Beginning July 1, 2014, the minimum wage in California will increase from $8.00 per hour to $9.00, the first such state increase since January 1, 2008. On January 1, 2016, the minimum wage will rise again to $10.00. These changes were enacted pursuant to Assembly Bill 10, which California Governor Jerry Brown signed into law on September 25, 2013. On the municipal level, low-wage earners in the City and County of San Francisco have enjoyed the highest minimum wage in the country since the start of 2014. Employers must pay these workers at least $10.74 per hour.
Though the legislation does not apply to properly classified independent contractors, it will affect the compensation owed to employees classified as “exempt,” i.e., employees who are paid a monthly salary equivalent to twice the minimum wage and spend more than half their work time performing professional, administrative, executive duties or other functions requiring the use of independent discretion and judgment.
The minimum monthly salary owed to exempt employees is calculated based on a 40-hour workweek over the course of 52 weeks a year. As of July 1, 2014, employers will need to pay their exempt employees at least $3,120 a month, or $37,440 annually. On January 1, 2016, the minimum wage for exempt employees will increase to $3,467 a month, or $41,600 annually.
The federal minimum rate for nonexempt employees is and has remained at $7.25 since July 24, 2009. According to the U.S. Department of Health & Human Services’ Office of the Assistant Secretary of Planning and Evaluation, the sole earner of a family of four working full-time at this rate would be making less than the federal poverty line. By comparison, comparable California minimum wage earners are living in the lap of luxury, still living below the poverty level but only barely so.
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And more changes may be becoming. On May 29, 2014, the California State Senate approved a bill that would raise the minimum wage to $11.00 in 2015 and $12.00 in 2016; by 2017, the minimum wage would reach $13.00. The bill would need to be approved by the State Assembly and signed by Governor Brown to become effective as law.