Los Angeles’ Minimum Wage Ordinance, passed last summer, begins its steady increase to the city’s minimum wage on July 1. The minimum wage will eventually increase to $15.00 by the year 2020 for large employers. Smaller employers will enjoy a one-year reprieve. With an estimated 800,000 people currently earning the minimum wage in Los Angeles, this legislation will have very real and practical ramifications on employers throughout the city.
Specifically, the Ordinance sets the following minimum wage schedule:
The size of the employer’s business is determined by the average number of employees employed during the previous calendar year, and includes employees working outside of the city of Los Angeles. These minimum wages apply to any employee who performs at least two hours of work within the city of Los Angeles, even if the employee generally works outside of the city’s limits.
In addition to paying increased regular and overtime wages for hourly employees, employers must pay a higher minimum salary (two times the minimum wage) to maintain the exempt status for qualifying administrative, executive and professional employees. Further, certain wage orders permit meal and lodging credits against minimum wage payments, and employers who use meal and lodging credits as a form of compensation must adjust their calculations to ensure they meet the increased minimum wage obligations.
The Los Angeles Wage Enforcement Division will enforce the minimum wage ordinance. The division will investigate potential violations, issue determinations of compliance or noncompliance, and obtain restitution, fines, penalties, and/or interest where violations have occurred. Employees have the right to file a complaint or inform any person about any party’s alleged noncompliance with the ordinance. Employees are protected against retaliation for filing a complaint, even where the employee mistakenly, but in good faith, alleges noncompliance.
Finally, the state of California also recently enacted legislation that will increase the minimum hourly wage to $15.00 for employers with 26 or more employees by January 1, 2022, and for all employees by January 1, 2023. The state’s schedule for wage increases is slower in comparison to the schedule for the city of Los Angeles. Consequently, employers with employees who perform work in multiple jurisdictions must take particular heed of the different minimum wage scales.