Minimum Wage Increase January 1, 2023, Are You Prepared?
Minimum Wage Increase January 1, 2023, Are You Prepared?
Since 2017, the state minimum wage has increased every year for employers of all sizes in accordance with legislation signed into law by former Gov. Jerry Brown. That law requires minimum wage of $15 now. Employers with 26 or more employees had to pay that as of January of this year; employers with fewer than 26 employees are currently paying a minimum wage of $14, and that will go up to $15 January 1, 2023. However, a provision in California law provides for the minimum wage to be raised annually for any increase in inflation of over 7% as measured by the national Consumer Price Index, and that is what is now happening. Gov. Gavin Newsom announced in May that all employers of every size must begin paying $15.50 beginning January 1, 2023.
That’s the state requirement. Employers must also check and be sure to pay the local minimum wage in the employer’s place of business if it is higher than the state minimum wage. Employers in more than 30 cities or counties are already required to pay an hourly minimum wage ranging to over $17.
Employers with exempt employees should also evaluate their workers’ salaries because exempt employees in California generally must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment. That means salary exempt employees must make at least $32 per hour, or $64,480 per year, beginning January 1, 2023. For smaller businesses, that may pull employees from a salary structure back to an hourly structure.
The changes and variety of minimum wage adjustments between state, city, and counties are giving HR professionals a headache. It is nearly impossible for any one person or company to keep track of every single work location’s minimum wage, and this is proving more difficult with the changes to hybrid and remote workers. HR professionals have two options when attempting to align each employee with each city, county, and state minimum wage. They can either comply in each municipality or take the highest minimum wage from all the municipalities in which the company operates and apply it to everyone.
Some companies, like Starbucks and Target, have raised minimum wages across their enterprises before state hikes took place because they find it helps attract and retain employees and improves corporate image; but, this may not work for small businesses.
At the same time that workers are pushing for higher wages, the concept of who works where is also changing with remote and hybrid workers. Some companies that moved their workplace to a state with a lower cost of living (and minimum wage) have to rethink this idea as the cost structure is less reliable in our new world of remote work.
While minimum wage increases may pose a challenge for small business, there are ways to stay ahead of the curve. Here at Epps & Coulson, LLP we are ready to help you keep up to date on changes to the minimum wage in all of the jurisdictions and keep small business owners compliant and avoid being caught off guard. Please feel free to contact dawn at: dcoulson@eppscoulson.com for any questions.
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 likely considered advertising. Epps & Coulson, LLP encourages you to call to discuss these matters as they apply to you or your business.
EPPS & COULSON, LLP
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