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  • Understanding Minimum Wage Laws

    MINIMUM WAGE – FEDERAL CONSIDERATIONS

    Ringing in a new year always means ringing in a wide range of changes for HR.  One of those changes over the past few years has consistently been minimum wage rates.  Looks like 2022 will continue the trend.

    Twenty-five states will have minimum wage increases in 2022 either at the state or local level and increases in 21 of those states were effective as of January 1st.  You can access our comprehensive, 2022 state-by-state chart (including cities and counties) minimum wage chart here: Minimum Wage by State for 2022

    If minimum wage increases were as simple as just adjusting employees’ payroll, the world would be a much easier place for HR.  The reality, of course, is that there are numerous ancillary issues that must be considered, addressed and adjusted.  Employers in CA, for example, must adjust the salary threshold for exempt status which is tied into the state minimum wage and is now $62,400 for employers with 26 or more employees ($58,240 for employers with 25 or fewer employees).

    For an extremely detailed explanation of the many nuances of minimum wage (and we can guarantee there are some you were not aware of) please continue to our blog.

    Summary

    The current federal minimum wage is $7.25 per hour.

    The Fair Labor Standards Act (FLSA) requires employers to pay nonexempt employees at least the minimum wage for all hours they work. The FLSA and its regulations also define compensable work time, covered employers and employees, situations in which an employer may reduce an employee’s pay below the minimum wage, and notices employers must post in the workplace. State laws may require a higher minimum wage than the federal requirement.

    Municipalities may have higher minimum wage rates, as well. Local laws may require employers to pay city employees and the employees of companies benefiting from city contracts or subsidies a “living wage” that is greater than the federal minimum wage. In addition, the federal Davis-Bacon Act and Walsh-Healey Act require employers to pay prevailing wages to employees working on public construction projects under federal contracts.

    The FLSA does not supersede any state or local laws that are more favorable to employees. Therefore, if a state has a minimum wage that is higher than the federal minimum wage, employers subject to the state minimum wage law are obligated to pay the higher rate to employees working in that state. Numerous states and localities have increased their minimum wage rates above that of the federal government. In addition, there are movements in many more states, counties, and cities to push for increases in the future. These movements will continue until the federal government increases the minimum wage rate to an amount that satisfies state and local governments.

    A few states across the nation have enacted laws, prohibiting cities from enacting their own minimum wage rates that are higher than the state minimum wage rate. The most recent is Alabama, precluding a minimum wage rate in Birmingham that would have increased Birmingham’s rate above the state rate.

    The minimum wage for federal contract workers performing work on or in connection with federal contracts covered by Executive Order (EO) 13658 is $10.95 per hour effective January 1, 2021. Adjustments for the minimum wage are indexed annually to reflect changes in the Consumer Price Index (CPI).

    Tipped workers. The required minimum cash wage that generally must be paid to tipped employees is $7.65 per hour effective January 1, 2021.

     Workers with disabilities. All individuals working under service or concession contracts with the federal government are to be covered by the same $10.95-per-hour minimum wage protections, including workers whose productivity is affected because of their disabilities.

    Government Contractors

    Future minimum wage increases for federal contractors. A proposed rule from the federal Department of Labor (DOL) pushes a $15-an-hour minimum wage for certain federal contractors. The Notice of Proposed Rulemaking, which was announced July 21, 2021, establishes standards and procedures to implement and enforce EO 14026, which President Biden signed on April 27, 2021.

    Contractors will see a significant increase in what they will be legally required to pay. Starting January 30, 2022, the Order requires agencies that issue contracts to incorporate the new minimum wage in all new contract solicitations, and by March 30, 2022, they will need to implement the new minimum wage into new contracts. Beginning in 2023, the minimum wage will be adjusted for inflation. Contractors’ current contracts aren’t affected, but future contracts or extensions of current contracts will be.

    The EO the proposed rule is set to implement will:

    • Increase the minimum wage for workers performing work on or in connection with covered federal contracts to $15 per hour beginning January 30, 2022.
    • Continue to index the federal contract minimum wage in future years to an inflation measure.
    • Eliminate the tipped minimum wage for federal contract workers by 2024.
    • Ensure a $15 minimum wage for workers with disabilities performing work on or in connection with covered contracts.
    • Restore minimum wage protections to outfitters and guides operating on federal lands.

    Compensable Work Time

    Hours worked. “Hours worked” includes all time an employee must be on duty, on the employer’s premises, or at any other prescribed place of work, as well as any additional time the employee is permitted to work.

    Workweek. A workweek is a period of 168 hours during 7 consecutive 24-hour periods. A workweek may begin on any day of the week and at any hour of the day established by the employer. Generally, for purposes of computing minimum wage, each workweek stands alone, regardless of whether employees are paid on a weekly, biweekly, semimonthly, or monthly basis. Compensation from 2 weeks cannot be averaged for purposes of satisfying minimum wage laws.

     Covered Employers

    Virtually all employers are subject to FLSA minimum wage requirements either because the employer is a “covered enterprise” or because its employees engage in interstate commerce. A “covered enterprise” as defined under the FLSA includes:

    • All businesses that have $500,000 or more in annual sales or receipts
    • Businesses that operate hospitals or residential care facilities for the elderly or people with disabilities
    • Schools and government agencies

    Covered Employees

    If an employer is not covered by the FLSA, its employees may be individually covered if they engage in:

    • Interstate commerce;
    • The production of goods for interstate commerce; or
    • Activities closely related or directly essential to the production of goods for interstate commerce.

    Interstate commerce includes activities such as working in communications or transportation, sending or receiving mail through the U.S. postal system, using telephones for interstate communication, keeping records of interstate transactions, and making credit card transactions that use the interstate banking system.

    Nonexempt Employees

    An employee is generally covered by the FLSA’s minimum wage requirements unless the employee qualifies for one of the FLSA’s exemptions. Employees who do not qualify for an exemption are “nonexempt” employees. An employee who is paid on an hourly basis is usually considered to be nonexempt, regardless of the hourly rate paid. Employees generally classified as nonexempt include clerical, blue-collar, maintenance, construction, and semiskilled workers, as well as technicians and laborers.

    Exempt Employees

    The FLSA exempts several “white-collar” jobs from minimum wage requirements, including certain executive, administrative, professional, computer professional, and outside sales employees.

    In addition, the FLSA provides for a number of miscellaneous exemptions from its minimum wage requirements. These include:

    • Employees of certain seasonal amusement or recreational establishments
    • Employees in fishing operations and in initial processing of seafood
    • Agricultural workers employed by employers using fewer than 500 man-days in any quarter of the previous year
    • Agricultural workers who are members of the employer’s immediate family
    • Locally based hand harvest workers traditionally paid a piece rate who worked fewer than 13 weeks in agriculture during the preceding calendar year
    • Certain local seasonal harvesters under the age of 17
    • Employees who principally work in the range production of livestock
    • Seafarers on foreign vessels
    • Newspaper carriers who deliver to consumers
    • Persons employed outside of the United States for the entire workweek
    • Employees of gas stations with annual sales of less than $250,000

    Home Healthcare Workers

    The U.S. Department of Labor (DOL) prohibits third-party employers, such as homecare agencies, from claiming the companionship or live-in worker exemptions. The exemptions for companionship services and live-in domestic service employees can be claimed only by the individual, family, or household using the services, rather than by third-party employers such as home healthcare agencies.

    Companionship services. The term “companionship services” means the provision of fellowship and protection for an elderly person or person with an illness, an injury, or a disability who requires assistance in caring for himself or herself. Companionship services also include the provision of “care” if the care is provided attendant to and in conjunction with the provision of fellowship and protection and if it does not exceed 20 percent of the total hours worked per person each workweek. “Fellowship” means to engage the person in social, physical, and mental activities. “Protection” means to be present with the person in his or her home or to accompany the person when outside of the home to monitor the person’s safety and well-being.

    Examples of fellowship and protection may include conversation; reading; games; crafts; accompanying the person on walks; and going on errands, to appointments, or to social events with the person. Household work is limited to that benefiting the elderly person or person with an illness, an injury, or a disability. Household work that primarily benefits other members of the household, such as making dinner for another household member or doing laundry for everyone in the household, results in loss of the companionship exemption, and thus, the employee would be entitled to minimum wage and overtime pay for that workweek.

     Live-in domestic service employees. Live-in domestic service workers who reside in the employer’s home permanently or for an extended period of time and are employed by an individual, family, or household are exempt from overtime pay, although they must be paid at least the federal minimum wage for all hours worked.

    Live-in domestic service workers who are solely or jointly employed by a third party must be paid at least the federal minimum wage and overtime pay for all hours worked by that third-party employer. These employers must maintain an accurate record of hours worked by live-in domestic service workers. Employers may require the live-in domestic service employee to record his or her hours worked and to submit the record to the employers.

    Credit for lodging. The FLSA allows an employer to count the value of food, housing, or other facilities provided to employees toward wages under certain circumstances. An employer that wishes to claim the credit for lodging must ensure that the following five requirements are met:

    1. Lodging must be regularly provided by the employer or similar employers.
    2. The employee must voluntarily accept the lodging.
    3. The lodging must be furnished in compliance with applicable federal, state, or local laws.
    4. The lodging must primarily benefit the employee rather than the employer.
    5. The employer must maintain accurate records of the costs incurred in the furnishing of the lodging.

    Paying Less Than the Minimum Wage

    This may differ for individual states (California for example); however, on a federal level, an employer may pay four groups of employees below the minimum wage: people with mental or physical disabilities, full-time students, certain employees under the age of 20, and certain employees who receive tips.

    Workers with Disabilities

    Individuals with a mental or physical disability may be paid a subminimum wage pending receipt of a certificate from the secretary of Labor.

    Full-Time Students

    Full-time students employed in retail or service stores, agriculture, or colleges and universities may also be paid subminimum wages. The employer that hires students can obtain a certificate from the DOL, which allows the student to be paid not less than 85 percent of the minimum wage. The certificate also limits the hours that the student may work to 8 hours in a day and no more than 20 hours a week when school is in session and 40 hours when school is out and requires the employer to follow all child labor laws. Once students graduate or leave school, they must be paid the full minimum wage.

    Opportunity Wage for New, Young Workers

    An “opportunity wage” of not less than $4.25 may be paid to employees under the age of 20 for their first 90 consecutive calendar days of employment with any employer as long as their work does not displace other workers. After 90 consecutive days of employment, or when the worker reaches the age of 20 (whichever comes first), the worker must receive the regular minimum wage.

    The federal wage and hour administrator may issue special certificates allowing employment at wages below the minimum for apprentices, learners, messengers, students, and workers with disabilities.

    Credit for Tips

    Those employees who receive more than $30 per month in tips and work in a job in which tipping is customary are considered tipped employees. Only tips actually received by an employee as money belonging to the employee may be counted in determining whether an employee qualifies as a tipped employee. Although tipped employees are entitled to the minimum wage, employers are allowed to pay tipped employees a cash wage of $2.13 and take a tip credit of up to $5.12 per hour, provided that the balance of the minimum wage is made up in the form of tips. The history of tip credits and tip pools has been complicated.

    2018 history. A 2018 DOL opinion letter addressed when an employer could take a tip credit and the complications arising from employees with varied tasks throughout the day. The opinion letter stated that tip credits apply only to the jobs and duties that would result in tips, not other jobs or duties an employee engages in throughout the workday. For those with dual jobs (e.g., a waitstaff employee who also works as a maintenance person), the tip credit applies only to hours in which they were engaged in waitstaff activities that would generate tips. Although it’s more complicated for employees in jobs with dual duties, employers can accept the tip credit so long as the related duties that don’t generate tips do not exceed 20 percent of their work or they aren’t routinely assigned those duties. There have been conflicting court decisions regarding the related-duties portion of the law, and the opinion letter sought to clarify those inconsistencies.

    The DOL opinion letter made it clear that the rules that regulate tip credits to certain duties within an occupation aren’t intended to limit the number of tip-generating duties an employee can perform. The 80 percent time requirement for tip-generating duties is a minimum, according to the 2018 opinion letter, and if employees spend all their time on those tasks, tip credits will apply for all of those hours.

    Tipped duties can be indirectly related to the direct service of customers, so long as they are performed alongside or within a reasonable time before or after direct service. Furthermore, the opinion letter stated that employers should determine which duties are related or unrelated to generating tips at the front end to more easily comply with the law. Main duties related to tip-generating work are described for various occupations on the O*NET website (https://www.onetonline.org). O*NET is a DOL resource containing extensive information for employers and employees, including lists of the main responsibilities associated with various tipped positions. The 2018 opinion letter stated that employers may not take a tip credit for employees’ time spent doing tasks outside the O*NET list.

     2020 history. In 2020, the DOL under the Trump administration announced a final rule amending the FLSA regulations covering tipped employees. Under these regulations announced in late December 2020, employers were explicitly prohibited from retaining any tips received by their employees for any purpose, regardless of whether the business took a tip credit.

    Most managers or supervisors were also prohibited from receiving any portion of employees’ tips. If a company took a tip credit, it must continue to ensure any mandatory, traditional tip pool includes only workers who customarily and regularly receive tips.

    The regulations, however, allowed those who don’t take a tip credit to implement mandatory, nontraditional tip pools that may include back-of-the-house employees such as cooks and dishwashers. If an employer chose to implement the mandatory, nontraditional tip pool, it would have to follow similar recordkeeping requirements as those that operate traditional, mandatory pools, such as (1) identifying employees who receive tips on payroll records and (2) recording the amounts of tips received by each individual.

    The regulations also clarified that when an employer collects tips to distribute as part of a mandatory tip pool (traditional or nontraditional), it must fully redistribute the tips at least as often as it pays other wages. Additionally, the final rule provided clarity on when an employee is performing tipped work for which an employer can take a tip credit. An employer could take a credit during times when tipped employees performed related nontipped duties simultaneously either with or for a reasonable time either before or after their tipped responsibilities.

    This effectively ended the 80/20 rule.

    According to the DOL, a nontipped duty is presumed to be “related to” a tip-producing occupation if it’s listed as a task of the tip-producing occupation in O*NET. Under the revised regulations announced in late December 2020, employers are explicitly prohibited from retaining any tips received by their employees for any purpose, regardless of whether the businesses take a tip credit. Most managers or supervisors also are prohibited from receiving any portion of employees’ tips. If a company takes a tip credit, it must continue to ensure any mandatory, traditional tip pool includes only workers who customarily and regularly receive tips.

     2021 recent events and current law. Portions of the 2020 tipped worker rule took effect April 30, 2021, but the Biden administration intends to delay the effective date and continue studying other parts of the rule, which was a product of the previous administration. There are three main rules that have changed from the former rules.

    The current law is:

    • Employers now cannot keep tips received by workers even if they pay the workers the full minimum wage and do not take a tip credit toward the minimum wage obligation.
    • Employers that pay the full minimum wage instead of taking a tip credit can require employees to put their tips in a tip pool that includes certain workers who don’t customarily and regularly receive tips as long as the employers meet new recordkeeping requirements. Workers who enhance a customer’s experience, such as cooks, janitors, and dishwashers, can be included in those nontraditional pools. Manager and supervisor participation in tip pools is prohibited.
    • Employers that collect tips for tip pools must redistribute the tips by the regular payday for the workweek or pay period in which they collected the tips.

    In March 2021, the Biden administration delayed parts of the 2020 rules on tips until December 31, 2021, giving the current administration time to evaluate the rule.

    Approximately 30 years ago, the DOL established a standard commonly referred to as the 80/20 rule in its wage and hour handbook to help employers determine which employees’ work hours qualify for the tip credit. Under the rule, if an employee spends a substantial amount of time performing non-tip-producing duties—equal to 20 percent or more hours of the tipped employee’s shift—the employer cannot take a tip credit from the time spent on those duties, and the employee must be paid at least the regular minimum wage for the work. In November 2018, the DOL suddenly upended the 80/20 rule with a new standard for dual-position tipped workers. Under the proposed DOL standard, employers must consider whether the employees’ nontipped work was performed “contemporaneously with the direct customer-service duties” in order to be eligible for the tip credit, rather than placing a strict time limit. In that way, tipped work could include services performed by tipped employees for a reasonable amount of time immediately before or after performing tipped duties, regardless of whether the duties involved customer service. The elimination of the 80/20 rule has been put on hold for 2021.

    Another delayed part of the regulation covers civil money penalties. For minimum wage and overtime violations, the DOL can seek civil money penalties only if a violation is repeated or willful. A delayed part of the rule would incorporate the repeated-or-willful limitation for violations of the tipped employee regulations, as well.

     Formula: To satisfy the minimum wage requirement for a tipped employee, hours worked multiplied by the minimum cash wage for tipped employees plus tips must be equal to or greater than hours worked times the regular minimum wage rate.

    Employers also must be able to show that the employee receives at least the minimum wage when direct wages and the tip credit allowance are combined. An employer must make up the difference if the combined total of a tipped employee’s direct wages plus tips is less than the amount the employee would have earned if paid the regular minimum wage rate. Tips that employers require employees to turn over to them or compulsory service charges added to checks or bills cannot be credited toward the minimum wage, even if those amounts are eventually distributed to employees. For example, if a hotel’s negotiations with a customer for banquet facilities include amount for distribution to hotel employees, the distributed amounts are not counted as tips received.

     Notice requirement. An employer that elects to use the tip credit provision must give employees notice in advance.

    The notice must include the following information:

    • The amount of the cash wage the employee will receive;
    • The additional amount the employer is using as a tip credit;
    • A statement that the tip credit amount cannot exceed the value of tips actually received by the employee;
    • A statement that all tips received by the employee must be kept by the employee except for valid tip pools;and
    • A statement that the tip credit does not apply to any employee who has not received advance notice of the tip credit provisions.

     Overtime. Overtime hours are subject to the same hourly tip credit; therefore, the federal minimum overtime rate for tipped employees is calculated by multiplying the regular minimum wage rate by 1.5 and then subtracting the hourly tip credit.

     Credit for Meals and Lodging

    An employer can also satisfy minimum wage requirements by providing an employee with food, lodging, or “other facilities.” An employer must assign a fair value to such items and cannot include profit to the employer.

    Required Postings

    Covered employers must post notices outlining the federal minimum wage requirements. The notices must be posted conspicuously and in enough places so employees can see them as they enter and exit the workplace. Posters are available from the DOL, Wage and Hour Division, and may be downloaded from its website at http://www.dol.gov.

    What is a Living Wage Ordinance?

    A living wage is a pay rate above the minimum wage that is considered to be sufficient to meet basic subsistence needs in a particular geographic area. Contractors that do business with a city or county that has a living wage ordinance must pay their employees at least a certain hourly rate and comply with other provisions of the ordinance, such as offering health benefits, providing leave, maintaining adequate records, and/or posting notice about living wage provisions. The living wage movement is made up of coalitions of community and labor organizations working to enact laws at the local level requiring that city employees and the employees of companies benefiting from city contracts, subsidies, or actions be paid a living wage in excess of federal and state statutory requirements.

    Living wage ordinances apply primarily to certain service contractors (and sometimes their subcontractors) doing business with a city or county government, contractors that receive financial assistance from the city or county, and/or city or county employees.

    Some ordinances require that both part-time and full-time workers be paid the living wage, and some refer only to particular types of jobs, such as healthcare workers, food service workers, janitors, security guards, landscapers, or clerical workers.

    Because some ordinances include provisions for automatic increases in the hourly wage rate on particular dates, or adjustments as a result of changes in the federal poverty level, employers should always determine the current requirements—even if they have done business with the same city in the past. Depending on the ordinance requirements, the city might be obligated to notify contractors of the change in writing before an increase takes effect.

    Living wage ordinances are gaining in popularity. Although a majority of those ordinances have been implemented in cities and counties, a handful of universities, school boards, and other jurisdictions have also adopted living wage ordinances. Local grassroots organizations made up of coalitions of community and labor organizations—dubbed the national living wage movement—seek to pass local ordinances requiring private businesses that benefit from public money to pay their workers a living wage.

    Commonly, the ordinances cover employers that hold large city or county service contracts or receive substantial financial assistance from the city in the form of grants, loans, bond financing, tax abatements, or other economic development subsidies. Many grassroots campaigns have defined the living wage as equivalent to the poverty line for a family of four, with some newer campaigns pushing for even higher wages. Increasingly, living wage coalitions are proposing other community standards in addition to a wage requirement, such as health benefits, vacation days, community hiring goals, public disclosure, community advisory boards, environmental standards, and language that supports union organizing.

    Often spearheaded by community groups, union locals, or central labor councils, living wage campaigns are characterized by uniquely broad coalitions of local community, union, and religious leaders. Because most current living wage campaigns seek to pass legislative measures, campaigns also include lobbying and negotiations with elected officials, such as city and county councillors, the mayor’s office, and city staff. Living wage campaigns also provide opportunities for organizations that work to build a mass base of low-income or working people to join up, organize, and mobilize new members.

    Cities and counties that adopt living wage ordinances are striving to improve the lives of local working-class families and stimulate the local economy. According to published reports, living wage critics argue that such ordinances are burdensome to employers, result in job losses, and lead to government budgetary problems. Proponents dismiss those arguments and say that the benefits of implementing a living wage ordinance outweigh its economic costs.

    A basic living wage ordinance is made up of various parts, including:

    • Specification of the living wage level based on whether or not health benefits are provided;
    • Length of time the living wage is in force;
    • A listing of the types of employees who are covered (for example, city or county employees, contractors, or subcontractors);
    • A listing of whether full- and part-time employees are covered, all employees of the employer, or just those on contract, etc.;
    • Agency duties for monitoring and enforcing the living wage ordinance;and
    • Penalties.

    A living wage ordinance may also include clauses on vacation days, sick leave, labor issues, training incentives, posting of job openings, and more.

    Living wages and the ordinances that implement them vary by city. Not only do hourly rates vary, but other requirements do, too. For example, some living wage ordinances apply only to certain types of workers, and some ordinances exclude small city contracts and/or set a particular threshold for contractors required to follow the ordinance’s provisions. Higher thresholds may apply for contracts with nonprofit employers, or nonprofits might be exempt altogether. For example, contractors doing at least $25,000 in business for a particular city in the same year may be subject to ordinance provisions. Nonprofit corporations, on the other hand, might not have to meet the requirements at all, or they might only have to pay a living wage if their annual contracts with the city exceed $50,000.

    Information on living wage ordinances is readily available on some, but not all, websites for city governments that have such ordinances. If an employer cannot find the information on a website, that doesn’t necessarily mean that there is no living wage ordinance. It’s best to check with the department responsible for receiving bids, such as the city’s Purchasing department.

    Just as the living wage requirements vary by city ordinance, so do the penalties for noncompliance. Employers may be forced to pay the deficiency to employees, or the city may withhold payments to the employer. Willful and repeated violations of living wage requirements can result in a fine and/or termination of the current contract or grant and, possibly, future contracts for a specific amount of time.

    Employers subject to living wage provisions may be responsible for submitting to the city a certified copy of their weekly payroll with such information as the name; job classification; Social Security number; number of hours worked each day (regular and overtime); total hours worked each week (regular and overtime); rate of pay, including overtime rate; fringe benefit payments; all payroll deductions other than those required by federal, state, or local statutes; and the total amount earned during such period by each employee on the specific job.

    Contractors subject to the provisions of a living wage ordinance often must post the applicable minimum living wage rate in a conspicuous place on the jobsite.

    Some living wage ordinances specify the amount of paid and/or unpaid leave employees may take each year. Employers that don’t provide health benefits may be required to pay higher wages to employees than employers that do offer benefits.

    The Davis-Bacon and Walsh-Healey Acts

    These acts set basic labor standards for employees working on public construction projects under federal contracts. Under both acts, employers are required to pay prevailing wages as determined by the labor secretary. The labor secretary calculates prevailing wages by surveying local rates of pay and cost-of-living standards in the applicable locality.

    SOME CALIFORNIA CONSIDERATIONS

    Minimum Wage Rate

    Definition of “employer.” The California Supreme Court has ruled that, in lawsuits to recover unpaid minimum wages or overtime, courts must apply the definition of “employer” as found in the wage orders issued by the state’s Industrial Work Commission (IWC) (Martinez v. Combs, 49 Cal. 4th 35 (Cal. 2010)).

    The IWC has three alternative definitions of what actions constitute being an employer:

    • Exercising control over the wages, hours, or working conditions, or
    • Suffering or permitting an individual to work, or
    • Engaging an individual, thereby creating a common law employment relationship.

    This decision expands the definition of employer and may subject employers with independent contractors, or employers in joint employment relationships, to minimum wage and overtime liability.

    Pieceworkers. A California Court of Appeal has held that auto mechanics who were paid on a piece-rate basis for repairing cars were also entitled to receive minimum wage for time in between repairs spent waiting for customers, cleaning their areas, going to meetings, and other nonrepair time, even though the employer made sure that the employees earned at least minimum wage for every hour worked ( Gonzales v. Downtown LA Motors, LP, Cal. App. No. B235292 (2013)).

     Exemptions

    Several occupations are exempt from the state minimum wage requirements (CA Labor Code Sec. 1182.12):

    • Outside salespersons
    • Individuals participating in a national service program receiving assistance through federal community service grants
    • Close relatives of the employer

    Also exempt are persons employed in administrative, executive, or professional capacities.  An employee classified as exempt must be paid a fixed salary that is no less than two times the state minimum wage ($62,400 in 2022) and must spend more than 50% of their time carrying out exempt-level duties.

    Scheduled Increases

    California law increases the minimum wage over time consistent with economic expansion, while providing safety valves to pause wage increases if negative economic or budgetary conditions emerge.  This year marks the end of a five-year scheduled increase in the minimum wage (a 50% increase from $10 to $15).

    Remaining Schedule for California Minimum Wage Rate

     

    Date Minimum Wage for Employers with 26 or More Employees Minimum Wage for Employers with 25 or Fewer Employees
    January 1, 2022 $15.00/hour $14.00/hour
    January 1, 2023 $15.00/hour $15.00/hour

    State law requires that most California workers be paid the minimum wage. Some cities and counties have a local minimum wage that is higher than the state rate.

    Employers are required to post information on wages, hours and working conditions at a worksite area accessible to employees. Notices for the wage orders in English and Spanish can be downloaded and printed from the workplace postings page on the DIR website.

    Employers must ensure that the wage rate is displayed on the employee’s pay stub, and that employees are paid at least the minimum wage even when employees are paid at piece rate.