California Local and State Minimum Wage Increases for 2020

On January 1, 2020, California state’s minimum wage increased from $11.00 to $12.00 an hour for small employers with 25 or fewer employees and from $12.00 to $13.00 an hour for large employers with 26 or more employees. Starting in the new year, employers must pay their employees at or above the new minimum wage that applies to them based on their number of employees.

The new minimum wage adjustment also means that California’s salary minimum for exempt-classified employees is increasing. As of January 1, 2020, small employers must pay exempt employees a salary of at least $49,920 (increasing from $45,760), while large employers must pay exempt employees at least $54,080 (increasing from $49,920).

As a result of the increased minimum wage, the minimum compensation for employees to qualify as exempt under the inside sales exemption also increased effective January 1, 2020. Commissioned inside sales employees must now earn at least one and a half times the minimum wage to qualify as exempt, meaning the minimum inside sales wage is rising from $16.50 to $18.00 per hour for small employers, and from $18.00 to $19.50 per hour for large employers.

The minimum wages for employees classified as exempt under the computer professional and licensed physician and surgeon exemptions have also increased. Computer professional employees must be paid a minimum of $46.55 hourly, $8,080.71 monthly, or $96,968.33 annually starting in the new year (increasing from $45.41 hourly, $7,883.62 monthly, and $94,603.25 annually). Employers must pay employees treated as exempt under the licensed physician and surgeon exemption at least $84.79 per hour in 2020, an increase from $82.72 per hour in 2019.

In addition, several California cities and counties have passed local laws providing for a minimum wage higher than the state-wide minimum wage. Almost all state and county minimum wages will increase in 2020, as well, and employers must comply with both state and local minimum wage laws. Local minimum wage laws, however, do not affect the earnings requirements for exempt employee classification discussed above.

The following jurisdictions increased their minimum wage effective January 1, 2020:

City	Current Rate Since January 1, 2019	New Rate Effective January 1, 2020
Cupertino	$15.00	$15.35
Los Altos	$15.00	$15.40
Mountain View	$15.65	$16.05
Oakland	$13.80	$14.14
Palo Alto	$15.00	$15.40
Redwood City	$13.50	$15.38
San Diego	$12.00	$13.00
San Jose	$15.00	$15.25
San Mateo	$15.00	$15.38
Santa Clara	$15.00	$15.40
Sunnyvale	$15.65	$16.05

 

Other California jurisdictions already increased their minimum wages this year effective July 1, 2019, meaning the following minimum wages in the following cities and counties are already in effect:

City/County	Rate Effective July 1, 2019
Berkeley	$15.59
Emeryville	$16.30
Los Angeles (city);	$13.25 (25 or fewer employees) or $14.25 (26 or more employees)
Los Angeles County (unincorporated areas)	$13.25 (25 or fewer employees) or $14.25 (26 or more employees)
Malibu	$13.25 (25 or fewer employees) or $14.25 (26 or more employees)
Milpitas	$15.00
Pasadena	$13.25 (25 or fewer employees) or $14.25 (26 or more employees)
San Francisco	$15.59
Santa Monica	$13.25 (25 or fewer employees) or $14.25 (26 or more employees)

 

Employers should take steps to comply with all local and state minimum wage laws by reviewing employee compensation and, when necessary, increasing wages. Failure to comply with local and state minimum wage laws exposes employers to claims for statutory and civil penalties and back wages. If you have any questions about implementing these wage increases, please contact a member of Goodwin’s California Employment team.