CALIFORNIA MINIMUM WAGE INCREASES COMING JULY 1, 2021. – ARE YOU READY FOR THESE CHANGES?

CALIFORNIA MINIMUM WAGE INCREASES COMING JULY 1, 2021.  

ARE YOU READY FOR THESE CHANGES?

California is due to increase the minimum wage July 1, 2021, in some Local Jurisdictions.  Employers employing 25 or more people began this change January 1, 2021, but beginning July 1, 2021, this will affect employers with 25 or fewer employees in some areas.  So, what does this mean to you?  Below are guidelines to help you comply with your minimum wage requirements.

State minimum wage is now $14/hour for employers of 26 or more people and is set to go up July 1, 2021, for employers with 25 or fewer people in several Cities and Counties. Many local jurisdictions already have their own schedule of minimum wage increases and may be different from the State and Federal mandated minimum wage.  If these rates differ, it is the employer’s responsibility to comply with the rate most generous to the employee.  For example, if your State  minimum hourly wage is $14 and the new change to the local Jurisdiction is $16, you must pay the employee your local minimum wage of $16.  This can be confusing with so many people now working remotely because of COVID-19.  Many employers have workers working in different county jurisdictions.  For example, Los Angeles may have their own rate whereas, San Francisco may have another.  These jurisdictions may have different requirements to the size of businesses, or work hours.  So, it is important to check with your local jurisdiction to make sure you are compliant as local wage requirements are often higher than State or Federal minimum wages.

Many employers are wondering if they need wage increases to employees already earning equal or more than the new rate.  Although they are not obligated to provide a raise, some employees are expecting one.  Employers are nervous about the impact this may have on their businesses with labor cost and employee morale.  Are the employees getting their “fair” share compared with other employees who may not have the same experience or skills.  These are all questions employers need to consider when making wage changes.

Employers also need to be aware of the possible changes to their “Exempt” employees.  For individuals to qualify as exempt employees, California requires that they must perform exempt duties more than 50 percent of their work time.  Exempt administrative, executive, and professional employees earn a salary of no less than two times the state minimum wage for full-time employment.  The minimum annual salary is based on the current state minimum wage, calculated as follows: (minimum wage x 2) x 2,080 hours in a year (i.e., $14 x 2 x 2080 = $58,240).

Below is a list of some of the Local Jurisdictions.  Employers should check with both their city and counties’ schedules to make sure they are compliant and address these matters immediately before the July 1^st, 2021, deadline.

For the 2021 calendar year, the minimum salary for exempt employees of employers with 26 or more employees is $58,240 per year ($1,120 per week or $4,853.33 per month). For employers with 26 or fewer employees, it is $54,080 per year ($1,040 per week or $4,506.67 per month).

Under California law, minimum wage will also impact commissioned “inside” salespeople. Commissioned inside salespeople are exempted from the state’s overtime laws if the employee earns more than 1.5 times the state minimum wage and more than half of the employee’s compensation represents commission earnings.

Employers also need to be sure to post the new updated rates in the workplace and follow both State and local Jurisdiction requirements.  To obtain these new posters you can go to both the State and your Local Jurisdiction websites.

Here at Epps & Coulson, LLP, we understand that these updated changes may be confusing.  To ensure that you understand the minimum wage rules that apply to your employees and your Jurisdiction feel free to contact Dawn:  dcoulson@eppscoulson.com.

EPPS & COULSON, LLP

Attorneys admitted to practice in

California, New York, Colorado, Texas, and Oregon

www.eppscoulson.com

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is considered advertising under laws of some states.  Epps & Coulson, LLP encourages you to call in order to discuss these matters as they apply to you or your business.