Mid-Year Compensation Rate Changes and How it Affects Employers

Labor Code section 4653 dictates that indemnity benefits should be calculated based on the Applicant’s average weekly earnings. The DIR has determined that the State Minimum Wage for 2023 is $15.50. However, on July 1, 2023 some counties are set to increase their minimum wage rates higher than those set forth by the DIR and some employers will need to adjust their payrolls accordingly.

It has long been a desire for the California state minimum wage, which is currently one of the highest in the nation, to continue to increase in an effort to keep up with record inflation and provide what would be considered a living wage for hourly employees. The Living Wage Act of 2022 is set to appear on ballots next year and would result in the state minimum wage being raised to $18.00 by the year 2025.

In anticipation of the ballot measure passing, some localities have taken it upon themselves to make gradual increases beyond those that have been set by the DIR in an effort to be on track to meet the $18.00 requirement by 2025. Even further, some localities have taken it so far as to increase the minimum wage amount to more than the proposed $18.00. Several localities have announced their intent to make these additional increases in advance of the effective date of July 1, 2023. Employers with hourly workers in these areas should be aware of the forthcoming changes and adjust the hourly wage to their employees in these localities by the effective date, so as not to be found non-compliant and to avoid the possibility of exposing themselves to civil liability as well as possible Labor Code violations as far as indemnity benefits are concerned.

It is important to note that some localities have already implemented an increase in the minimum wage that is being paid to hourly employees, and employers in these localities should have already made the necessary payroll changes at the beginning of the year. If you have not already done so, please review the minimum wage that has been established for each locality wherein you have employees.

The specific localities where the changes are set to take place on July 1, 2023 are: Alameda, Berkeley, Emeryville, Fremont, City of Los Angeles, County of Los Angeles (only unincorporated areas), Malibu, Milpitas, Pasadena, San Francisco, Santa Monica, and West Hollywood.

If you would like a more in-depth explanation on these changes and how they may affect your business with regard to workers’ compensation liability, please feel free to reach out to CBE Law Group for more information.

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