How to Prepare For California’s Minimum Wage Increases?
As per the law, California businesses were required to increase the minimum wage pay to $16 per hour from January 1, 2024. If you are an employer or a small business owner in California, it is important that you are aware of these laws to avoid getting penalized.
Previously, the per-hour rate was $15.50, but it has now been increased to $16. This also means that the annual minimum salary of exempt employees will be $66,560, an increase from the previous $64,480. Employers must ensure that they comply with the Wage Theft Protection Act and update wage statements.
Given the complexities of labor laws and the recent changes, the expertise of a small business accountant in Walnut Creek, CA, becomes invaluable. If you are a small business owner in California, hire an accountant for your ease of operations today.
Things California business owners need to know about the new wage increases
If you are a small business owner in California, there are certain things you need to know as well as some strategies to follow. This will help you remain compliant and avoid legal penalties.
Understand the new wage rates.
California’s minimum wage has increased to $16.00 from $15.50 on January 1, 2024. Therefore, you should remember these rates and familiarize yourself with the laws and specific requirements. It is important to understand that they apply to both hourly and salaried employees. Note that it will also affect the annual salary of full-time exempt employees.
Update your company’s payroll systems.
In order to ensure that you comply with the new wage requirements, you must update your company’s payroll systems. This involves changing the pay structures and making sure that every employee is getting at least the new minimum wage set for the year. Furthermore, if your company uses payroll software, ensure that the systems reflect these changes promptly.
Review employee classifications.
As an employer or a business owner, it is your responsibility to review the employee classifications, especially those who are going to be affected by the new law. If you have currently employed people who are classified as exempt, it is important to update this information and reclassify them as non-exempt. This ensures that employee rights are protected.
Make sure your staff understand the changes.
While your employees may have already heard about the new law, it is important to have effective communication in the workplace. Your staff should know the other details associated with the wage increase and how it will impact their annual salaries and working conditions. The more you communicate with your staff, the lower the risk of misunderstandings.
Comply with Wage Theft Protection requirements.
California has made it mandatory for employers to issue updated wage statements and provide non-exempt employees with a revised Wage Theft Protection Act Notice. This is to ensure legal compliance as well as transparency in the workplace.
Seek guidance from a CPA.
While you may think a wage increase law may not be complex enough to make you feel confused, it will. Hiring a CPA who specializes in labor laws can be helpful. They can help you understand the financial impact of the minimum wage increase.
Since you will be paying your employees more, it will affect your budget as well. Therefore, a CPA will help identify the areas that need adjustment.
Most importantly, a CPA is aware of the ever-changing tax rules and other laws. They know about the best practices for compliance, ensuring that your business remains intact.
Protect your business in the wake of new laws!
California law can be complicated, especially when you are a business owner with employees. It can be overwhelming to try to understand everything and remain compliant while also dealing with business operations. Hire a CPA in California for better management and ease of mind!
