Question:

I run a small business. I read that the minimum wage is going up again, even though it just went up in 2007! Is this true?

Answer:

Yes. In 2006, Governor Schwarzenegger signed AB 1835, which provided for a two-step increase in the minimum wage. On January 1, 2007, the minimum wage increased to $7.50 per hour. Effective January 1, 2008, the minimum wage increases to $8.00 per hour.

As an employer, you should know that the increase in minimum wage affects not only the minimum hourly wage for employees, but other obligations as well.

  • Exempt Salary Requirement

The increase in the minimum wage affects exempt executive, administrative, and professional employees (i.e. those that do not have to be paid overtime). This is because the minimum salary required to qualify as an exempt employee is based on the state minimum wage. The minimum salary requirement for an exempt executive, administrative, or professional employee, is an amount equal to at least two (2) times the state minimum wage for full-time (40-hour) employment. Therefore, on January 1, 2008, in order for these employees to remain exempt under the California Wage Orders, they must receive a minimum salary of $2,773.33 per month ($33,280 per year.) In addition to the minimum salary requirement, these exempt individuals must perform certain defined duties, and must customarily and regularly exercise discretion and independent judgment in performing those duties.

  • Split Shift Premium

When an employee works a split shift, one (1) hour’s pay at the minimum wage must be paid in addition to the minimum wage for that workday, except when the employee resides at the place of employment. Therefore, on January 1, 2008, the split shift premium will increase to $8.00 per hour.

  • Collective Bargaining Agreements

Employees covered by collective bargaining agreements, who are exempt from overtime, must be paid “not less than 30 percent more than the state minimum wage.” Effective January 1, 2008, these employees must therefore be paid at least $10.40 per hour to maintain their status as employees who are exempt from overtime pay.

  • Commissioned Employees

Employees who are exempt from overtime and who are paid commissions must be paid in excess of one and one half times the state minimum wage. Therefore, in 2008, these employees must be paid more than $12.00 per hour.

  • Travel Time Pay

Although employees are not entitled to be paid for the time they normally spend traveling from home to their work location, if the employer requires the employee to travel during work time, the travel time is counted as time worked, and the employee must be paid at least the minimum wage for the travel time. California law permits an employer to pay a different rate of pay for travel time, as long as the rate meets or exceeds the minimum wage, and the employer notifies the employee of the different pay rate for the travel time before the employee spends time traveling.

  • Posting Requirements

Employers are required to post a minimum wage order, as well as the industry or occupation wage order governing their business, in the workplace. The minimum wage poster is available in Spanish and English on the California Industrial Welfare Commission website, at http://www.dir.ca.gov/IWC/Minwage2007.pdf. The industry and occupation wage orders are available at http://www.dir.ca.gov/iwc/wageorderindustries.htm.

As you can see, the minimum wage increase has many implications and therefore requires you to review your pay practices and make adjustments as needed, depending on your industry and employee status.
– – – – – – – – – – – – – – – – – – – – – – – – – –
Back to Menu- Work Place Law 2007 Articles