Question: I heard about proposed increases in the minimum wage on the federal level, in cities, and in California. What is the current law in California and what do I need to know?


Answer: The minimum wage is a popular topic in the news. The City of Seattle just passed an ordinance increasing the minimum wage to $15.00 per hour. President Obama signed an Executive Order in February 2014 increasing the minimum wage for employees of federal contractors to $10.10 per hour effective January 1, 2015. Certain cities in California have their own minimum wages such as San Jose ($10.15 per hour) and San Francisco ($10.74 per hour).
The current law in California is that the hourly minimum wage will increase next month, on July 1st, to $9.00, and will increase again on January 1, 2016 to $10.00.
Legislation was recently proposed to increase California’s minimum wage again, to $11.00 effective January 1, 2015, to $12.00 effective January 1, 2016, and to $13.00 effective January 1, 2017, with the amount then being adjusted for inflation annually beginning January 1, 2018. This proposed legislation recently passed the California Senate and is now before the Assembly.
California employers normally have not had to worry about changes in the minimum wage under the federal law because California’s minimum wage has been higher. But with the change in the law for federal contractors, beginning January 1, 2015 federal contractors in California must pay their employees $10.10 per hour unless they are working in, for example, San Jose or San Francisco, where the minimum wage is higher.
Additionally, with cities starting to pass ordinances with their own minimum wages, employers that occasionally send their employees to work in other cities should educate themselves in any laws specific to those locations. For example, the minimum wage ordinance in San Francisco requires employers to pay employees who perform at least two hours of work per week in San Francisco its minimum wage of $10.74 per hour.
It is important to remember certain changes that come with the increase in the minimum wage and plan for those before July 1, 2014:

  • If you have not done so already, post the new minimum wage order, available from the Department of Industrial Relations website at
  • Ensure that exempt, salaried employees are paid a salary of at least two times the minimum wage, i.e., $3,120.00 per month effective July 1, 2014.
  • Under Wage Orders 4 and 7, an employee may be exempt from overtime requirements if the employee’s earnings exceed one and one-half times the minimum wage, and if more than half of the employee’s compensation consists of commissions. Employers must ensure that they adjust their calculations to account for the new minimum wage to determine if these employees still qualify as exempt, and update written commission agreements if necessary.
  • Employers that provide meals or lodging and credit the value of these against the obligation to pay the minimum wage must make sure the proper adjustments are made for the increased minimum wage and that written agreements with employees are updated.

Be sure to take steps to prepare for the increase in minimum wage, and stay tuned for more wage increase developments.