By: Trevor D. Large, Partner
July 2014
On July 1, 2014, California’s minimum wage increased to $9.00 per hour. However, this is not a change that affects only minimum wage workers. Employers must be aware of other consequences of this increase:
The minimum salary for employees who qualify for one of the “white collar” overtime exemptions (administrative, executive, or professional) must be equal to at least two times the state minimum wage for full-time employment. The increase in the minimum hourly wage therefore also increases the minimum salary requirements for these exemptions. As of July 1, 2014, the minimum annual qualifying salary will be $37,440.
The inside salesperson exemption requires that employees under the exemption earn more than 1.5 times the current minimum wage and that commissions make up more than half of the employee’s earnings each week. Thus, to be exempt from overtime, as of July 1, 2014, California inside salespersons will need to be paid at least $13.51 per hour. Additionally, inside salespeople will need to increase their earnings from commissions to continue to be exempt.
The increase in minimum wage also affects employers who compensate their employees on a commission only or piece-rate basis. Recent judicial decisions mandate that such employees be compensated at no less than the minimum wage for non-productive work performed by such employees.
Wage orders in virtually every industry or occupation allow the value of meals and lodging furnished by the employer to be credited toward the employer’s minimum wage obligation up to specific amounts. Employers who use this form of compensation as part of their wages will need to adjust accordingly to ensure that they are meeting the increased obligations.
The Wage Theft Prevention Act of 2011 took effect on January 1, 2012. In part, it requires employers to notify non-exempt employees in writing of any changes to their rate of pay. Notice of any changes must be provided within seven calendar days from the time the change was made. Accordingly, employees affected by the change in minimum wage must receive notice from their employer by July 7, 2014, for the increase to $9.00.
The Labor Code requires employers to provide every employee with a written itemized statement either semimonthly or at the time wages are paid. Among other things, the itemized statement must show all applicable hourly rates in effect during the particular pay period and the corresponding number of hours worked at each hourly rate. Employers should take steps to make sure that their itemized statements accurately reflect the increased minimum wage as of July 1, 2014.
Remember, on January 1, 2016, the minimum wage will increase to $10.00 per hour, triggering similar changes as above.
Trevor D. Large, Partner
TLarge@BFASLaw.com
(Direct) 805.966.7716
DISCLAIMER: This Advisor is one of a series of business, real estate, employment and tax advisories prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution of this legal Advisor.
