— By Colleen McCarthy, Esq. and Brenna Johnson, Esq.
Since 2014, at least 21 states and the District of Columbia have seen a pay increase for those earning minimum wage. Organized labor and other groups are calling for a nationwide $15.00 per hour living wage. Some companies are acting on their own including Walmart, Disney, Gap, TJX Companies, Target, IKEA, Aetna, and Starbucks.
The Department of Labor is proposing to increase the minimum exempt status to $970 per week or $50,440 annually.
Local jurisdictions raising the minimum wage floor are also becoming more active. The County of Los Angeles is seeking to increase the minimum wage to $15.00 per hour by 2020. Northern California cities including San Francisco, Oakland, and Berkeley have enacted minimum wage increases. Southern California cities include Santa Monica and West Hollywood. On February 1, 2016, Pasadena voted to raise the minimum wage to $15.00 an hour by 2020. San Diego’s June ballot measure will raise the minimum wage to $11.50 an hour by 2017, with future minimum wage increases tied to inflation.
What should you do?
- Pay particular attention to your city or county discussions about proposals to increase the minimum wage.
- As the minimum wage increases in California and if the FLSA increase if implemented, the salary test for exemption will increase.
- Be proactive when it comes to wage and hour laws and stay ahead of potential areas where violations are common.
It is hard to predict what a large increase in minimum wage will mean to jobs and society as a whole.
- Consumers will have an increase in purchasing power. [Joon Suh, “Doing the Right Thing, the Right Way: A Regional Minimum Wage,” Third Way, February 11, 2016.]
- Paying higher wages may reduce employee turnover. [Noam Scheiber, “Raising Floor for Minimum Wage Pushes Economy Into the Unknown,” The New York Times, July 26, 2015.]
- A raise in minimum wage will affect women more than men. [Scheiber]
- Businesses with low wage earners will find ways to economize labor costs.
- Minimum wage increases do not affect all industries equally. [Michael Reich, Ken Jacobs, Annette Bernhardt and Ian Perry, “The Proposed Minimum Wage Law for Los Angeles: Economic Impacts and Policy Options,” Center on Wage and Employment Dynamics, Policy Brief, March 2015.]
Colleen McCarthy, Esq. is a Partner and the Employment Law Practice Group Leader at Ferruzzo & Ferruzzo, LLP. She is dedicated to representing and protecting employers with a particular emphasis on risk mitigation through preventative counseling and sound practical advice. Her objective is to educate employers about the complicated employment laws that impact their businesses to ensure that they are in compliance and to reduce the chance of costly litigation.
Brenna Johnson is an Employment Law Attorney, and Workplace Investigator. Brenna helps small businesses navigate California’s employment and labor laws, as well as helping employees whose rights have been violated in the workplace.