Several new minimum wage rates are slated to take effect on January 1, 2018 in various cities throughout California, as well as the state as a whole.  California employers should begin preparing now to adjust employee wages to ensure compliance with the new rates.

A summary of the new minimum wage rates for nonexempt employees is provided below:

City    Covered Employers Minimum Wage Rate
Cupertino All employers $13.50/hr
El Cerrito All employers $13.60/hr
Long Beach Employers with 25 or fewer employees $10.50/hr
Employers with 26 or more employees $11.00/hr
Los Altos All employers $12.00/hr
Oakland All employers $13.23/hr
Palo Alto All employers $13.50/hr
Richmond All employers $13.00/hr
San Jose All employers $13.50/hr
San Leandro All employers $13.00/hr
San Mateo All employers (excluding non-profit) $13.50/hr
Non-profit employers $12.00/hr
Sunnyvale All employers $15.00/hr
California (statewide) Employers with 25 or fewer employees $10.50/hr
  Employers with 26 or more employees $11.00/hr

Raising Minimum Wage Impacts Salary Thresholds for Exempt Employees

 It is important to also keep in mind that raising minimum wage rates also impacts the salary threshold for white collar exempt employees.  The current salary threshold for employers with 25 employees or fewer is $41,600.  The current salary threshold for employers with 26 or more employees is $43,680.  On January 1, 2018, the salary threshold for exempt employees will be as follows:

California (statewide) Employers with 25 or fewer employees $43,680
  Employers with 26 or more employees $45,760

Possible Legislation Could Raise Minimum Salaries for Exempt Employees

 Employers should also keep an eye on Assembly Bill 1565.  AB 1565 proposes to accelerate the salary increases by requiring all employers (regardless of size) to pay an exempt employee a minimum of $47,472 per year.  Although the bill did not pass in 2017, the bill could be reconsidered in 2018 (though there is some grounds to believe that it will not be reconsidered— namely, the fact that the salary threshold will surpass $47,472 as early as 2019 for employers with more than 25 employees).

Takeaways for California Employers in Light of the New Minimum Wage Laws

 Employers should make sure that they are prepared for the rate increase for both hourly and exempt employees that will take effect on January 1, 2018.

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