California Employers are well aware of the minimum wage increase that went into effect July 2014.
The increase, according to the California Department of Industrial Relations, raised the hourly minimum from $8 to $9, and will require a $10 minimum wage by 2016. For some employers, the increase was little but ceremonial as local laws already required a minimum wage that exceeded the statewide increase. For example, San Francisco’s minimum wage is $10.74/hr, while San Diego is pushing for its own increase above state law.
What you may not know is that the California salaried minimum wage is different than the hourly minimum wage. The statewide increase also raises the wages of exempt or “salaried” employees.
By California law, exempt workers must meet a salary requirement. The general requirement is that the salaried employee’s monthly pay must be twice what a full-time hourly employee earns (40 hours/week). So for full-time exempt workers, the minimum wage was $33,280 per year. With California’s increase in effect, the minimum wage for exempt workers is now $37,440 per year. This means that if your employee’s salary wage is still in compliance with the 2013 minimum, it’s time to make that change.
If you have a salaried employee who is now making less than the legal requirement following the increase, we recommend you make adjustments now. It’s also a great time to review your employees’ salaries to prepare for the increases to come. By 2016, exempt employees are required a yearly minimum of $41,600.
By making adjustments now, you will avoid penalties and back-pay interest. You will also steer clear of potential overtime premium pay for any employee’s loss of exempt status and possible litigation costs. If you have avoided these penalties until now, consider yourself lucky. It’s never too soon to work out these kinks.
Pink Payroll can help you with a variety of payroll related tasks. Visit our payroll services page to learn more, or contact us for a free quote!
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