July 1 Marks California Minimum Wage Increase and Other Updates to Employer Obligations

The first phase of California’s two-phase, minimum wage increase is now less than one month from taking effect.  Last fall, California Governor Jerry Brown signed into law AB 10, which amended the California Labor Code to provide for an increase in the minimum wage.  The first phase of the minimum wage increase takes effect July 1, 2014, and will increase the mandated minimum wage from $8.00 to $9.00 per hour.  The second phase of the minimum wage increase will take effect on January 1, 2016, and will increase the mandated minimum wage from $9.00 to $10.00 per hour.

Exempt employees are also affected by the minimum wage increase.  California’s Wage Orders generally require that any employee classified under the executive, professional, or administrative exemptions be paid a salary of not less than twice the prevailing minimum wage.  Under the current minimum wage laws, that means exempt employees must be compensated based upon an annual salary of not less than $33,280.  However once the minimum wage increase takes effect on July 1, 2014, exempt employees will have to be compensated based upon an annual salary of not less than $37,440.

Certain other employees – such as those who are required to provide their own tools to perform the functions of their job, for example – may also be affected by the minimum wage increase.  California employers should take prompt action to ensure their wage and hour practices are in full compliance with the new minimum wage law.

Also effective July 1, 2014, the following revised posting and notice requirements take effect in California:

  • Employers must prominently display a poster showing the new, $9.00 per hour, minimum wage;
  • Employers must start using an updated workers’ compensation brochure containing new pre-designation regulations.  Employers must provide their employees, at the time of hire or by the end of the first pay period, with the workers’ compensation brochure.
  • Employers must start using updated Paid Family Leave brochures containing new family member definitions, which now include grandparents, grand-children, siblings, and parents-in-law.  The brochures should be provided to new hires and to employees who take a qualifying leave.

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