The 12 Days of California Labor & Employment – Day 12 "Employers Beware - Minimum Wage Updates for January 1, 2023"

In the spirit of the season, we are using our annual "12 days of the holidays" blog series to address new California laws and their impact on California employers. On this twelfth day of the holidays, my labor and employment attorney gave to me: twelve drummers drumming and an update on minimum wage laws for 2023 and SB 1477.

Day 12In 2016, California enacted set annual increases for minimum wage for non-exempt employees. As of January 1, 2023, the minimum wage for all employers in the state of California will be $15.50. This rate applies regardless of how many employees an employer has on its books. It is imperative that minimum wage rates are updated to avoid any wage and hour issues and/or lawsuits. However, every employer needs to verify if they have any city or county regulations that create an even higher minimum wage. If that is the case, the employer must pay the highest minimum wage for that area. Visit the UC Berkeley Labor Center website to verify.

In order to qualify as an exempt employee, California law requires that the individual perform duties associated with a position that qualifies for an exemption (e.g., executive, administrative or professional exemptions) more than 50 percent of their work time, and earn a salary of no less than two times the state minimum wage for full-time employment. The minimum annual salary is based on the current state (not local) minimum wage, calculated as follows: (minimum wage x 2) x 2,080 hours. As such, effective as of January 1, 2023, the minimum salary for all California exempt employees will increase to $64,480.00 per year or $5373.33/month.

In addition, 2023 brings SB 1477 which clarifies how to garnish wages when required. The current calculation becomes obsolete as of September 1, 2023. On that date, an employee's garnishment cannot exceed the lesser of 20 percent of the employee's disposable earnings for that week or 40 percent of the amount by which the employee's disposable earnings for that week exceed 48 times the state's minimum wage.

If a judgment debtor works in a location where the local minimum hourly wage is greater than the state minimum hourly wage, the local minimum hourly wage in effect at the time the earnings are payable shall be used for the calculation made pursuant to this paragraph.

In addition, there are multipliers for all other pay periods other than weekly, including:

  • For a daily pay period, the amounts shall be identical to those described weekly.
  • For a biweekly pay period, multiply the applicable hourly minimum wage by 96 work hours.
  • For a semimonthly pay period, multiply the applicable hourly minimum wage by 104 work hours.
  • For a monthly pay period, multiply the applicable hourly minimum wage by 208 work hours.

Our recommendation? Begin 2023 on a high note. Check your employee classifications and ensure all employees will be properly paid per the new minimum wage laws taking effect on January 1, 2023. This is a simple fix to avoid an otherwise costly mistake. Happy Holidays and Happy New Year.