Some salaried employees in California, including a category of relatively higher-paid workers, may be entitled to pay increases because of minimum-wage increases that went into effect this year. In 2017, the California Legislature enacted a new minimum-wage law aimed at raising the statutorily-mandated minimum wage from $10 per hour to $15 per hour. The increase was to be phased in over multiple years, from 2017 to 2023. As of January 1, 2023, the State’s minimum-wage law was increased to ensure that California employees be paid at least $15.50 per hour for their work.
Although the goal of the minimum-wage laws are to ensure a certain level of pay for the lowest-paid workers in the California economy, the minimum-wage increase also has a direct impact on the pay rates of higher-paid employees; specifically, salaried employees considered exempt under the Executive, Administrative or Professional or exemptions, as well as exempt computer professional employees.
Under California law, California employers may lawfully classify certain categories of employees exempt from certain requirements guaranteed to non-exempt hourly wage earners, including—most importantly—overtime pay. Non-exempt employees are guaranteed overtime pay computed at one and one-half times their regular hourly rate of pay for all work in excess of 8 hours in a day or 40 hours in a week, as well as double pay for all work in excess of 12 hours in a day.
To avoid paying overtime—which can quickly add up to dramatically increase pay for some workers—employers rely on exemptions in the law for employees in Executive, Administrative or Professional categories. However, in order to rely on such exemptions, the law requires that the employee be paid “a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment.”
With the lawful minimum wage increased to $15.50 per hour, it means an employee must be paid a minimum annual salary of $64,480, or $5,373.33 per month, in order for the overtime exemption to apply. Any salaried employee paid less than those amounts must be paid overtime for all work in excess of 8 hours in a day or 40 hours in a week. Because special minimum-wage rules apply to exempt computer professional employees (including a higher minimum-wage rate), computer professionals must be paid a minimum annual salary of $112,065.20 for the exemption to apply. If a computer professional is paid less than that, he or she is entitled to overtime pay computed at their regular rate, which can be no less than $53.80 per hour.
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The Law Offices of C. Joe Sayas, Jr. welcomes inquiries about this topic. All inquiries are confidential and at no cost. You can contact the office at (818) 291-0088 or visit www.joesayaslaw.com. [For more than 25 years, C. Joe Sayas, Jr., Esq. successfully recovered wages and other monetary damages for thousands of employees and consumers. He was named Top Labor & Employment Attorney in California by the Daily Journal, selected as Super Lawyer by the Los Angeles Magazine for 11 years, and is a past Presidential Awardee for Outstanding Filipino Overseas.]
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