As the California minimum wage increases from $8 per hour to $9 per hour July 1, all California employers should consider the following items in seeking to comply with the law:
- Review salary for all exempt employees.
- Review Wage Theft Protection Act notices.
- Review timekeeping systems and policies.
- Review paystubs provided to employees and ensure your payroll company is aware of the new law.
- Review your relationships with independent contractors.
- Review any existing wage agreements with employees.
First, all California businesses should review the salaries of exempt employees. The status of exempt employees is based on two qualifying tests: the salary basis test and the duties performed test. For the salary-based test, most employees will have to be paid around two-times the equivalent of minimum wage to qualify as exempt.
Second, take time to review your Wage Theft Protection Act notices. While you don’t have to reissue your notice if the pay raise has been reflected on the paystub, it is a good opportunity to double-check your materials to ensure compliance.
Third, consider your timekeeping systems and associated policies. Because of the minimum wage hike, there is an increased liability exposure from “off the click” claims.
Fourth, review the paystubs you provide employees and check-in with your payroll processing company to make sure they are aware of California’s new minimum wage and understand how to comply. The regular rate of pay and overtime rate must be included on your employees’ paystubs. This is just one example some of the changes, which need to be made in order to abide by the law.
Fifth, take another look at your relationships with independent contractors. Though the definition of independent contractors has not been altered, there is again the risk of higher liability in cases of misclassified employees.
Finally, go over any existing wage agreements you may have with employees. Remember, it is against the law to make agreements with staff members that pay less than minimum wage.
Legal Center Live is a video series answering commonly asked legal questions affecting California restaurant operators. The CRA Legal Center provides CRA members with access to attorneys across the state who specialize in issues affecting restaurant operators. To ask a question, contact firstname.lastname@example.org.