (currently $13.25) $13.25 (currently $12.00)
Pasadena TBD1 (currently $13.25) TBD2 (currently $12.00)
San Diego (increased on January 1, 2019) $12.00 $12.00

Northern California locations with recent or impending increases in their minimum wage are below. Note that these locations do not distinguish between smaller and larger employers for minimum wage purposes:

San Francisco (July 1, 2018) $15.00 (subject to CPI increases on July 1, 2019, & each year thereafter)
Berkeley (October 1, 2018) $15.00 (subject to CPI increases on July 1, 2019, & each year thereafter)
Oakland (January 1, 2019) $13.80
Palo Alto (January 1, 2019) $15.00
Richmond (January 1, 2019) $15.00
El Cerrito (January 1, 2019) $15.00
Mountain View (January 1, 2019) $15.65
San Jose (January 1, 2019) $15.00
Santa Clara (January 1, 2019) $15.00
Sunnyvale (January 1, 2019) $15.65
Milpitas (July 1, 2019) $15.00
San Leandro (July 1, 2019) $14.00

Employers should also keep an eye open for changes at the federal level.  Effective December of 2016, the U.S. Department of Labor had planned to increase the federal exempt salary threshold from $23,660 to $47,476, but this move was blocked by an injunction.  The Department of Labor under the Obama administration appealed the injunction, but the Department of Labor under the Trump administration requested comments in the Federal Register regarding how the salary threshold should be updated and may be close to proposing a new overtime threshold, which is expected to be considerably lower than the $47,476 level previously planned. We will keep you posted on this issue as developments occur.  

The author would like to gratefully acknowledge the assistance of Joanne Warriner. 

[1] & [2] On or before February 18, 2019, the Pasadena City Manager is required to report on minimum wage impact to the City Council, and as soon as practical thereafter, the City Manager is required to request direction from the City Council whether to institute the following increases: on July 1, 2019, to $14.25 and on July 1, 2020, to $15.00.

This publication is published by the law firm of Ervin Cohen & Jessup LLP. The publication is intended to present an overview of current legal trends; no article should be construed as representing advice on specific, individual legal matters, but rather as general commentary on the subject discussed. Your questions and comments are always welcome. Articles may be reprinted with permission. Copyright ©2019. All rights reserved. ECJ is a registered service mark of Ervin Cohen & Jessup LLP. For information concerning this or other publications of the firm, or to advise us of an address change, please send your request to info@ecjlaw.com.

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