Who Is Entitled to a Minimum Wage in California?
California has some of the most robust wage laws in the United States, ensuring that most employees receive at least the state-mandated minimum wage. However, not everyone automatically qualifies for minimum wage protections. Understanding eligibility involves considering both federal and state laws, particularly the Fair Labor Standards Act (FLSA) and California’s more stringent wage and hour regulations. Below we explore the concept of who is entitled to be paid the applicable minimum wage in California. If you are a Southern California employee or small business owner in Oxnard, Camarillo or Ventura with questions about minimum wage, overtime, or other employment law matters, contact the Ventura County wage and hour lawyers at Rounds & Sutter, LLP, for a free consultation to share your concerns and find out how we can help.
Federal Minimum Wage Coverage: Enterprise and Individual Coverage
Under the FLSA, an employee must qualify under either enterprise coverage or individual coverage to be entitled to the federal minimum wage. Enterprise coverage applies to businesses that have at least two employees and engage in interstate commerce (activities across state lines, including handling goods or materials that have moved in commerce), and have an annual gross revenue of at least $500,000. Examples of businesses typically covered under enterprise coverage include retail stores, restaurants, healthcare facilities, and schools.
Even if a business does not meet the enterprise criteria, an employee may still qualify under individual coverage. Individual coverage applies to employees whose job duties involve interstate commerce. This can include, for example, processing credit card transactions, making interstate phone calls, shipping or receiving goods across state lines, or producing goods for interstate commerce. In short, under the FLSA, employees qualify for minimum wage if their work directly or indirectly affects interstate commerce, which is broadly interpreted.
Broader Coverage Under California’s Minimum Wage Laws
California minimum wage laws differ significantly from the FLSA and are more protective of employees. As of 2024, the state minimum wage is $15.50 per hour for employers of all sizes, with some cities mandating higher local minimum wages. Several key differences exist between the FLSA and California labor law, as noted below:
- Broader Employer Coverage
Unlike the FLSA, California law does not require a business to meet revenue thresholds or engage in interstate commerce for employees to qualify for minimum wage. Almost all employees working in California are entitled to the state’s minimum wage, regardless of the employer’s size or scope of business. - Independent Contractors
While independent contractors are not entitled to minimum wage under either the FLSA or California law, California uses the ABC test (per the Dynamex case that was eventually codified into law) to distinguish employees from independent contractors. This test makes it more challenging for employers to classify workers as independent contractors, ensuring more workers receive wage protections. - Exempt vs. Non-Exempt Employees
California’s exemptions from minimum wage are similar to but stricter than federal exemptions. For example, executive, administrative, and professional employees may be exempt, but only if they earn a monthly salary of at least twice the state minimum wage for full-time employment and meet specific job duties criteria. - Domestic Workers and Agricultural Workers
California extends minimum wage protections to groups often excluded under federal law, such as domestic workers and many agricultural workers.
Exceptions to California’s Minimum Wage Requirements
Despite California’s broad coverage, there are limited exceptions where employees may not qualify for minimum wage:
- Certain learners and apprentices may earn less during a probationary period, but only for the first 160 hours of work.
- Outside salespersons who spend more than 50% of their time working away from the employer’s place of business are exempt.
- Unionized workers covered by collective bargaining agreements that include minimum wage provisions meeting or exceeding state standards may be subject to different rules.
Which Law Applies?
California employees are entitled to the minimum wage that provides the greater benefit. Since California’s minimum wage is significantly higher than the federal minimum wage of $7.25 per hour, almost all employees in the state benefit from California’s standards. Employers must comply with both laws, applying the one most favorable to the employee.
Protecting Your Rights as an Employer or Employee
Minimum wage disputes can arise for various reasons, including misclassification of workers, incorrect calculations of hours worked, or confusion over federal and state laws. Whether you are an employer striving to comply with California’s labor laws or an employee concerned about receiving fair wages, understanding these distinctions is critical.
At Rounds & Sutter, LLP, we are here to guide employers and employees in Ventura County, including Oxnard, Ventura, Camarillo and surrounding communities, through the complexities of California wage laws. If you have questions about minimum wage requirements, classification issues, or compliance, contact us today at 805-650-7100 for personalized assistance.