I just heard West Hollywood passed a local minimum wage ordinance. How do local minimum wage ordinances interact with the statewide minimum wage and how do we know which wage rate to apply to our workforce?
Much like updating workplace postings and employee handbooks, understanding minimum wage increases has become an annual end-of-year task for employers. In California, there are two different statewide minimum wage rates depending upon employer size.
Currently for employers with 26 or more employees, the minimum wage is $14 per hour, while employers with 25 or fewer employees are subject to a $13 per hour minimum wage.
Effective January 1, 2022, the minimum wage rate for employers with 26 or more employees will increase to $15 per hour while the minimum wage rate for employers with 25 or fewer employees will increase to $14 per hour.
Local Minimum Wage Rates
Over the last several years, many local governments have implemented their own minimum wage rates for work performed within their jurisdiction.
West Hollywood is the latest city to do so, enacting its own minimum wage ordinance (MWO) that takes effect January 1, 2022. The West Hollywood MWO sets minimum wage rates depending upon whether you employ at least 50 employees.
For employers with 50 or more employees, the West Hollywood minimum wage effective on January 1, 2022 will be $15.50 per hour. For employers with fewer than 50 employees, the minimum wage will be $15 per hour. The West Hollywood minimum wage has scheduled increases every six months until July 1, 2023, and then will be subject to increases annually every July 1.
In addition to West Hollywood, approximately three dozen other local jurisdictions have minimum wage ordinances within the state. Although each ordinance is unique, the general rule of thumb is that an employee who performs at least two hours of work in a locality that has a minimum wage ordinance will be subject to that minimum wage for all work performed in the locality.
In nearly every case, the local minimum wage is greater than the statewide minimum wage, so employers who have employees performing work in areas with minimum wage ordinances will need to pay that higher rate.
Further, most of these rates increase annually on either January 1 or July 1, depending upon the ordinance. Following are the new minimum wages for local jurisdictions that increase their minimum wages every January 1:
- Belmont: $16.20.
- Burlingame: $15.60.
- Cupertino: $16.40.
- Daly City: $15.53.
- East Palo Alto: $15.60.
- El Cerrito: $16.37.
- Half Moon Bay: $15.56.
- Hayward: $15.56 for employers with 26 or more employees; $14.52 for employers with 25 or fewer employees.
- Los Altos: $16.40.
- Menlo Park: $15.75.
- Mountain View: $17.10.
- Novato: $15.77 for employers with 100 or more employees; $15.53 for employers with 26 to 99 employees; $15 for employers with 25 or fewer employees.
- Oakland: $15.06.
- Palo Alto: $16.45.
- Petaluma: $15.85.
- Redwood City: $16.20.
- Richmond: $15.54.
- San Carlos: $15.77.
- San Diego: $15.
- San Jose: $16.20.
- San Mateo: $16.20.
- Santa Clara: $16.40.
- Santa Rosa: $15.85.
- Sonoma: $16 for employers with 26 or more employees; $15 for employers with 25 or fewer employees.
- South San Francisco: $15.80.
- Sunnyvale: $17.10.
Each minimum wage ordinance also has notice and posting requirements that are updated every time the minimum wage increases.
Exempt Employee Salaries
An important note is that the minimum wage also affects most exempt employee salary requirements. The minimum salary for administrative, executive, and professional exempt employees is two times the applicable statewide minimum wage.
So, if you are paying your exempt employees the minimum salary required to maintain the exemption, you will need to ensure those employees receive an increase as well on January 1. In 2022, the minimum exempt salary will be $62,400 for employers with 26 or more employees, and $58,240 for employers with 25 or fewer employees. You do not use local minimum wages for this purpose.
Column based on questions asked by callers on the Labor Law Helpline, a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.