WAAG AND CO. [ Bulletins

On Monday, October 23, 2000, the Industrial Welfare Commission raised California’s minimum wage by $1 per hour over the next 2 years, starting with a 50 cent boost on January 1, 2001, with the final 50 cent boost on January 1, 2002. Currently, the California minimum wage is $5.75 per hour. The federal minimum wage is also being reconsidered by Congress. Waag and Co. will continue to monitor this situation.

Currently, about 8.6% of all California wage-earners make the minimum wage. The change was considered a compromise, with many business groups arguing for no increase, and labor groups lobbying for $8 per hour. The main concern for many employers is the “ripple” effect the increase will have on other employees who are currently above the minimum wage but will no longer be much above it.

The change will also raise the minimum monthly salary that must be earned to qualify as exempt employees. Per AB 60, an exempt employee must be paid a monthly minimum salary equal to two times the minimum wage. This must be calculated at 40 hours per week times 52 weeks divided by 12 months. As of January 1, 2001, with the new California minimum wage, an exempt employee must earn a minimum salary of $2,166.67 per month to be exempt. As of January 1, 2002, this will be $2,253.33 per month.

The increase was done via a unanimous vote of the California Industrial Welfare Commission. Although it was rumored that Governor Gray Davis was pushing for its adoption, it was left to the Commission to determine the raise amount. The Commission did admit that they had worked with the Governor's staff on the raise proposal.

In a related matter, the Commission voted to eliminate exemptions for several groups of workers, including full-time carnival ride operators and professional actors not covered by the state’s minimum wage law. Left intact was an exemption for the 1,000 or so shepherds who tend sheep in California; the Commission is establishing a panel to determine how the new minimum wage law should apply to them.

You can download the most recent official notice (MW-2001) and poster in PDF format by clicking here for English or Spanish.

This bulletin is a general overview of the subject matter, and is not meant to provide professional opinions regarding any specific case, matter, or set of facts, or to substitute for the professional advice of Waag and Co. Instead, please contact Susan S. Waag, Esq. for additional information.