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Employer Alert: California Minimum Wage Increase for 2018 – Be Prepared

December 13, 2017 | Christine H. Long
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California employers should note that the state minimum wage is scheduled to increase in phases between 2017 and 2022. Under California law, exempt employees must earn a fixed monthly salary of at least double the minimum wage for full-time employment. The salary threshold will rise again January 1, 2018 based on the increases to the State Minimum Wage Laws.

The minimum exempt salary will also rise each year as follows (for businesses with at least 26 employees):

 

Year Hourly Weekly Monthly Annually
2017 $10.50 $840 $3,640 $43,680
2018 $11.00 $880 $3,813.33 $45,760
2019 $12.00 $960 $4,160 $49,920
2020 $13.00 $1,040 $4,506.67 $54,080
2021 $14.00 $1,120 $4,853.33 $58,240
2022 $15.00 $1,200 $5,200 $62,400

 

Businesses with 25 or fewer employees will have an extra year to comply with each increase. Therefore, employers that had less than 25 employees in 2017, will now follow the guidelines for 2017 in the year 2018.

While some cities and counties in California have their own, higher minimum wage that impacts nonexempt hourly rates and overtime payments, it does not affect the exempt salary threshold as that is based on the state minimum wage. Therefore, if you have an hourly employee employed in the City of Santa Clara, which has a minimum wage of $11.10 an hour you need not pay 2 times that rate to meet the exemption, rather your salaried individuals will be exempt under the salary portion of the test so long as they make 2 times the state minimum wage.

It is important that each employer review their pay rates not just at the company level but at each location to ensure they are compliant with State and Local laws. If you have questions about the minimum wage laws or salaries, please contact Christine H. Long, Employment Law Department Chair, at christine.long@berliner.com or (408) 286-5800.

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Berliner Cohen has served the business and regulatory needs of private business and public agencies for close to 50 years.  Berliner Cohen continually meets the growing demands of both the Silicon Valley and San Joaquin Valley. The Firm has developed the special expertise required by a diverse client base consisting of nationally recognized business interests and a number of Northern California’s largest national and multinational corporations, new ventures, leading real estate developers and brokerages, cutting-edge technology companies, agribusiness, banking and financial institutions, employers, municipalities, public agencies, and individuals.

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