What is minimum wage?
Minimum wage refers to the minimum hourly rate of pay which employees must be paid for their work. This rate varies depending on your city or county, where local minimum wage rates can vary based upon geographic boundaries and even the size of your business.
The minimum wage in Modesto is currently $15 an hour, the state minimum wage. However, cities in California are free to adopt their own higher minimum wage, and dozens of cities across the country have done so. To find out whether Modesto has passed its own minimum wage law since we last updated, visit the city’s website at https://www.modestogov.com/.
Modesto CA is located in Stanislaus County, where the minimum wage is $15 an hour, equivalent to the state minimum wage. To find out if Stanislaus County has passed its own minimum wage law, visit http://www.stancounty.com/.
Effective January 1, 2022, California's minimum wage will increase to $15.00 per hour for employers with 26 or more employees, and $14.00 per hour for employers with 25 or fewer employees.
California does not have a reduced minimum wage rate for tipped employees. Employers must pay employees who earn tips the standard minimum wage for all hours worked. In other states, most employers may pay employees a lower minimum hourly wage, as long as the employees earn enough in tips to make up the difference (called a "tip credit"). However, California does not allow employers to take tip credits.
Employers must pay employees at least the California minimum wage for each hour worked, in addition to any tips they may receive. The tipped minimum wage in California is the same as the regular minimum wage: $15 an hour if you work for an employer with more than 25 employees, or $14 an hour if you work for a smaller employer. An employer may not use an employee's tips as a credit toward its obligation to pay the current minimum wage.
All nonexempt employees must be paid the minimum wage required by federal law. Although there are some exceptions, almost all employees in California must be paid the minimum wage as required by state law. Local entities, such as counties and cities, are able to enact their own minimum wage rates. You are entitled to be paid the higher minimum wage established by the local law, state law, or federal minimum wage standards. If a locality has not set its own minimum wage that is higher than the State minimum wage, the State minimum wage applies. Federal labor law posters, such as the notice below, explicitly state the federal minimum wage, but your local wage may differ significantly from this rate.
With the exception of Washington, D.C.’s $15.20 hourly minimum wage, California has the highest minimum wage in the country. Advocates for raising minimum wages argue that such measures assist with reducing poverty and increasing standards of living. Opponents argue that raising minimum wages puts unsustainable pressure on many small businesses who cannot afford increased labor costs, negatively affecting the overall health of the economy and stifling job creation. Though economists have conflicting views on whether rising minimum wages actually increase inflation, with inflation rates hitting record levels in 2022, such potential consequences are sure to be a central part of the ongoing national debate.
With Congress unable to agree on a national minimum wage increase in over a decade, President Biden issued executive orders directing his administration to work towards ensuring that employees working on federal contracts and federal employees earn a $15 per hour minimum wage. On January 30, 2022, those directives took effect, resulting in tens of thousands of federal workers immediately earning $15 per hour and hundreds of thousands of employees of federal contractors seeing a raise to $15 per hour over the course of the year. This action in the new year brings us one step closer to a guarantee of livable wages.
The latest increase from the California Department of Industrial Relations benefits all workers who qualify for California's minimum wage. The hourly minimum wage will rise to at least $16 an hour in about a dozen other cities in California, according to data compiled by the UC Berkeley Labor Center.
Again, as explained above, some local ordinances have a higher minimum wage than the state or federal law, and some local ordinances remove any distinction in minimum wage based on employer size. For example, a barista in the city of Half Moon Bay may earn higher minimum wages than a barista in the city of Menlo Park. Employers must comply with the local minimum wage rate if the local rate exceeds the state minimum wage rate.
Anyone who works at least two hours in a one-week period within the State of California is entitled to the State minimum wage for the hours worked. The employee’s employment status, where they live, or where your business is headquartered does not determine the minimum wage that applies. Some workers may be exempt from this law based on their type of work.
For individuals to qualify as exempt employees, California requires:
They perform exempt duties more than 50 percent of their work time and:
Exempt executive, administrative, and professional employees earn a salary of no less than two times the state minimum wage for full-time employment. The minimum annual salary is based on the current state minimum wage, calculated as follows: (minimum wage x 2) x 2,080 hours.
Employers should be sure to comply with both state and local minimum wage laws. Where a local minimum wage rate exceeds the state minimum wage rate, employers must comply with the local rate, including overtime rates.
Employers should review compensation for exempt employees to ensure that the applicable salary threshold is satisfied. Where the salary threshold is not satisfied, the employer should consider whether to increase compensation to meet the salary threshold or reclassify the employee as nonexempt.
Effective January 1, 2022, the minimum salary threshold for these exemptions are:
Employers with 1-25 employees: $58,240 per year.
Employers with 26 or more employees: $62,400 per year.
Computer professionals: $50.00 per hour; $8,679.16 per month; $104,149.81 per year.
Licensed physicians and surgeons: $91.07 per hour.
California's increased minimum wage will also impact commissioned inside salespeople. Under California law, commissioned inside salespeople are exempted from the state's overtime laws if the employee earns more than 1.5 times the state minimum wage and more than half of the employee's compensation represents commission earnings. Thus, in order to maintain their exempt status, commissioned inside salespeople will need to earn more than $21 per hour (26 or more employees) or $19.50 per hour (1-25 employees).
Employers should review compensation for their exempt employees to ensure that the appropriate minimum salary level is satisfied. If the salary level is not satisfied, the employer should consider increasing compensation to meet the minimum, or reclassify the employee as nonexempt.
California employers may pay 18 year old's and minors the youth minimum wage of $4.25 for the first 90 days of employment. Other labor law exemptions for minors in California may exist.
Further details, including information about the rare exceptions to California’s minimum wage requirements, can be found on the Labor Commissioner’s website.
Please be aware that several cities set special minimum wages for workers in particular industries. For example, the City of Los Angeles provides, effective July 1, 2021, a minimum wage of $17.64 per hour for hotel workers working in hotels with 150 or more rooms. If you are unsure whether you fall into an alternative category as an employer or employee, please contact the attorneys at Freeburg & Granieri, APC.
You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner's Office), or file a lawsuit in court against your employer to recover the lost wages. Additionally, if you no longer work for this employer, you can make a claim for the waiting time penalty pursuant to Labor Code Section 203.
If you are considering filing a wage claim or lawsuit, you may want to speak to an attorney advertising their ability to file a wage claim at the California Department of Industrial Relations.
For employees, it is important that you are paid all wages owed, including all applicable minimum wages and overtime hours. You should check your paystubs to make sure you are being properly paid by your employer. If you think you are not being paid all your wages, please contact the attorneys at Freeburg & Granieri, APC today.
For employers, now is the perfect time to review your payroll policies and practices. The liability for failing to comply with minimum wage laws can have devastating effects on your business. Please contact the attorneys at Freeburg & Granieri, APC today to have your payroll policies and practices reviewed.
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