Minimum Wage Increase May Affect More Than Minimum Wage Earners

By May 1st, 2018HR Blog

By Jennifer Jacobus, PHR-CA, SHRM-CP, SDEAwhiteboard-graph

The start of the New Year will mean an automatic pay raise for some California employees. We are all well aware of the two-increment minimum wage increase that went into effect on July 1, 2014. The first increment implemented an increase in the state’s minimum wage from $8/hour to $9/hour. We have also known that the second increment was to enact an additional bump in minimum wage up to $10/hour on January 1, 2016. That seemed far away at the time, didn’t it? Well, here we are!

On January 1, 2016, California’s minimum wage will increase to $10/hour. Regardless of opinion, the change itself is easy enough to understand. Any minimum wage earner currently making $9/hour will receive a wage increase at the rate of $1/hour. However, what employers also need to remember is that the state’s minimum wage is tied to the minimum salary requirements for an exempt employee. In California, an exempt employee must make a minimum of 2 times theĀ currentĀ minimum wage (in addition to the duties test). In order to meet state requirements as of January 1, 2016, all exempt employees must make a minimum of $41,600/year or $3,466.66/month.

The salary “test” is comprised of two parts. As mentioned above, each exemption: managerial, administrative, professional, outside sales, and professional computer, has a specific duty test that must also be met. Both parts are required – not one or the other.

If you have questions about the upcoming minimum wage increase or if you are uncertain whether your current exempt employees are properly classified, feel free to contact our team by calling (858) 505-0024 or emailing

Contact us: 858.505.0024