California minimum wage and seasonal employment

California’s minimum wage law is very complex. Even attorneys get it wrong. Today, we are going to talk a little about California’s two tiered minimum wage system and seasonal employment. Essentially, the number of employees an employer has determines which minimum wage rate applies. While this system is pretty straight forward, difficulties arise is for employers with seasonal or intermittent employees. Essentially, these employers must continually reevaluate which wage rate applies each time their workforce expands or contracts.

In these situations where the employer's employee list fluctuates due to seasonal or intermittent employees, which can be very often, employers should look closely at the facts of EACH pay period to prevent employees from claiming underpayment. Employers should be inclusive and look at whether every employee was counted, regardless of whether or not they are exempt from overtime, the number of hours they worked, or their location.

Importantly, employers are required to give written notice in advance each time the employer makes a change to the employee's rate of pay. If at any time an employer employs less than 26 employees, there is no requirement that employers immediately pay their employees at the lower minimum wage rate. However, in that case, the employer will need to decide if the administrative time, costs, and the risk of making a mistake in a specific pay period outweighs any amount saved in switching back when the workforce dips below 26 employees. Likewise, if at any time the employer's workforce reaches 26 employees or more, the employer will again need to pay the employees at the higher minimum wage rate.

If there is any uncertainty in the application of the law, the court will almost always construe the law in the way most favorable to the employees. The labor code statutes are put in place to protect employees, not the employers! So, employers must err on the side of caution and, if at any time, they have 26 employees, the employer should compensate its employees at the higher minimum wage rate for the entire pay period and continue paying at the higher minimum wage rate until the employer no longer has 26 employees. As an added incentive for employers to be diligent in determining which wage rate applies, a wrong decision to not pay the higher minimum wage rate to their employees will result in large penalties and interest on top of the missed unpaid wages.

The best advice is to be very careful in how you pay your employees. If you can afford a lawyer, hire one. What may seem like a small mistake easily snowballs into a large amounts of money and even worse, a payroll audit by the California Labor Commissioner’s Office.