You’ve probably already heard about California’s new minimum wage law signed by Governor Brown. One minute the unions are pushing him to increase the minimum wage and the next he’s signed a bill. This moved so quickly, it was a done deal before most of us knew it was happening.
The only good news is that, for companies with fewer than 25 employees, you’ll get a one-year delay in all of the below dates so your increases won’t begin until 2018. The bad news is that this change will also affect minimum salaries because they are a calculation based on minimum wage.
- 1/1/2017 — Minimum wage will be $10.50 per hour and minimum salary will be $43,680 per year (and no proration for fewer than full-time hours).
- 1/1/2018 — Minimum wage will be $11.00 per hour; salaries will be $45,760.
- 1/1/2019 — Minimum wage will be $12.00 per hour; salaries will be $49,920.
- 1/1/2020 — Minimum wage will be $13.00 per hour; salaries will be $54,080.
- 1/1/2021 — Minimum wage will be $14.00 per hour; salaries will be $58,240.
- 1/1/2022 — Minimum wage will be $15.00 per hour; salaries will be $62,400.
The governor does have the option of altering these amounts based on economic changes but he must do so by September 1st. Any change would be effective on January 1st of the next year.
While you might be gasping at the increases to minimum salaries, you need to take a deeper breath. Don’t forget we’re expecting the federal government to put into effect their increased minimum salary of $50,440 per year by no later than November. That will override California’s minimum salary until 2020, when California’s will once again be higher than the federal minimum.
It’s time to consider each of your positions and the value they bring to your company. A change in minimum wage is also the perfect time to reclassify any exempt employees whose positions aren’t really at the level they should be for an exempt classification.
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