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An Introduction to California Minimum Wage Laws for Business Owners

California provides its workers a thicker blanket of legal protections than most other states, particularly when it comes to that number-one employee priority: the paycheck.

Business owners operating in Silicon Valley must stay up-to-date on both state and local wage and hour laws in order to avoid employee pay disputes. Such disputes can take the form of a wage claim filed with the state Labor Commissioner’s Office (also known as the Division of Labor Standards Enforcement) or a lawsuit filed in Santa Clara County courts. In addition, the Santa Clara County District Attorney has the power to prosecute cases of wage theft and to bring civil enforcement actions.

Here is a basic overview of California’s 2018 minimum wage laws:

Minimum Wage and Overtime for Hourly Workers

The California labor code calls for a steady increase in the state’s minimum wage over the next five years. For 2018, the minimum wage is $11 per hour for businesses with 26 or more employees and $10.50 per hour for businesses with 25 or fewer employees. By 2023, all employers will be required to pay a minimum wage of $15 per hour, after which the minimum wage can rise up to 3.5 percent annually (rounded to the nearest 10 cents). Only Washington state, at $11.50, has a higher minimum wage for 2018.

Some cities and counties mandate a higher minimum wage than the state, in which case employers must pay the higher rate. In the city of San Jose, for example, the minimum wage for 2018 is $13.50 per hour, rising to $15 in 2019. Such local variations are a good reason to retain a local attorney in the event of a wage dispute.

Hourly workers must receive overtime pay (at least 1.5 times their regular hourly rate) for all hours worked in excess of eight hours per day and 40 hours per week. Tipped employees must be paid the full minimum wage in addition to their tips.

Minimum Pay for Salaried Exempt Employees

An exempt employee is one who is paid a fixed annual (or monthly) salary and is exempt from receiving overtime pay. California law requires such workers to be paid a salary at least twice the minimum wage, based on a 40-hour work-week. For 2018, assuming an $11/hour minimum wage, the minimum annual salary for an exempt worker is $45,760.

Minimum Pay for Computer Software Employees

There are a number of different classes of exempt employees; see the website of the California Labor Commissioner’s Office for full details. Silicon Valley businesses should pay special attention to California Labor Code Section 515.5. This law mandates a specific minimum salary for computer software employees (e.g., computer systems analysts, programmers, and software engineers) in order for them to remain exempt from overtime pay requirements. Effective January 1, 2018, that minimum annual salary is $90,790.07. The law does, however, provide an exception for trainees who have not yet attained the level of skill and expertise necessary to work independently.

Get Help From an Experienced San Jose Employee Disputes Lawyer

Does your business need help to prevent or resolve an employee pay dispute? An experienced Silicon Valley employment attorney can help. To schedule a free consultation, call SAC Attorneys LLP at (408) 436-0789.


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