Little Known Fact: Fiscal Cliff Deal May Kick California’s Low and Middle Income Wage Earners Over a Financial Cliff – Los Angeles Wage & Hour Claims Attorneys Blumenthal, Nordrehaug & Bhowmik

by Norman B. Blumenthal on February 6, 2013

Many low and middle income wage earners are ecstatic that the federal government’s fiscal cliff has been somewhat averted.  Few of these wage earners will ever earn enough to be subjected to the new tax rate on incomes over $400 thousand.  However, Congress’ failure to extend the Payroll Tax Cut means all of these workers may face their own financial cliff.

With a now expired Payroll Tax Cut, the 2013 FICA tax rate on employee wages now increases to 6.2%, a 2% increase from 2012, on the increased Social Security base of $113,700.  The Medicare tax rate remains at 1.45%.

For California workers paid the minimum wage of $8.00 (except in San Francisco where the minimum wage is $10.24), this 2% payroll tax increase decreases their weekly paycheck by $6.40 or $332.80 annually.  As wages increase, the take home pay decreases.  Furthermore, workers considering making up the wage loss by working overtime should remember that like regular wages, overtime pay is also subject to FICA withholding.

If you have an employment law matter that requires legal attention, call an experienced Los Angeles labor attorney today at Blumenthal, Nordrehaug & Bhowmik at (310) 981-3918.  Blumenthal, Nordrehaug & Bhowmik is a California employment law firm with offices located in San Diego, San Francisco and Los Angeles. The firm dedicates its practice to contingency fee employment law work for issues involving misclassification as a salaried worker exempt from overtime, failure to pay vacation wages, misclassification as an independent contractor, off-the-clock work, wrongful termination, discrimination and other California labor laws.

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