California has finally claimed the title as the first state to approve raising the minimum wage to $10 an hour. Although the ten-buck uptick doesn't go into effect until 2016 (the law increases it to $9 next July), employers need to take a hard look at what the law may mean for them right now in order to avoid wage-and-hour-related disputes and litigation.
Writing for the Association of Corporate Counsel, attorneys Gregory Cheng and Ameneh Ernest of Ogletree Deakins warn that the new law could "take them out of compliance in other areas of wage and hour law that are dependent upon the value of the state minimum wage."
Among the examples they cite:
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"California's commissioned salesperson exemption applies only to employees whose earnings exceed one-and-a-half times the minimum wage if more than half of the employee's compensation represents commissions. As such, the increase in the state minimum wage likely will result in certain individuals falling below these critical salary thresholds thereby triggering misclassification liability and penalties."
That's only the beginning of the pitfalls that await unwary HR managers.
Cheng and Ameneh go on to say the wage hike "could potentially create exposure under California split shift regulations, undermine existing agreements to credit the value of meals and lodging against the minimum wage, render obsolete agreements to pay employees at reduced hourly rates for travel or on-call time, or impact the viability of overtime provisions contained in collective bargaining agreements."
The attorneys advise that employers should start now to take the California minimum wage increases into account in their systems.
"Those efforts should be undertaken as soon as possible for employers to have sufficient lead time to address issues that may arise," they conclude.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
