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California Minimum Wage Increases—The Impact to Hourly and Exempt Employees

The California minimum wage will reach $15.00 an hour for all employers by January 1, 2023. Until then, Californians will see incremental increases of one dollar per year. Effective January 1, 2019, the minimum wage for employers with 26 or more employees increases to $12.00 per hour and $11.00 per hour for employers with 25 or fewer employees. Even if all your employees make more than minimum wage, there still may be action required.

Exempt Salary Threshold

For employees that are exempt from the Fair Labor Standards Act (FLSA) overtime requirements under the executive, administrative or professional exemptions, a minimum monthly salary of two times the minimum wage must be maintained. Since this amount is directly tied to the state minimum wage, now is the time to review your employees' salaries. While select cities in California have adopted a higher minimum wage than California state law, the requirement for calculating an exempt employees' salary is the statewide minimum wage, not the local minimum wage.