California New Minimum Wage Increase

As of January 1, 2021, California’s minimum wage increases to $14.00 per hour for employers with 26 or more employees and $13.00 per hour for employers with 25 or fewer employees. Local ordinances may impose further increases to the minimum wage.

Employers should review base salaries for all employees exempt from receiving overtime pay to ensure they still satisfy the requirement under California Labor Code § 515(a) that exempt employees be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” This determination is made according to the California state minimum wage, regardless of any locally mandated, higher minimum wage. So, as of January 1, 2021, employees working for employers with 25 or less employees must earn at least $54,080 per year to be exempt, and employees working for employers with 26 or more employees must earn at least $58,240 per year to be exempt.

Employers should review base salaries for all employees exempt from receiving overtime pay to ensure they still satisfy the requirement under California Labor Code § 515(a) that exempt employees be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” This determination is made according to the California state minimum wage, regardless of any locally mandated, higher minimum wage. So, as of January 1, 2021, employees working for employers with 25 or less employees must earn at least $54,080 per year to be exempt, and employees working for employers with 26 or more employees must earn at least $58,240 per year to be exempt.

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