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California Minimum Wage is Going Up—And There’s More

The passage of Senate Bill 3 (SB3), which introduced a step-based minimum wage in California, means another minimum wage increase in 2021. This was an anticipated step. We’re betting, however, that many employers haven’t considered the full scope of the impact on their businesses, including compliance areas.

The basics are simple enough: The new minimum wage in California will be $14 per hour for employers with 26 or more employees and $13 for those with fewer than 26. But, as we’ve seen before, it’s never just the basics that capture the whole picture.

Here are some other things to consider:

Exempt Employees

One eligibility requirement under the Executive, Administrative, and Professional Exemptions is the employee must earn a monthly salary equivalent to no less than two times the state minimum wage. There are also local changes to minimum wage ordinances that may apply to your business.

Labor Law Posters

Allevity is mailing 2021 labor law posters to our PEO clients as soon as all regulations have been finalized. For businesses with employees working remotely, we can provide an electronic version of the poster so you remain in compliance. If you are not yet an Allevity client but are interested in getting 2021 labor law posters, contact us here.

Commission Exemption

Remember, commissioned employees may be overtime-exempt if they make a certain amount and a certain percent of that amount on commission. Employees whose earnings exceed one and one-half times the minimum wage, and whose commissions represent more than half their compensation, could be exempt from the overtime provisions under Section 3 of California Wage Orders 4 and 7. Employers would need to ensure these individuals earn at least one and one-half times the new state minimum wage (meaning new minimums of $19.50 and $21 hourly for small and large businesses, respectively).

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