November HR Bulletin: Are Your Pay Ranges Ready for 2018?

As you know, Senate Bill 3 (passed in 2016) gradually raises California’s minimum wage on an annual basis. Which means that in addition to planning your office holiday party, ‘tis also the season to audit your employees’ pay rates to ensure legal compliance. (Who says HR people are dull?)

Effective January 1, 2018 the minimum hourly wage for employers of 25 or fewer employees will be $10.50 per hour. If your company employs 26 or more employees, the minimum hourly rate will be $11.00 per hour. In California, an exempt salaried employee must be paid at least two times the minimum wage for a 40-hour workweek, making the minimum annual salary $43,680 for employers of 25 or fewer, and $45,760 for employers of 26 or more.

The Department of Industrial Relations has also announced changes to the minimum wage rates for employees who are classified as exempt computer software professionals or licensed physicians and surgeons.

Since you’re already foregoing the eggnog so you can examine pay rates, now is a good time to review your company’s wage range for each position, or to create them if you do not currently have formal ranges. In addition to supporting equitable hiring and pay practices, formal wage ranges are necessary for compliance with Assembly Bill 168 (signed by the Governor in October.) This bill prohibits an employer from inquiring about an applicant’s salary history, and from relying on past salary history when deciding on a pay rate to offer. It also requires employers to provide the pay scale for a position to an applicant applying for employment. Failing to comply with a reasonable request would be deemed a misdemeanor.

Establishing new pay ranges can be a time consuming process, and Sierra HR Partners is available to assist with best-practice steps and labor market research.

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