by Philip M. Vermeulen, Legislative Advocate for the Golden State Builders Exchanges
Several laws that were signed last year will take effect on July 1, including the upcoming minimum wage increase. Employers should take note of the laws below and revise existing business practices accordingly AND post a new poster of your office wall!
On July 1, 2014, California’s minimum wage increases to $9 per hour from the existing minimum wage of $8 per hour. This is the first increase to the state minimum wage since January 1, 2008. The minimum wage will increase a second time to $10 per hour on January 1, 2016.
Employers should examine all pay practices that might be affected by the minimum wage increase. The minimum wage increase affects several employer practices, including:
- Overtime rates of pay;
- Exempt/nonexempt classification. The minimum salary requirement for administrative, professional and executive exemptions increases to $3,120 per month;
- Meal and lodging credits;
- Piece-rate pay. Employers must ensure that piece-rate employees receive the minimum wage for each hour worked;
- Draws against future commissions, which must be equal to at least the minimum wage and overtime due to the employee for each pay period (unless the employee is exempt);
- Tools and equipment. Only employees whose wages are at least two times the minimum wage can be required to provide and maintain hand tools and equipment customarily required by the trade or craft in which they work; and
- The subminimum wage rate.
Employers will need to make certain to comply with all notice requirements that are affected by the minimum wage increase.
- First, employers must post California’s official Minimum Wage Order (MW-2014) in a conspicuous location frequented by employees. The Department of Industrial Relations (DIR) updated the official notice, which now includes both the July increase and the second increase for January 1, 2016.
- Second, the DIR recently revised all 17 industry Wage Orders. The DIR amended sections 4(A) and 10(C) in orders No. 1 through No. 15, and sections 4(A) and 9(C) in order No. 16. Employers are required to post a copy of the industry Wage Order that applies to their business in a place where employees can read it easily. Use the correct industry Wage Order(s), which now bear a revision date of “07/2014.”
- Third, California employers must provide each employee with written, itemized wage statements at the time wages are paid. The wage statements must reflect all applicable hourly rates in effect during the pay period (Labor Code Section 226).
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