On January 1, 2016, the minimum wage will increase to $10 per hour. In 2013, Governor Jerry Brown signed into law the bill that would increase California’s minimum wage in two phases. For the first phase, the minimum wage for California employees rose from $8 per hour to $9 per hour beginning July 1, 2014.
The minimum wage increase also affects piece-rate employees. Piece-rate workers must be paid at least minimum wage for each hour worked. AB 1513, which goes into effect on January 1, 2016, requires nonproductive time for piece-rate employees be separately paid at the minimum wage or contracted hourly rate. Rest and recovery periods for piece-rate employees must be paid at the average hourly rate for the workweek.
The increases in the minimum wage may also cause some employees to fall outside the “white collar” overtime exemptions under California law. Under these exemptions, an employee must receive a monthly salary that is no less than two times the California minimum wage for full-time employment (40 hours per week). The current minimum salary is $37,440 ($3,120 per month or $18 per hour). Starting in January 2016, exempt employees will have to be paid an annual salary of at least $41,600 ($3,446.67 per month or $20 per hour).
The new minimum wage impacts certain employer notice and posting requirements:
- California’s official Minimum Wage Order (MW- 2014) poster already includes the increase for January 1, 2016.
- Labor Code Section 226 requires California employers to provide each employee with an itemized statement at the time wages are paid. The itemized wage statement must include, among other pieces of information: the amount of gross or net wages paid to the employee for the pay period and all applicable hourly rates in effect during the pay period and the number of hours that the employee worked at each hourly rate.
- California employers must provide each employee with a written notice of pay information at the time of hire pursuant to California Labor Code § 2810.5 with certain pay information including:
- The employee’s rate of pay;
- Any overtime rates of pay; and
- Any allowances, such as meal or lodging allowances, claimed as part of the minimum wage.
Employers must notify employees, in writing, of any changes to the items required in the notice within seven days of the changes, unless those changes are contained in a regular wage statement or other written notice required by law.
This increase in the minimum wage rate provides a good opportunity for Western Growers members to review their pay practices and ensure that they are in compliance with all wage and hour laws. Examination of pay practices involving piece-rate employees is especially important to ensure compliance with AB 1513 which codifies recent court decisions holding that such employees must be paid at least minimum wage for all hours worked.
For more information, contact Jason Resnick at (949) 885-2253.
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