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KHLS Legal Update

CA State Minimum Wage Increasing
as of January 1st

 

What You Need to Know:
California State’s minimum wage requirement is increasing to $15.50 as of January 1, 2023.

Recommended Actions:

  • Employers must review their local minimum wage ordinances carefully to determine whether they are subject to a higher minimum wage than the state requirement and to be aware of future changes in the rate.  Failure to comply with these wage rates can expose you to significant penalties.
  • Employers must review compensation for exempt employees to ensure that the applicable salary threshold is met. 
  • Employers must know where their employees are located, especially employees who work virtually, in order to ensure they are complying with any local minimum wage ordinances that apply to those employees.
  • Update your required workplace postings accordingly.


The Details: 

  • The January 1, 2023 minimum wage increase to $15.50 is for BOTH small and large employers. In prior years, there were different rates based on employer size. This is not the case moving forward.  The increase will be especially hard for small employers given the $1.50 increase in minimum wage (increase from the current $14.00 per hour) for these companies.
  • Minimum Pay:
    • Non-exempt employees: the minimum salary increase is to $15.50 (this is for BOTH small and large employers.)
    • Exempt employees: the minimum salary increase is to $64,480/year (this is for BOTH small and large employers.)
      • To qualify for the administrative, professional, and executive exemptions, employees must satisfy two tests
        • Salary basis test:  Earn a salary of no less than 2x the California minimum wage for full-time employment for executive, administrative, and professional employees. Employers must pay a salary of at least $1,240/week;
        • Substance test:  Perform exempt duties more than 50% of their work time and in a particular manner.

Since some employees may still be working from home or may have relocated, the minimum wage that may have previously applied to your employees based on your company’s location may no longer apply, depending on where those employees are now located. Several California municipalities have a higher minimum wage requirement (e.g., Los Angeles’ minimum wage is currently at $16.04 per hour and Santa Monica is at $15.96 per hour).  If you have non-exempt employees working in locations that are subject to a more generous minimum wage ordinance than the California wage order, you must pay the more generous local rate.

Important links:



Date Legal Update Issued: October 10, 2022
About the KHLS Legal Update:
As part of a new feature and free service, we will be sharing important legal and human resources updates related to issues that may impact our clients.
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