A local minimum wage applies to our nonexempt employees. When the minimum wage increases on July 1, does that mean the salary test for our exempt employees also increases?
There are 11 cities and one county that have minimum wages which increase on July 1. These increases to the minimum wage rates apply only to an employer’s nonexempt employees. The increases don’t alter the salary test for the employer’s exempt employees.
Employees classified under the executive, administrative or professional exemptions must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment.
For employers with 26 or more employees, the required monthly salary is $4,160 per month, and for employers with 25 or fewer employees, the required monthly salary is $3,813.33 per month.
The exempt salary test is based on the California minimum wage, which means that it increases every year on January 1 as the state minimum wage increases. The salary test is not affected, however, by any applicable local minimum wage.
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.