It is that time of the year again. For 2021, this means exempt employees must receive a minimum annual salary of $58,240 for employers with more than 26 employees, and $54,080 for employers with 25 employees or less. Minimum Wage Increase. Employers must pay their employees California overtime and California minimum wage> unless an employee is “exempt” under California’s employee exemptions. The wage increase will be dependent upon the number of persons employed by the employer. Earn a salary equivalent to at least twice the state minimum wage for full-time (40 hours/week) work. Along with the increase to the minimum wage, the amounts that employers can deduct from employees’ wages for items such as uniform allowances and meals are also set to change on December 31. Employers generally must pay nonexempt employees at least the minimum wage. The Fair Labor Standards Act (FLSA) determines the minimum wage for employees in private and public sectors, in both Federal and State governments. According to the Department of Industrial Relations for the State of California, the minimum wage is $12 an hour for employers with 25 employees or less and $13 an hour for employers with 26 employees or more. Most California employees are entitled to be paid minimum wage.⁠1 They are also entitled to overtime wages when they work more than eight hours in a workday, more than forty hours in a workweek, or seven consecutive days. Individuals in these classifications must be paid at least two times the state minimum wage, in addition to meeting all other legal requirements for this exemption. Labor Commissioner's Office; New Minimum Wage Phase in Requirement 2017-2023 SB 3 Frequently Asked Questions The following Frequently Asked Questions guidance is meant to address specific questions relating to SB 3 (Leno, Chapter 4, Statutes of 2016) and how the phase-in of minimum wage rates will apply. As a reminder, the minimum wage in California is increasing to $14.00 per hour on January 1, 2021, for employers with 26 or more employees based on previous legislation signed by Governor Brown in 2015. This was an anticipated step. California's stair-step climb to a $15 minimum wage continues. Effective January 1, 2021, the minimum wage for employers with 25 employees or less will increase to $13/hour, and for employers with 26 or more employees, the minimum wage will increase to $14/hour. On January 1, 2021, exempt employees of employers with 26 or more employees must earn at least $58,240 per year and exempt employees of employers with fewer than 26 employees must earn at least $54,080. […] Minimum Wage (2021) In keeping with the gradual increase in the State's minimum wage levels, the new tiered rates across the State, effective December 31, 2020, are listed below. To help employers with this new requirement, the DFEH has created an FAQ here. ** Hayward and San Carlos will impose new minimum wages as of January 1, 2021 *** San Diego’s minimum wage has been surpassed by the state minimum wage We’re betting, however, that many employers haven’t considered the full scope of the impact on their businesses, including compliance areas. Under the FLSA, non-exempt employees must be paid the minimum wage or higher. The exempt salary test is calculated using the current California minimum wage, even if an employer’s nonexempt employees may be entitled to receive a higher minimum wage under a local ordinance. 4. The appellate court recognized in a footnote that the regulations did provide that “an employer may provide an exempt employee with additional compensation without losing the exemption or violating the salary basis requirement, if the employment arrangement also includes a guarantee of at least the minimum weekly-required amount paid on a salary basis,” citing 29 C.F.R. On January 1, 2023, the minimum wage will increase to $15 per hour. Non-exempt employees are required to make at least minimum wage. The 2021 thresholds for computer professionals who are paid by the hour have also changed . 2021 California State Minimum Wage Law. * Novato has a third category of minimum wage, for very large businesses with 100+ employees. California employers should take note of the following changes to state and local minimum wage laws—set to take effect on January 1, 2021—that will impact both nonexempt and exempt employees. The 2016 rule also increased the minimum salary for HCEs (to $134,004), allowed employers to use nondiscretionary bonuses and incentive pay to satisfy up to 10% of the salary threshold, and provided for automatic annual updates to keep the minimum salary level adjusted to the 40th percentile of full-time salaried workers in the lowest-wage Census region. Additionally, we expect further guidance in the new year. Administrative exempt employees must also earn a salary of more than $54,080 a year, as of 2020. The salary test is not affected, however, by any applicable local minimum wage. Effective January 1, 2021, employers must pay their exempt California computer professional employees a salary of at least $1,902.08 per week/$98,907.70 annually or an hourly wage of at least $47.48 per hour. 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