Is Your Nonprofit Compliant With Minimum Wage Requirements?

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California Minimum Wage Rate Increases

Although there are some exceptions (discussed below), almost all employees in California must be paid the minimum wage as required by state law, including those employed by nonprofit organizations. From January 1, 2017, to January 1, 2022, the minimum wage will increase for employers employing 26 or more employees. This increase will be delayed one year for employers employing 25 or fewer employees, from January 1, 2018, to January 1, 2023. The scheduled increases may be temporarily suspended by the Governor, based on certain determinations.

For more information on the schedule for the new increases and guidance on how to count employees for the purpose of determining whether an employer qualifies as an employer with 25 employees or less please see New Minimum Wage Phase- in Requirements 2017-2023, SB 3 Frequently Asked Questions page.

Exceptions to the Minimum Wage Increases

There are some employees who are exempt from the minimum wage law, such as outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards.

There is an exception for learners, regardless of age, who may be paid not less than 85 percent of the minimum wage rounded to the nearest nickel during their first 160 hours of employment in occupations in which they have no previous similar or related experience.

There are also exceptions for employees who are mentally or physically disabled, or both, and for nonprofit organizations such as sheltered workshops or rehabilitation facilities that employ disabled workers. Such individuals and organizations may be issued a special license by the Division of Labor Standards Enforcement authorizing employment at a wage less than the legal minimum wage. See California Labor Code Sections 1191 and 1191.5.

Local Minimum Wage Rates

Also, local entities (cities and counties) are allowed to enact minimum wage rates and several cities have recently adopted ordinances which establish a higher minimum wage rate for employees working within their local jurisdiction. The effect of this multiple coverage by different government sources is that when there are conflicting requirements in the laws, the employer must follow the stricter standard; that is, the one that is the most beneficial to the employee. Thus, since California's current law requires a higher minimum wage rate than does the federal law, all employers in California who are subject to both laws must pay the state minimum wage rate unless their employees are exempt under California law. Similarly, if a local entity (city or county) has adopted a higher minimum wage, employees must be paid the local wage where it is higher than the state or federal minimum wage rates.

For information regarding San Diego County minimum wage rates, see the Office of the City Treasurer, Minimum Wage Program.

What Happens After 2023?

After the state minimum wage reaches $15 an hour for all employees, the rate will be adjusted annually for inflation based on the national consumer price index for urban wage earners and clerical workers.

Need More Information on California Minimum Wage Laws?

For additional information see the State of California, Department of Industrial Relations website which contains information regarding minimum wage and a frequently asked questions section.

With the minimum wage increase, employers should re-examine employee compensation and ensure that they are meeting the minimum wage requirements for all employees.

Minimum Wage Requirements for California Nonprofits

If you have questions regarding the minimum wage requirements and your California nonprofit organization, please call our team of nonprofit attorneys at (858) 755-3000 or email us via the contact button below.

Henderson, Caverly & Pum LLP