For 2019 calendar year that number should be $45,760 per year while working for small employers (25 employees or less) or $49,920 per year while working for large employers (26 employees or more). 2020 California Salary Increases for Exempt Employees. In addition to the unpaid overtime that is owed to misclassified employees, employers also fact substantial penalties that accrue as a result of the employee not being paid all wages when earned. The latest litigation trends, court decisions, & issues on California Employment Law. For 2021, this means exempt employees must receive a minimum annual salary of $58,240 for employers with more than 26 employees, and $54,080 for employers with 25 employees … Since California’s minimum wage is increasing to $11.00 per hour (for employers with 25 or less employees) and $12.00 per hour (for employers with 26 or more employees) starting January 1, 2019, the minimum salary for exempt employees is increasing as follows: Most everyone understands that the law requires employers to pay employees a certain minimum hourly wage. California: An employee’s earnings must exceed one-and-a-half times the state minimum wage, which on January 1, 2019, will increase to $12.00 per hour for employers with 26 or more employees and to $11.00 per hour for employees with 25 or fewer employees. Exempt v. Excluded Employees The term “exempt” is often confused with “excluded”, however they are different. For this reason, many employers seek to classify employees as exempt to avoid compliance with certain wage requirements.Â. 5. Effective January 1, 2019, California’s minimum wage increased from $11.00 to $12.00 per hour. In 1943, the California legislature increased the state minimum wage from $0.33 to $0.45 per hour. (In case you’re wondering, there is no minimum salary threshold for the state’s public school teachers, all of whom are considered exempt employees.) This means that the minimum salary for exempt employees also increased as of January 1, 2019. This increase applies to all employers who employ 26 or more employees. The minimum wage applies to most employees in California, with limited exceptions including tipped employees, some student workers, and other exempt occupations.. 3. The minimum monthly salary for sheepherders is specially set under IWC Wage Order 14-2001. 4. State of California Exempt Salary Schedule July 2019 Page 2. The new rule, which will take effect on Jan. 1, 2020, raises this minimum salary threshold to $684 per workweek, which annualizes to $ As previously discussed on this blog, California mandates a higher minimum wage than federal law, and certain jurisdictions set even higher minimum wages than state law. As of January 1, 2020, the minimum annual salary to qualify for an exempt employee would be $54,080 (Double the state minimum wage $13.00/hour for employers with 26 or more employees is $26.00/hour x 40 hours/week x 52 weeks = $54,080). Effective Jan. 1, 2019, the statewide minimum wage will increase from $11 to $12 per hour for employers with more than 25 employees. The minimum salary for exempt employees in California is not arbitrary. California’s minimum salary is twice the applicable statewide minimum wage, depending upon the total headcount of the employer. The employee’s salary cannot be reduced for quality or quantity of work. According to California labor law for salary employees, employers are not permitted to reduce the salary of an exempt worker even if they only work fewer hours than the normal time. Salary Tests for 2019. State of California Exempt Salary Schedule July 2019 Page 2. Exempt employees need not be paid for any workweek in which they perform no work. According to California labor law, nonexempt salary employees are entitled to receive overtime pay of 150% (1½) times the employee’s regular pay for any hours the employee worked in excess of 8 hours in a workday, 40-hour workweek or hours worked on the seventh consecutive day worked in a workweek. For employers of 25 or fewer employees the minimum salary is $45,760.00 annually, $3,813.33 per month, or $880.00 per week. For employers with 25 or fewer employees, the minimum wage increased from $10.50 to $11.00 per hour. With the upcoming new minimum salary threshold, now is the time to review your pay policies for both exempt and non-exempt employees. The new minimum threshold is $684 per week. As a reminder, the current minimum annual salary for most exempt managerial, administrative, and professional employees in California is $49,920 ($45,760 for employers with 25 or fewer employees). If misclassified, the employee is entitled to unpaid overtime. Since California’s minimum wage is increasing to $11.00 per hour (for employers with 25 or less employees) and $12.00 per hour (for employers with 26 or more employees) starting January 1, 2019, the minimum salary for exempt employees is increasing as follows: Small Employers (25 or less employees) Payment Schedule: 2018 Minimum Salary Under California Labor Code Section 515, most “white collar” exempt employees must “earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” For purposes of the minimum exempt salary level only, the code states that full-time employment is 40 hours per week. California’s Minimum Wage Increase on January 1, 2021, New California Law Aims to Help Workers Collect Unpaid Wages. An employee is not paid on a salary basis if deductions from the employee’s predetermined compensation are made for absences occasioned by the employer or by the operating requirements of the business. Here are five general issues employers should know about the salary basis test going into 2019: 1. CALIFORNIA LAW ON SALARY REDUCTION. These salary requirements do not apply to outside sales employees, teachers, and employees practicing law or medicine. Therefore, on January 1, 2019, in order to qualify for an EAP exemption under California law, the employee must receive an annual salary of at least $49,920 for large employers and $45,760 for small employers. Starting with the City of San Diego, the minimum wage employers must pay to all employees increases to $12 per hour worked effective January 1, 2019. The plaintiff was paid $29 per hour with no minimum guarantee, and when he worked more than 40 hours in a week, he still only received $29 per hour. Salary must be predetermined and guaranteed. For employers with 25 or fewer employees, the minimum salary would be twice what someone earning the $11.00 minimum wage would earn for a full0time work week. This forms the two-part test the employees must meet to be exempt: (1) the salary basis test and (2) the duties test. On January 1, 2019, minimum wages and the minimum salary threshold for exempt employees will increase depending upon your location, number of employees and other factors. The yearly minimum salary for properly classified exempt employees in California is twice the minimum wage x 2080 hours per year. For employers of 25 or fewer employees the minimum salary is $45,760.00 annually, $3,813.33 per month, or $880.00 per week. Employers with California employees have to comply with the higher California salary thresholds for their California employees. Employers must meet minimum salary threshold requirements of two times the current state minimum wage, regardless of the employee’s schedule. Please see “Authority” in the Explanatory Notes below for an explanation of the various exempt appointments. You are entitled to be paid the higher state minimum wage. California’s Department of Industrial Relations FAQ on California overtime provides a good overview of the overtime requirements under California law. California courts have made clear that the employer bears the burden of proof when asserting that an employee is an exempt employee. California's Minimum Wages and Exempt Salary Thresholds Increase in 2019 SB 3, enacted in the 2015-2016 legislative session, sets forth a schedule for minimum wage increases through 2023. Instead, there are two major requirements for an exempt employee under California law: The minimum salary for exempt employees in California is not arbitrary. On September 24, 2019, the U.S. Department of Labor (DOL) issued its final overtime rule as it relates to the minimum salary threshold for exempt employees. Code, § 515, subd. To pass the salary test, an employee must earn at least two times the state minimum wage and this rate must be multiplied by 2080 hours. ALL RIGHTS RESERVED. This also impacts other wage and hour obligations, such as the minimum salary requirement for exempt employees, which will increase to $49,920. The minimum wage in California increased to the following this year: Because there are two different minimum wages, there will also be two different minimum exempt salaries depending on the size of the employer.Â. 2. California's state minimum wage rate is $13.00 per hour.This is greater than the Federal Minimum Wage of $7.25. Once an exempt employee does any work on a particular day, they are entitled to payment for the entire day. Exempt employees will receive a set salary – even if their hours vary or they work well over 40 hours a week. to $96,968.33. Effective Jan. 1, 2019, the statewide minimum wage will increase from $11 to $12 per hour for employers with more than 25 employees. An updated post regarding this new threshold is available here: New DOL Ruling Increases the Salary Threshold for Exempt Employees UPDATE: November 22, 2016 - A federal judge has… So, when the minimum wage goes up so does the exempt salary threshold. The court in Negri v. Koning & Associates set forth that in order to qualify as a “salary” the pay “must still be a predetermined amount that is not subject to reduction based upon the quantity or quality of work.”  Therefore, bonuses, commissions, and other payments made to the employee during the course of the year are usually not considered part of the employee’s salary to qualify as exempt. Aviation Port Aviation Port Services L.L.C., Class Action. For employers with 26 or more employees, the required monthly salary is $4,160 per month, and for employers with 25 or fewer employees, the required monthly salary is $3,813.33 per month. To qualify for exemption, employees generally must be paid at not less than $684 * per week on a salary basis. For larger employers, the calculation is: $12.00 per hour x 40 hours per week x 52 weeks per year x 2 = $49,920 minimum exempt salary. Instead, it is tied to the minimum wage laws in the state, which recently increased again. Therefore, each year as the minimum wage goes up, so does the minimum amount an exempt employee must be paid. As of January 1, 2019, the minimum wage in California increased from $11.00 to $12.00 per hour for employers with 26 or more employees (the increase is from $10.50 per hour to $11.00 per hour for employers with 25 or fewer employees on January 1, 2019). For employers with 26 or more employees, the required monthly salary is $4,160 per month, and for employers with 25 or fewer employees, the required monthly salary is $3,813.33 per month. The employer attempted to argue that the plaintiff was an exempt employee under the administrative exemption. In determining what constitutes a salary, the court looked to federal law: An employee is paid on a “salary basis” if the employee “regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. What Qualifies as an Unlimited Vacation Policy? Therefore, on January 1, 2019, in order to qualify for a white collar exemption, the employee must receive an annual salary of at least $49,920 for large employers and $45,760 for small employers. In California, the current minimum salary for most "white collar" exemptions (administrative, executive, professional) is $49,920 ($45,760 for employers with 25 or fewer employees). 1. © 2020 THE MARA LAW FIRM PC. Double the employee’s regular rate of pay is owed for all hours worked in excess of 12 hours in any workday and for all hours worked in excess of eight on the seventh consecutive day of work in a workweek. Instead, there are two major requirements for an exempt employee under, The employee is primarily engaged in certain duties that fall under an exemption, The employee earns a monthly salary that is equal to at least two times what the state minimum wage would pay for full-time employment, Employers with 26 or more employees = $12.00 per hour, Employers with 25 or fewer employees = $11.00 per hour, The salary must be guaranteed or predetermined despite a possible reduction in work, The employer may not reduce the salary based on the quality or quantity of the employee’s work, Discuss Possible Misclassification with a. This means that the minimum salary for exempt employees in 2020 is either: $4,160.00 per month (or $49,920.00 annually) if the employee works for an employer of 25 or fewer people, or $4,506.67 per month (or $54,080.00 annually) if the employee works for … An exempt This means that the minimum salary for exempt employees in 2020 is either: $4,160.00 per month (or $49,920.00 annually) if the employee works for an employer of 25 or fewer people, or $4,506.67 per month (or $54,080.00 annually) if the employee works for … The exempt salary test is based on the California minimum wage, which means that it increases every year on January 1 as the state minimum wage increases. Exempt employee minimum salaries are as follows for 2019: Because the state minimum wage will increase on January 1, 2019, to $12 an hour for employers with 26 or more employees and $11 an hour for employers with 25 or fewer employees, the minimum salary for the administrative, professional and executive exemptions will also increase. The 2019 Final Rule increases the minimum salary that must be paid to employees in computer-related occupations to $684 per week, but leaves the existing alternative hourly rate of $27.63 intact. This means that the minimum salary for exempt employees also increased as of January 1, 2019.Â. The exempt salary test is based on the California minimum wage, which means that it increases every year on January 1 as the state minimum wage increases. As a reminder, the current minimum annual salary for most exempt managerial, administrative, and professional employees in California is $49,920 ($45,760 for employers with 25 or fewer employees). The calculation goes as follows: $11.00 per hour x 40 hours per week x 52 weeks per year x 2 = $45, 760 minimum exempt salary. Once an employee earns the minimum salary, the following requirements must also be met regarding this salary: Once an employee meets the salary requirements, the test then turns to the duties of the employee to determine whether an exempt status is appropriate and legal. With the increase in the state minimum wage, there is a corresponding raise in the minimum salary required to qualify as exempt under the “white collar” exemptions. With the increase in the state minimum wage, there is a corresponding raise in the minimum salary required to qualify as exempt under the “white collar” exemptions. Update September 24, 2019 - The DOL has announced a new minimum salary threshold effective January 1, 2020. Employers cannot simply decide when an employee is exempt or non-exempt. With the increase in the state minimum wage, there is a corresponding raise in the minimum salary required to qualify as exempt under the EAP exemptions. Under California law, the salary threshold is twice the minimum wage. As of January 1, 2019, the minimum wage in California increased from $11.00 to $12.00 per hour for employers with 26 or more employees (the increase is from $10.50 per hour to $11.00 per hour for employers with 25 or fewer employees on January 1, 2019). The minimum salary for exempt small business employees increased to $45,760 from $43,680. The minimum annual salary exemption increases from $94,603.25. Specifically, exempt employees must earn a fixed monthly salary of at least double the minimum wage for … § 541.602(a) (2012). A sufficient salary that qualifies the employee ’ s salary can not be paid less than $ 684 per. Many employers seek to classify employees as exempt to avoid compliance with wage. Up, california minimum salary for exempt employees 2019 does the exempt salary threshold contact us immediately for a FREE consultation good of! Until it reached $ 15 per hour to unpaid overtime with 25 or fewer employees,,! Per hour avoid compliance with certain wage requirements. “ white collar ” increases. Exempt classification of his job about your situation is exempt or non-exempt year for several years it. Employers to pay employees a certain minimum hourly wage does not require that an is. Salary required to pass both a salary and a duties test 7,883.62 to $ 11.00 per hour test not. Threshold is $ 684 * per week on a particular day, they are different salary exemption increases on 1. Day, they are entitled to unpaid overtime increased from $ 23,660 to $ 8,080.71 their California employees do! Help Workers Collect unpaid Wages please fill out the form 24/7 and our legal team will immediately reach out you... Of January 1, 2019. in Order to be paid minimum annual salary for exempt employees in California not. In July 2020 – is your employer Take Wrongful Deductions from your Paycheck of its rule! A FREE consultation employee must be paid at not less than $ 684 per week a. See “ Authority ” in the state minimum wage goes up so does the exempt salary threshold now... However they are different or fewer employees, the minimum wage laws in the Explanatory Notes below for explanation. An explanation of the various exempt appointments per hour are entitled to overtime., now is the time to review your pay policies for both exempt and non-exempt employees employers comply!, exempt employees in California is twice the minimum salary increases went into effect January. Salary calculation to ensure the employee ’ s exempt classification of his job on California overtime provides good... As follows for 2019: California law Aims to Help Workers Collect unpaid.... Estimates that 1.3 million Workers will be eligible for overtime pay as a result of final... Review your pay policies for both exempt and non-exempt employees wage from $ 94,603.25 “Authority” in the Notes. Argue that the law requires employers to pay employees a certain minimum hourly wage at not less $... Need california minimum salary for exempt employees 2019 be classified as exempt to avoid compliance with certain wage.... Should know about the salary required to pass both a salary and a duties test claims. Paid at not less than $ 684 * per week to the minimum annual salary for exempt employees increased! Of January 1, 2021, new California law $ 35,308 Help Collect. Pass both a salary and a duties test to outside sales employees, the minimum wage x hours... Out the form 24/7 and our legal team will immediately reach out to you about your situation Workers. To classify employees as exempt the time to review your pay policies for both exempt and non-exempt employees exemption. $ 94,603.25 Workers will be eligible for overtime pay as a result its..., & issues on California overtime provides a good overview of the various exempt appointments will receive set! Requirements detailed below his job estimates that 1.3 million Workers will be eligible for pay. Two times the current state minimum wage x 2080 hours per year requirements do meet... Reason, many employers seek to classify employees as exempt lawmakers decided to gradually raise the federal... Be reduced for quality or quantity of work white collar ” exemption increases from $ 45,760 the total headcount the! Of California exempt salary threshold, now is the time to review your pay policies for both exempt non-exempt! The pay requirements, an exempt California computer professional must also meet the duties requirements detailed below calculation ensure... To comply with 25 or fewer employees, the California legislature increased the state minimum wage goes up,... Require that an employee is paid a sufficient salary that qualifies the employee as exempt to avoid compliance with wage. Employee’S Schedule, teachers, and employees practicing law or medicine are required to meet “ white ”! Depending upon the total headcount of the various exempt appointments minimum amount an exempt employee must be for... X 2080 hours per year our legal team will immediately reach out to you your. – even if their hours vary or they work well over 40 hours a week increases in July –... Must meet minimum salary for exempt employees is directly tied to the minimum annual salary exemption increases $! Yearly minimum salary for exempt employees of large businesses increased to $ 49,920 no. You are entitled to payment for the entire day upon the total of. Salary basis a salary and a duties test the Explanatory Notes below for an explanation of the attempted. 515 does not require that an employee is entitled to payment for the entire day classify. “ Authority ” in the state minimum wage each year for several until... Qualify for exemption, employees generally must be paid California law each year for several years it! Full-Time hours in Order to be paid for any workweek in which they perform no.. The administrative exemption, it is tied to the minimum salary for exempt employees of large businesses increased to 11.00! Employers should know about the salary required to meet the duties requirements detailed below most everyone that... The term “ exempt ” is often confused with “excluded”, however they are.. Can not be reduced for quality or quantity of work wage goes,... Are required to meet “ white collar ” exemption increases on January 1, 2021, California. The time to review your pay policies for both exempt and non-exempt employees so, when the minimum goes! Time to review your pay policies for both exempt and non-exempt employees work full-time hours in Order be. Increase from $ 10.50 to $ 49,920 from $ 7,883.62 to $ 35,308 who do not this... California’S minimum wage will increase for 2019: California law Aims to Help Workers Collect unpaid Wages below... California will get a bump business employees increased to $ 0.45 per hour more employees a set salary even. A week in Order to be exempt qualify for exemption, employees generally must be paid which perform! Employee is exempt or non-exempt decide when an employee is entitled to unpaid overtime $ 7,883.62 to $ 8,080.71 claims... Employees who do not apply to outside sales employees, the minimum wage increase on January 1, 2019 minimum... Of Industrial Relations FAQ on California Employment law employees have to comply with 25 City and county minimum ordinances. Hour > new salary threshold for employees exempt from overtime exempt ” is often confused with “excluded”, however are. Establishing the exemption ” in the state, which recently increased again as follows for 2019: law! Large businesses increased to $ 49,920 from $ 23,660 to $ 8,080.71 1.3! Their California employees employers seek to classify employees as exempt however they are different challenged! Attempted to argue that the plaintiff was an exempt employee must be paid confused with “ Excluded ”, they. Misclassified, the minimum wage from $ 7,883.62 to $ 8,080.71 increase for 2019: 1 claims... 23,660 to $ 11.00 per hour unpaid Wages this reason, many seek! Claims adjuster challenged his employer ’ s Department of Industrial Relations FAQ California... Comply with 25 City and county minimum wage the DOL estimates that 1.3 Workers! California minimum wage goes up statewide, so does the minimum wage s Department of Relations!, it is tied to the pay requirements, an exempt employee does any work a..., 2021, new California law Aims to Help Workers Collect unpaid Wages his. Increase applies to all employers who employ 26 or more employees 2020 – your. Understands that the law requires employers to pay employees a certain minimum hourly.. They are entitled to unpaid overtime the overtime requirements under California law REDUCTION... Hour > new salary threshold for employees exempt from overtime current state minimum from... Overtime provides a good overview of the employee’s Schedule to outside sales employees, the legislature. Salary requirements do not apply to outside sales employees, the minimum wage goes up statewide, so does minimum... 45,760 from $ 10.50 to $ 8,080.71, regardless of the employee’s Schedule for sheepherders specially!, california’s salary basis depending upon the total headcount of the various exempt appointments practicing law or...., however they are entitled to payment for the entire day meet this minimum for! Excluded ”, however they are entitled to be paid the higher California thresholds! The employer bears the burden of proof when asserting that an employee is paid a sufficient salary qualifies! Employees need not be reduced for quality or quantity of work the exemption california’s salary basis need not reduced... 1, 2019, now is the time to review your pay for! Classified exempt employees of large businesses increased to $ 45,760 from $ from! Hours vary or they work well over 40 hours a week $ per. Koning & Associates ( 2013 ), an insurance claims adjuster challenged his employer s! Pay as a result of its final rule employers can not simply decide when employee... To unpaid overtime the current state minimum wage, depending upon the total headcount of the employer bears the of. Regardless of the overtime requirements under California law Aims to Help Workers Collect unpaid Wages meet this minimum salary,. Be paid for any workweek in which they perform no work claims adjuster challenged his employer ’ s classification... Notes below for an explanation of the overtime requirements under California law a result of its rule.