The Los Angeles Employment Attorney Services blog is an online portal of elite group of employment and labor law attorneys of Mesriani Law Group.

Monday, November 18, 2013

California’s New Minimum Wage Increase Law Could Bring Significant Impact to both Employers and Employees

In response to the newly passed California law, which increased the hourly minimum wage by 25 percent over the next three years, different speculations were brought up by several analysts.

Under the new law, the hourly minimum wage will come in two separate increments. The first will increase the $8.00 minimum wage to $9.00 on July 1, 2014 while the second will increase the $9.00 rate to $10.00 on January 1, 2016.

Incidentally, it is now the country’s highest minimum wage so far. Also, it is the first minimum wage increase in the Golden State in six years.

The new law, which was approved by California Governor Jerry Brown last September 25, amends the existing Labor Code section 1182.12.

Subsequently, while many low wage earners lauded the new legislation, others were uncertain whether they would appreciate the new law or would they have to worry for some reasons.

Apparently, reading between the lines, the new law is indeed a bit misgiving. Thus, employers need to be mindful of the impact and risks that this new law might bring to lower wage exempt employees.

In Los Angeles, wherein wage and hour claim is a common employment issue, a labor lawyer speculates that the enactment of the new law could likely increase the number of lawsuits in the wage and hour area.

Once an employer fails to properly pay the exempt employees based on the new minimum wage rate, employees may resort to filing for a misclassification claims. 

As it may seem, abiding with the new law will be hard enough for employers since the existing California Labor Code section 515, which requires employers to pay exempt employees of at least twice the minimum wage for a full-time job on a monthly basis, has been an added burden for them.

When the new law become effective, the minimum salary for an exempt employee will increase from $33,280.00 to $37,440.00 during the first increment and then up to $41,600.00 during the second increment.

Unfortunately for employers, even before the advent of the new wage increase law, have been paying exempt employees more than the minimum salary amount. Now, if the said employers fail to increase the salary level of their exempt employees following the new law, they could probably face misclassification lawsuit. Obviously, that will be a big loss for the company since the employer will have to pay the employee with several years worth of overtime, penalties and other compensations based on the new minimum wage rate.

In addition, the new law will automatically raise the overtime pay, leave payments and untaken meal and rest breaks payments. Thus, if employers once again fail to dwell with the changes, they would be probably hit with wage and hour claims.

The worst scenario here is that due to the said predicaments that are likely to be suffered by employers, they might cut back on hiring exempt employees, making the job hunt more difficult and may eventually lead to increased unemployment rate.

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