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2019 Minimum Wage Hike Creates Ripple Effects

Published Monday, October 29, 2018
by Gail Cecchettini Whaley, Esq.

California is on course to reach a minimum wage of $15/hour for businesses of all sizes by 2023. On January 1, 2019, the statewide minimum wage will rise to $12 an hour for employers with 26 or more employees and $11 per hour for employers with 25 or fewer employees.

Here is a table which shows the increases for this year and the future:

Date 26 or More Employees 25 or Fewer Employees
01/01/2019 $12 $11
01/01/2020 $13 $12
01/01/2021 $14 $13
01/01/2022 $15 $14
01/01/2023 $15 $15

In addition to the wage rate that you must pay employees, the increase affects several other payroll and HR practices.

Check your pay-scale for employees classified as exempt. The administrative, professional and executive exemptions require the worker to earn 2x the state minimum wage for full-time employment in order to be classified as exempt (plus meet a strict duties test). For 2019, this means that a worker will need to earn at least $49, 920 to be exempt if there are 26 or more employees and at least $45,760 to be exempt if there are 25 or fewer employees.

Adjust your overtime rate for minimum wage workers. Employers will need to pay more than last year for time and one-half and double-time.

Post California’s New Official Minimum Wage Notice. All employers are legally required to post this notice, and a new notice reflecting the increased rates is required for 2019. (CEA can help—pre-order our 2019 Labor Law poster)

Keep an eye out for updated Wage Orders. California employers are also required to post the Wage Order(s) that applies to their business. 2019 Wage Orders will be updated next year to reflect the minimum wage increases.

Provide a new wage notice. Nonexempt employees whose wages are affected by the minimum wage increase must be provided with a written wage notice within seven calendar days of the change unless the new increase is noted on a paystub. (Labor Code sec. 2810.5)

Review 2019 meal and lodging credit amounts. If you use meal and lodging credits toward your minimum wage obligation, you will need to review the 2019 credit amounts which will be found in both the Official Minimum Wage Notice and the Wage Orders.

Check on draws against commissions. If you have employees who receive a draw on a commission to be earned at a later date, the draw for nonexempt employees must be at least minimum wage and overtime—so make sure you have the correct rate.

Important! Pay attention to local ordinances which can affect the minimum wage you are required to pay employees - if it’s higher than the statewide wage, you must pay the local wage. See our fact sheet under Additional Resources.

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