California's Minimum Wages and Exempt Salary Thresholds Increase in 2020 SB 3, enacted in the 2015-2016 legislative session, sets forth a schedule for minimum wage increases through 2023. The California 2020 legislative session has closed, and employers should be preparing for 2021 by updating policies and procedures.Employers should ensure that the minimum wage for non-exempt employees’ wages will be appropriately increased for 2021. Employers with exempt employees should evaluate employees’ salaries because exempt employees in California generally must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment. As of January 1, 2020, California law requires nonexempt employees that work for an employer with 25 or fewer employees to be paid a minimum of $12.00 per hour. Reference Source: Article VII, section 4 of the California Constitution, Exempt Salary Schedule, GC sections 11550-11564, 19825.5 For these employees, CalHR approves the salary range for each position and determines any annual increase. Pay requirements for exempt employees. As of January 1, 2020, the minimum wage in California increased from $12.00 per hour to $13.00 per hour for employers with 26 or more employees (the increase is from $11.00 per hour to $12.00 per hour for employers with 25 or fewer employees on January 1, 2020). Since 2017, California has been working its way up to an eventual $15 minimum wage. part 541 with an effective date of January 1, 2020.WHD will continue to enforce the 2004 part 541 regulations through December 31, 2019, including the $455 per week standard salary level and $100,000 annual compensation level for Highly Compensated Employees. Employers with California employees have to comply with the higher California salary thresholds for their California employees. These positions normally receive the same increase provided comparable civil service employees. Salary Test Requirements. Likewise, nonexempt workers may receive a predetermined salary, but it should be equal to the federal minimum wage or the state minimum wage, whichever one is higher. It is a common misconception that anyone who is paid a salary or works in an office is an exempt employee under this category. But in fact that is not true. 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). As of January 2020, the minimum salary requirement for an employee to be exempt under the white-collar exemption is $49,920 (if the employer employs less than 26 workers). Federal law requires employers to pay nonexempt employees a minimum wage of $7.25 per hour.4 Fortunately, California state law is more favorable to employees than in this context. Minimum Wage and Exempt Employees Salary Threshold: Adjust pay levels for increasing minimum wage and ensure exempt employees are paid minimum threshold salaries to qualify as exempt. 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. This Friday’s five article covers five reminders about the California minimum wage increase and its impact upon exempt employees: 1. Simply paying an employee a salary does not make them exempt, nor does it change any requirements for compliance with wage and hour laws. *Note: The Department of Labor revised the regulations located at 29 C.F.R. Effective from January 1, 2020, California labor law requires employers with at least 26 employees to pay $1,040 every week or $54, 080 per annum. Exempt employees in California generally must earn a minimum monthly salary of no less than two times the state minimum wage for full time employment. California, for instance, has a minimum salary exemption of "$49,920 effective January 1, 2020, for employers with 25 employees or less; $54,080 for employers with more than 25 employees."