CFA News Flash
June 2015
Minimum Wage: Collateral Effects
DIRECT EFFECTS of the minimum wage increase for the CITY of Los Angeles.

  • Proportionate rise in the cost of Workers Compensation, based on the company’s total wage outlay. Estimates for an increase in Workers Comp rates are for an additional 15% by 2020.
  • Added FICA, SUI, FUI, and Medicare fees are also calculated as a percentage of total wages paid and would add to the total employee costs.
  • ​Increased salary levels for those currently at $15.00 per hour, raising the entire company’s over-all payroll....the company’s options would be to reduce its in-house staff, or convert some present employees to part-time employment.
  • Under California law ‘Exempt’ employees are required to be paid twice minimum wage. Therefore, an ‘assistant manager’ in a specialty retail store (for example), would be required to have a minimum salary of $64,400 or else be converted to ‘Non-Exempt’ status with an overtime pay of $22.50 per hour for any ‘extra’ administrative work. Employee advancement becomes problematic.
Suggestions for Mayor Garcetti and the LA City Council:
  1. Raise the small-business tax exemption to $100,000 from $500,000.
  2. Eliminate the gross receipts tax
  3. Include a three month ‘training wage’ level to encourage businesses to hire inexperienced workers.
  4. Create tax incentives for job creation of ‘new hires’.
California Fashion Association
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