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Most everyone understands that the law requires employers to pay employees a certain minimum hourly wage. As previously discussed on this blog, California mandates a higher minimum wage than federal law, and certain jurisdictions set even higher minimum wages than state law. However, these minimum wage requirements, along with other wage and hour laws, only apply to employees who are classified as “non-exempt.”

On the other hand, employers are not expected to pay “exempt” employees a certain amount for every hour worked. Exempt employees will receive a set salary – even if their hours vary or they work well over 40 hours a week. For this reason, many employers seek to classify employees as exempt to avoid compliance with certain wage requirements. 

Requirements for Exemption

Employers cannot simply decide when an employee is exempt or non-exempt. Instead, there are two major requirements for an exempt employee under California law:

  • The employee is primarily engaged in certain duties that fall under an exemption
  • The employee earns a monthly salary that is equal to at least two times what the state minimum wage would pay for full-time employment

Increased Minimum Salary

The minimum salary for exempt employees in California is not arbitrary. Instead, it is tied to the minimum wage laws in the state, which recently increased again. This means that the minimum salary for exempt employees also increased as of January 1, 2019. 

The minimum wage in California increased to the following this year:

  • Employers with 26 or more employees = $12.00 per hour
  • Employers with 25 or fewer employees = $11.00 per hour

Because there are two different minimum wages, there will also be two different minimum exempt salaries depending on the size of the employer. 

For employers with 25 or fewer employees, the minimum salary would be twice what someone earning the $11.00 minimum wage would earn for a full0time work week. The calculation goes as follows:

$11.00 per hour x 40 hours per week x 52 weeks per year x 2 = $45, 760 minimum exempt salary

For larger employers, the calculation is:

$12.00 per hour x 40 hours per week x 52 weeks per year x 2 = $49,920 minimum exempt salary

Once an employee earns the minimum salary, the following requirements must also be met regarding this salary:

  • The salary must be guaranteed or predetermined despite a possible reduction in work
  • The employer may not reduce the salary based on the quality or quantity of the employee’s work

Once an employee meets the salary requirements, the test then turns to the duties of the employee to determine whether an exempt status is appropriate and legal. If an employee is misclassified as exempt, the employer may owe them a significant amount in unpaid overtime wages. 

Discuss Possible Misclassification with a California Employment Law Attorney 

At the Mara Law Firm, we represent employees in California in cases involving misclassification, unpaid overtime, and more. If you would like to discuss a possible overtime claim with an experienced California employment lawyer, please call (619) 234-2833 or contact us online today. 

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