California raises its minimum wage rate to $10 per hour, effective in 2016.

On September 25, 2013, Governor Brown signed AB 10 into law which will raise California’s minimum wage from $8 per hour today to $10 per hour by 2016. The first step is to raise the minimum wage to $9 by July 1, 2014 and then from $9 to $10 by January 1, 2016. However it should be noted that some cities in California already have a minimum wage higher than $10 per hour. For instance, San Francisco’s minimum wage rate is $10.55 per hour and San Jose’s current minimum wage rate is $10.00 per hour. Those cities will either impose an even higher minimum wage rate by 2016. In comparison, the minimum wage in New York State is $7.25 per hour, with few exceptions.
Justifying the necessity for the law, the Governor stated that “it’s {his} goal and it’s {his} moral responsibility to do what {he} can to make our society more harmonious, to make our social fabric tighter and closer, and to work toward a solidarity that every day appears to become more distant.”
Currently the federal minimum wage is $7.25 per hour which is much lower than California’s new law. California employers are subject to both federal and state minimum wage laws. However, the employer must follow whichever law is stricter, which means that they are bound by California’s minimum wage laws (which are most beneficial to employees).
It should be noted that some employees can be exempt from application of the California standard, such as outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards.

For instance, « white collar » exempt employees (executive, professional and administrative) must earn at least twice California’s minimum wage for full time work and commissioned salesperson must earn at least 1.5 times the California minimum wage. Thus, the minimum earning rate will go up for those employees as well. Besides, overtime, vacation, sick leave, paid time off, meal and rest period premiums will need to be adjusted in light of the increased minimum wage.

The California Chamber of Commerce along with a coalition of business groups reacted to the bill saying that it would force small-business owners to make tough choices including reducing employee hours, cutting positions entirely, and possibly closing their business altogether. They claimed that the bill would be « job killer » and tried to prevent it from becoming a law but ultimately did not succeed.

The new law will impact an estimated 3 million Californians (among which, 1.5 million working full-time) currently in minimum-wage jobs.

If you are a worker and you believe you have a labor claim under state or federal minimum wage statutes, please contact The Harman Firm, LLP.

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