Changes to Minimum Wage Laws in 2019 Will Affect Nonexempt and White Collar Employees, as Well as Commissioned Inside Salespeople
As 2019 approaches, California employers should take note of the following changes to state and local minimum wage laws, which remain more generous than federal law and will affect both nonexempt and exempt employees.
Key Takeaways for Nonexempt Employees
Effective January 1, 2019, the California statewide minimum wage will increase to $12.00 for employers with 26 or more employees and $11.00 for employers with fewer than 26 employees.
The charts below show changes to local minimum wage rates throughout California. If a local minimum wage law is more generous to employees than the state minimum wage rate, employers must comply with the local law.
California Local Minimum Wage Rates - Effective January 1, 2019
Jurisdiction |
New Minimum Wage Effective January 1, 2019 |
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$13.50 to employees who perform at least two hours of work per week in Belmont. Applies to employers who maintain a facility in Belmont or who are subject to the Belmont Business License Tax. |
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$15.00 to employees who perform at least two hours of work per week in Cupertino. Applies to employers who maintain a facility in Cupertino or who are subject to the Cupertino Business License Tax. |
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$15.00 to employees who perform at least two hours of work within the City of El Cerrito in a workweek. |
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$15.00 to employees who perform at least two hours of work per week in Los Altos. Applies to employers who maintain a facility in Los Altos or who are subject to the Los Altos Business License Tax. |
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$15.65 to employees who perform at least two hours of work per week in Mountain View. Applies to employers who maintain a facility in Mountain View or who are subject to the Mountain View Business License Tax. |
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$13.80 to employees who perform at least two hours of work in Oakland within a workweek. |
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$15.00 to employees who perform at least two hours of work in Palo Alto per week. |
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$13.50 to employees who perform at least two hours of work per week. |
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$15.00 to employees who perform at least two hours of work in the City of Richmond per week. |
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$12.00 to employees who perform at least two hours of work in the City of San Diego per workweek. |
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$15.00 to employees who perform at least two hours of work per week in San Jose. Applies to employers who maintain a facility in San Jose or who are subject to the San Jose Business License Tax. |
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$15.00 to employees who perform at least two hours of work per week in San Mateo. Applies to employers—who are not 501(c)(3) organizations—and who maintain a facility in San Mateo or who are subject to the San Mateo Business License Tax. Tax-exempt nonprofit organizations must pay a minimum wage of $13.50. |
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$15.00 to employees who perform at least two hours of work per week in Santa Clara. Applies to employers who maintain a facility in Santa Clara or who are subject to the Santa Clara Business License Tax. |
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$15.65 to employees who perform at least two hours of work per week in Sunnyvale. Applies to employers who maintain a facility in Sunnyvale or who are subject to the Sunnyvale Business License Tax. |
California Local Minimum Wage Rates - Effective July 1, 2019
For a PDF version of this chart, click here.
Jurisdiction |
New Minimum Wage Effective July 1, 2019 |
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Will be based on the Consumer Price Index. |
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$16.00 (est.) for employers of all sizes. |
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City and Unincorporated Areas of County) |
$14.25 for employers with 26 or more employees in the City or unincorporated areas of the County. $13.25 for employers with 25 or fewer employees in the City or unincorporated areas of the County. |
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$14.25 for employers with 26 or more employees in the City of Malibu. $13.25 for employers with fewer than 26 employees in the City of Malibu. |
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$15.00 to employees who perform at least two hours of work per week in Milpitas. Applies to employers who maintain a facility in Milpitas or who are subject to the Milpitas business license requirement. |
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In February 2019, the City Council will review a request by the City Manager to increase the minimum wage to $14.25. |
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Will be based on the Consumer Price Index |
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$14.00 for employers of all sizes. |
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$14.25 for employers with 26 or more employees in the City of Santa Monica. $13.25 for employers with fewer than 26 employees in the City of Santa Monica. |
*Special minimum wage rates often apply to hotel employers, which the above tables do not capture.
A Ripple Effect for Exempt Employees
Executive, administrative, and professional employees must satisfy a salary threshold requirement in order to maintain their exempt status under California law: twice the state minimum wage for a 40-hour week (regardless of how many hours the exempt employee actually works). Thus, when the minimum wage goes up, so too does the salary threshold. Effective January 1, 2019, the new California threshold for employers of 26 or more employees will be $960 per week, or $49,920 per year. For employers of 25 or less employees, the new California threshold for will be $880 per week, or $45,760 per year.
The new state minimum wage will also affect commissioned inside salespeople, who only qualify as exempt if they earn more than 1.5 times the state minimum wage and if half of their compensation represents commission earnings. Thus, as of January 1, 2019, commissioned inside salespeople will need to earn more than $18 per hour in order to maintain their exempt status (and may have to make more in commissions as a result).
What to Do
Employers should examine employee compensation to ensure that low-wage workers earn at least the required minimum wage. They should also review compensation for exempt employees to ensure that exempt employees receive at least twice the minimum wage. If an employee does not, the employer should consider whether to (1) increase compensation so that the salary threshold is satisfied or (2) reclassify the employee as nonexempt.
While conducting this review, employers should be mindful of applicable equal pay laws and other wage hour laws. See our advisory here.
To read about other important changes 2019 will bring to California employment laws, see our advisory here.