As many workers in the state of California are probably aware by now, the beginning of 2018 saw the implementation of a welcome rise in both the amount of minimum wage and by extension, the exempt salary threshold that employers are now required to pay their workers. So, what does this mean for employees throughout the state?

California’s current and future plans for increasing the minimum wage

On January 1, 2018, the first of a projected six-year plan of minimum wage increases took effect in California. The amount was determined based on the size of the business in terms of how many people are employed there. 

As of 2018, employers are now required to increase their minimum wage rate to reflect whichever of the following two ways is applicable to their business:

●      If they have 25 or less employees, the minimum wage has been increased from $10.00 to $10.50 an hour.

●      If they have 26 or more employees, the minimum wage has been increased from $10.50 to $11.00 an hour. 

In additional good news for California’s workers, the state minimum wage will continue to rise incrementally each year until 2023, when the rate will reach $15.00 an hour for all employees – regardless of the total number of employees at a given business.

Exempt employee salary increase 

In direct relation to the increasing minimum wage rate is an increase of the salary threshold for employees in the state who are considered to be “exempt”. In California, an exempt employee is generally one who holds a position that consists primarily of duties that are executive or administrative in nature, and which also calls upon their ability to make and carry out decisions related to their job duties, relying on their own judgment. Workers who fall into this category are exempt from the legal requirements of their employer to track their working hours and breaks and are not eligible for overtime hours and pay rates. 

Exempt employees receive a monthly salary in lieu of an hourly wage, and the minimum salary that an exempt employee can be paid must total at least twice the amount of the state minimum wage for a full-time job. 

With the recent increase that went into effect at the beginning of 2018, the new monthly minimum for exempt employee salaries is currently:

●      At a business with 25 employees or less – $3,640.00 per month

●      At a business with 26 employees or more – $3,813.33 per month

Further considerations on a local level 

As pointed out in a recent article about the new minimum wage laws posted by the Society for Human Resource Management, there may be further responsibilities for employers to remain aware of in regards to their legal requirements on a more local level. Los Angeles attorney David Cheng (of FordHarrison) called it “a virtual explosion of new wage ordinances that aim to set standards that exceed the state standards”. This comes in the form of ordinances being implemented on both city and county levels that are choosing to increase their minimum wage rates at a faster pace than the statewide increase planned over the new few years. 

While this likely comes as little surprise to anyone familiar with the general generosity toward employees that California sees fit to provide, it’s worth noting that these local ordinances will be what determines the legally required wage rate in locations that choose to put them into effect. It will then be the responsibility of the employers to stay up to date with the minimum wage requirements of their particular location. 

If your employer is not meeting the legal requirements of the new wage rates or if you have other concerns regarding the effects of these new laws, contact us today. We take pride in keeping the best interest of California’s hard working employees at heart.