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California's Minimum Wage Requirements & Exceptions

Instructor: Ian Lord

Ian has an MBA and is a real estate investor, former health professions educator, and Air Force veteran.

In this lesson, we will look at California minimum wage laws and its exceptions. We will also briefly compare California's wage laws with the federal minimum wage standards.

California Minimum Wage

Joe has just moved to California and is looking for an entry-level job. He understands that California minimum wage laws are different from his old state. Let's help Joe review the local minimum wage laws and identify any differences from federal law or other exceptions.

The minimum wage in California was $11 an hour as of January 1, 2018. For employers with over 25 employees, it rose to $10.50 an hour on January 1, 2017, then $11 in 2018 and one dollar each subsequent year through 2022. For employers with 25 or fewer employees the future increases to $15 an hour, are delayed one year. The state has a different minimum wage for sheepherders, who are instead mandated a minimum monthly salary. As of 2017, this was $1,866.88 per month for employers with over 25 employees and $1,777.98 for those with 25 or fewer. Individual cities and counties may choose to implement a minimum wage higher than the state minimum.

An employer must use the highest minimum wage applicable to the work location. The federal minimum wage since 2009 has been $7.25 per hour. Joe cannot be compelled or agree to accept this lower wage rate in California. If the work location is in an area with a minimum wage higher than the state minimum, his employer is obligated to pay the higher rate.

The California minimum wage laws apply equally to minors and adults. Unlike under federal law, restaurant servers cannot be paid less than minimum wage or have their tips counted toward the minimum wage. If Joe's employer fails to pay at least the minimum wage for the hours worked, he can file a claim with the Division of Labor Standards Enforcement or sue the employer. He can take further legal action against the employer if there is any retaliation for taking action about not paying the minimum wage.

Prevailing Wage

California minimum wage rates are set well above the federal rate. A large factor in this is the difference in cost of living in the state compared with the rest of the country. Increases in the minimum wage try to bring incomes up to the level of a living wage, that is to say, an amount that covers a normal standard of living for a person working full-time. California protects the wages of laborers and other workers on public contracts through prevailing wage laws. These laws prevent companies from submitting low bids for projects by cutting employee wages below those traditionally expected to pay for the type of work being performed.

Exceptions

The state has a limited number of exceptions to the minimum wage laws. Workplace situations where someone works for a family member provide an exemption; a parent, child, or spouse of an employer may be paid below minimum wage. Outside salespersons, such as sales agents working on commission, are not subject to the minimum wage. Indentured apprentices under the State Division of Apprenticeship Standards are in the process of learning a skilled trade and are not paid at the minimum wage rates during the program.

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