New Minimum Wage Will Have Maximum Impact on California Employers

HR Hero's California Employment Law Letter

Elizabeth J. Boca, an Associate in the Labor and Employment practice, in the firm’s San Francisco office, authored an article for HR Hero’s California Employment Law Letter titled “New Minimum Wage Will Have Maximum Impact on California Employers.”

Following is an excerpt:

Each time the state minimum wage increases, so will the minimum salary required for exempt white-collar employees. Under Labor Code Section 515, to qualify as exempt from overtime as an executive, administrative, or professional employee, an employee must earn a monthly salary equivalent to at least two times the state minimum wage for full-time employment totaling 40 hours per week, or 2,080 hours per year. On January 1, the minimum salary will increase from $3,120 monthly ($37,400 annually) to $3,467 monthly ($41,600 annually). The minimum salary requirement is not prorated for part-time employees.

You should review whether your exempt employees will still meet the “salary test” requirement by January 1. If you have employees that otherwise meet the re­quirements for the white-collar exemption but you fail to raise their salaries to the appropriate minimum salary, these exempt employees will revert to nonexempt status and will be eligible for overtime. That could result in a complicated situation and cause you significant poten­tial exposure.