With the approach of January 1, 2017 employers in California are facing increased compliance with new labor laws. And increased costs.
California labor law for wage and salary requirements mandates that almost all employees must be paid the state minimum wage, although with some exceptions.
As of last January 1, 2016, the minimum wage in California increased to $10.00 per hour. This labor law is currently for employers with 26 or more employees. However, this requirement will apply to employers with fewer than 26 employees beginning in 2018. This minimum wage increase plan is going into it's second year in less that a week.
The estimated increase in just wage costs alone for California employers will be an immediate jump of almost 5% and any associated increases required to accomodate employees already earning close to that amount.
Not All Employees Included
The wage law dictates that some employees are exempt from the minimum wage law, including outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards.
The base minimum wage rate is established by the federal government, although many states currently have minimum wage requirements that are higher than the federal rate. The most recent federal increase went into effect last year, in July 2015, when the federal government mandated a nationwide minimum wage level of $7.25 per hour.
Here is a graphic that shows increases in California Minimum Wage over just the next four years:
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Local Minimum Wage Hikes Exceed Even the State Minimum
Earlier this year, for example, the city of San Mateo council approved a $15 minimum wage by 2019 ordinance. Until then, no cities in San Mateo County had raised their minimum wage above the state rate. That rate, which is currently $10 and scheduled to increase on January 1, 2017 to $10.50, will ultimately increase to $15 by 2022.
San Mateo's minimum wage will increase to $12 in 2017, to $13.50 in 2018 and to $15 by 2019. All of these increases will go into effect on January 1 of each year.
In addition, voters in San Diego approved an Earned Sick Leave and Minimum Wage Ordinance in June of 2016, but the effective date was initially delayed until those election results were certified. Once that was completed the new wage ordinance took effect on July 11, 2016.
Employees working within the geographic boundaries of the City of San Diego must now be paid a minimum wage of at least $10.50 per hour. The minimum wage will increase again to $11.50 per hour on January 1, 2017, and beginning on January 1, 2019, the minimum wage in San Diego will be tied to the Consumer Price Index and will be adjusted based on subsequent increases in the cost of living.
A Spate of Cities Have Increased Minimum Wage Laws
So far this year, at least 28 cities, towns or municipalities in California have their own minimum wage laws and ordinances. This even includes the Jackson Rancheria Band of Miwok Indians Casino's and Resorts which has instituted it's own minimum wage requirements.
In addition, local minimum wage increases have been established in all of Los Angeles City and County, San Francisco, Oakland, Berkeley, Santa Clara, San Jose and Sacramento.
Navigating California Labor Laws - Minimum Wage and Other Employer Requirements
Many of these new regulations expand the scope of costs and risks for employers, and require new workplace postings or changes to existing workplace policies. We recommend that all California employers consult with experienced employment counsel to ensure compliance.
Accurate and timely management and compliance practices are required for every business and every payroll professional. But there are options.
Accuchex, a reputable payroll management services provider, can not only relieve you of the burden of your ongoing payroll process demands, but can potentially prove to be a more cost-effective solution, as well.
Get your Free Download: Payroll Outsourcing Guide or click the button below and let us help you make an informed decision about our payroll solutions. Call Accuchex Payroll Management Services at 877-422-2824.