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Posted April 2015 by S. Ward Heinrichs
On July 1, 2014, the minimum wage in California was raised from $8 per hour to $9 per hour. Governor Jerry Brown signed that law in 2014. The second part of that law will raise the minimum wage in California to $10 per hour on January 1, 2016.
The federal minimum wage is $7.25 an hour. President Obama and the Department of Labor support a raise to $10.10 per hour, but congress probably will not support that or any other increase.
Many states have higher minimum wage rates than the federal minimum wage. Similarly, many cities have higher minimum wage rates than both the federal and state minimum wage rates. For instance, San Francisco has a minimum wage of $12.25 per hour. It will increase to $13 per hour in 2016 and to $14 per hour in 2017. Likewise, Los Angeles has a minimum wage of $9 per hour but it will increase incrementally through 2020 to $15 per hour, unless the voters pass an initiative which will increase it to $15 per hour by 2017.
VACATION/PAID TIME OFF
In California, Vacation and Paid Time Off (PTO) are considered deferred wages. In other words, as Vacation/PTO accrues it is banked as a wage to be used at a later time. If an employer terminates and employee with unused Vacation/PTO, the employer must pay the unused amounts on the day of termination. Failure to do so subjects the employer to waiting time penalties equal to one day’s wage for every day the accrued Vacation/PTO remains unpaid, up to a maximum of 30 days.
An employer may not take away earned Vacation/PTO. However, and employer may place a cap on the total amount of Vacation/PTO that an employee may accrue. For instance, an employer may allow an employee to accrue 8 hours of Vacation/PTO every pay period, but may cap the maximum amount of vacation an employee may accrue at 100 hours. Once that maximum amount has accrued, an employee will not accrue more vacation until the employee actually uses accrued vacation time.
California law does not require an employer to give its employees Vacation/PTO. In fact, many small employers do not give employees Vacation/PTO. In that case, time taken off will not be compensated unless the employee qualifies for and uses sick leave.
PAID SICK LEAVE
On July 1 of this year, most employers in California must provide at least 3 days of paid sick leave for its employees who have worked at least 30 days within the year. The sick leave accrues at the rate of 1 hour for every 30 hours worked. The employer may provide only 24 hours (3 days) of sick leave per year if the employer offers its employees three sick days at the beginning of the employment year. Otherwise, the employer must allow its employees to accumulate up to 6 days of sick leave per year, but may still limit each employee to the use of only 3 days per year. In that case, any unused balance may be carried over to the next year. Employees can begin to use accrued sick leave after 90 days of employment.
Unlike Vacation/PTO, California does not consider sick leave to be a wage. That means, employers need not pay terminated employees for accrued, but unused, sick time. However, if the employer lumps sick leave with vacation time or other PTO, then the sick leave becomes a wage and must be paid out at the time of termination.
California law forbids the employer from taking or sharing in tips (Labor Code §351), and employers must track all tips that they collect for employees (Labor Code §353). Tip pooling is legal, but employers cannot take any portion of the tips. Only those employees who are in the chain of service can be in the pool. For instance, an employer cannot require servers to include cooks and dishwashers in the pool.
WAGE PAYMENT TIMING
In California, employers must pay workers at least twice a month, unless those workers are exempt salaried workers. Employers must pay exempt salaried workers at least once a month by the 26th of the month. If employers pay twice a month, then work performed during the 1st day and the 15th day of the month, must be paid by the 26th of the month. Similarly, work performed during the 16th of month and the end of the month, must be paid by the 10th of the following month.
Employers may also pay wages weekly (52 pay periods per year) or bi-weekly (26 pay periods per year). In that case they must pay wages within a week of the last day of the pay period.
If an employer fails to pay wages on time, the employers faces $100 penalty for each initial violation for each employee and faces a $200 penalty for each subsequent or willful/intentional violation for each employee. Those penalties can add up quickly.
S. Ward Heinrichs, Esq.
Employment Law Office of Ward Heinrichs
4565 Ruffner Street, Suite 207
San Diego, CA 92111
(858) 408-7543 (fax)
Employment Law Office of WARD HEINRICHS
4565 Ruffner St. Suite 207 San Diego 92111
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