California Minimum Wage Increase

In accordance with SB 3, beginning January 1, 2021, the California minimum wage will rise.[1] The minimum wage for employers with 25 or less employees, will increase from $12.00/hour to $13.00/hour. For employers with 26 or more employees, the minimum wage will increase from $13.00/hour to $14.00/hour. This yearly increment is on track to meet SB 3’s goal of $15.00/hour for all employees by 2023. Thereafter, the state’s minimum wage will be adjusted for inflation but never lowered.

Who Is Affected?

As defined by Labor Code section 1182.12, an “employer” is “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.”

This means, that “any individual performing any kind of compensable work for the employer,” who is not a legitimate independent worker, is considered and counted as an employee. This definition also includes new hires, minors, part-time workers, and salaried executives. In sum, all workers, except for classified independent contractor’s “IC” are protected under this wage and hour law.

A legitimate independent contractor must pass the “ABC” test in order to be classified as such. To be an IC, a worker must be free from control, work outside the hiring firm’s usual business, and have an independent business as established by AB5.[2]

Minimum Wage Factors

The main determining factor of which minimum wage requirement is applicable to a place of employment is the number of employees. If an employer obtains 26 or more employees during the year, they should pay their employees a minimum of $14.00/hour instead of $13.00/hour for that pay period. Additionally, in accordance with the Labor Code and employment contract law, employers are required to notify employees of the rate of pay. Although an employer will not be penalized for paying above the required minimum wage rate, they may be liable for back wages and penalties if their pay is less than what is mandated by law.

Employers should also take into consideration any local rules which might require a higher minimum wage than required by the state. For a list of national local minimum wage ordinances, you can reference: https://laborcenter.berkeley.edu/inventory-of-us-city-and-county-minimum-wage-ordinances/

Reach Out to an Experienced Employment Law Firm for a Free Consultation

As employment attorneys in California, we are committed to ensuring our clients receive the rights they are entitled to as employees under state law. If you believe you are not being properly compensated in accordance with the California minimum wage requirements stated above, or if you believe you have been denied your rights as an employee in any other capacity, we at Makarem & Associates are ready to step in and help you. With some of the best employment law attorneys in California, we can provide you legal representation to help you reach the most ideal outcome.

Get in touch with Makarem & Associates for a free consultation over the phone at 310-312-0299 or email at [email protected] to receive the right legal counsel.


[1] https://www.dir.ca.gov/dlse/sb3_faq.htm

[2] https://www.nolo.com/legal-encyclopedia/california-gig-worker-law-AB-5.html

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