California Minimum Wage Increases January 1, 2019: Your Legal Rights if Your Employer Fails to Compensate You At the New Minimum Wage
Absent a few exceptions, employers are required to pay their employees minimum wage for all hours worked. While “all hours worked” has been the subject of much litigation, it is beyond the scope of this article. The California Legislature has set a schedule to increase California’s minimum wage to $15.00 per hour, in increments, by the year 2023; January 1, 2019 represents another one of those incremental increases in minimum wage. However, based on a myriad of factors, the Governor may suspend these scheduled minimum wage increases.
- When Can the Governor Suspend Minimum Wage Increases?
After the first minimum wage increase, which took place January 1, 2017, the Governor can pause minimum wage increases if any of the following occurs:
- The seasonally adjusted California job growth for the previous 3 to 6 months is lower and receipts from retail sales for the previous 12 months is lower; or
- The minimum wage increase is projected to result in a negative operating reserve of 1% or more of annual revenues in the next 2 fiscal years;
The Governor must make a preliminary finding that either of these conditions have occurred by August 1 of any given year; the final determination must be made by September of that year. Further, the Governor is only authorized to pause the minimum wage increases twice between the year 2017 and the year 2023.
The minimum wage increases are dependent on the number of employees an employer has, with one category of minimum wage applying to employers with 25 or less employees, and another category of minimum wage applying to employers with 26 or more employees. The illustration below shows the minimum wage changes by year, split into these two categories.
Schedule for California Minimum Wage rate 2017-2023.
Minimum Wage for Employers with 25 Employees or Less
Minimum Wage for Employers with 26 Employees or More
January 1, 2017
January 1, 2018
January 1, 2019
January 1, 2020
January 1, 2021
January 1, 2022
January 1, 2023
- How Do I Determine How Many Employees an Employer Has?
California Labor Code 1182.12, subdivision (b)(3), defines “employer” as “any person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person [and] includes the state, political subdivisions of the state, and municipalities.”
Thus, any person who is entitled to compensation, and is not properly classified as an “independent contractor” [Link to Dynamex article] count as employees for purposes of compliance with California’s minimum wages.
NOTE: Under this definition, people who work part-time, are new hires or minor, or even salaried executives will count as “employees” for purposes of the less than 25 or greater than 26 employee distinction.
NOTE: While the statute does not explicitly specify how employers should calculate the number of employees they have for purposes of minimum wage compliance, this definition becomes particularly relevant where the number of employees fluctuates over the year (seasonal and temporary employees for example). In a situation where it is unclear whether an employer is compliant with minim wage laws during a given pay period, the “employee” definition will be used by the Court or the Labor Commissioner to determine if the employer was compliant with the laws during that pay period.
- Who Is Exempt From Minim Wage Law?
The labor Code exempts certain individuals from the minimum wage requirement. One example of an individual who is exempt from minimum wage requirements is a “learner” (e.g., someone within the first 160 hours of their employment, provided they have no previous experience in the business). If you qualify as a “learner”, your employer is not allowed to pay less than 85% of the current minimum wage applicable to them.
Further, California Labor Code §1191 states: “For any occupation in which a minimum wage has been established, the commission may issue to an employee who is mentally or physically handicapped, or both, a special license authorizing the employment of the licensee for a period not to exceed one year from date of issue, at a wage less than the legal minimum wage. The commission shall fix a special minimum wage for the licensee. Such license may be renewed on a yearly basis.” A related statute, California Labor Code §1191.5, states: “Notwithstanding the provisions of Section 1191, the commission may issue a special license to a nonprofit organization such as a sheltered workshop or rehabilitation facility to permit the employment of employees who have been determined by the commission to meet the requirements in Section 1191 without requiring individual licenses of such employees. The commission shall fix a special minimum wage for such employees. The special license for the nonprofit corporation shall be renewed on a yearly basis, or more frequently as determined by the commission.”
In plain English, this means that certain individuals with mental or physical disabilities may be paid less than minimum wage if the prerequisites are satisfied.
- Can I Agree to Work for Less Than Minimum Wage?
Situations have come up where employers require their employees to agree to receive a wage less than minimum wage as a precondition to employment. For a discussion of so-called “yellow dog contracts” see Justice Ginsburg’s dissent in Epic Systems Corp. v. Lewis). The law is very clear that minim wage obligations cannot be waived by any agreement whatsoever. Specifically, any remedial laws, enacted by the California Legislature for the purpose of protecting employees, cannot be circumvented by contract between the employee and employer. These rules can be found in California Civil Code §1668 and California Civil Code §3513.
- What Can I do if My Employer is Not Paying Minimum Wage
After you have determined how many employees and employer has, you can figure out what the appropriate minimum wage rate is for that employer. In the event that your employer is paying you less than minimum wage, your remedies can be found in Labor Code §1194 and Labor Code 1194.2.
Labor Code §1194 states, in relevant part: “Notwithstanding any agreement to work for a lesser wage, any employee receiving less than the legal minimum wage … applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage …, including interest thereon, reasonable attorney’s fees, and costs of suit.”
EXAMPLE: Owen, the owner of a small manufacturing company which “employs” 30 people, hires Paula for 40 hours per week on January 3, 2019. Paula is not a “learner”, and is not physically or mentally handicapped for purposes of California Labor Code §1191 and California Labor Code §1191.5. Notwithstanding this fact, Owen only pays Paula $8.00 per hour. Under Labor Code §1194, Paula may bring a civil suit to recover the difference between what she has been made, and the current minimum wage. In this case, Paula can recover $160.00 per week [$12.00 – $8.00] per hour * 40 hours per week]. Further, Paula is entitled to interest on the $160.00 plus attorneys’ fees and costs. This statute effectuates the California Legislature’s goal of fully compensating employees for all hours worked, Labor Code 1194.2 operates to punish the employer who seeks to exploit their workers (there would not be much of an incentive to avoid minimum wage violations if the only consequence for getting caught was paying what was owed).
To that effect, Labor Code 1194.2 states: “In any action under Section … 1194, … to recover wages because of the payment of a wage less than the minimum wage … an employee shall be entitled to recover liquidated damages in an amount equal to the wages unlawfully unpaid and interest thereon.”
EXAMPLE: Same facts as above. Under the liquidated damage clause of Labor Code 1194.2, Paula is entitled to an additional $160.00 per week, where she was paid less than minimum wage. Paula is entitled to interest (10% annually) on the total of $320.00 per week. This can add up very quickly. Let’s suppose Paula didn’t realize she was being paid less than minimum wage until January 3, 2020 (1 year). Paula would be entitled to ($320.00 per week * 52 weeks ($18,720.00) *10%) $20,592.00 plus attorneys’ fees and costs.
If you or a loved one receive the minimum wage, and that amount does not increase to $11. or $12.00 per hour (depending on how many employees the employer has) beginning January 1, 2019, it essential that you contact one of the skilled attorneys at Yeremian & Associates, Inc. to discuss your legal options. The attorneys at Yeremian & Associates have been assisting exploited workers in the Greater Los Angeles since their inception and have developed a skill-set that will enable them to zealously advocate on behalf of your rights. Ultimately a few dollars may not seem like a good justification for suing your employer, but many employers rely on that mind-set to exploit all their workers. This is why the California Legislature enacted Labor Code 1194.2; it is there to punish opportunistic employers, and Yeremian & Associates, Inc. is here to assist you in that endeavor.