Minimum Wage Increases January 1st 2023 – Don’t Forget Your Exempt Employees


By Jennifer Jacobus, PHRca, SDEA Director of HR Services

SDEA is still receiving calls on the upcoming minimum wage increase, mostly from the perspective of how it affects your exempt, salaried employees.  You have just a couple of weeks before these changes go into effect.

Effective January 1, 2023, the San Diego City minimum wage will increase to $16.30/hour.  The city’s minimum wage is applicable to any employee who performs at least two (2) hours of work in one or more calendar weeks of the year within the geographic boundaries of San Diego.  This applies to all companies in the geographical boundaries, regardless of company size.

For those companies that do not fall within the city boundaries, California’s minimum wage applies; this too will increase effective January 1, 2023 to $15.50 for all businesses, regardless of employee count.  

Because the state minimum wage is tied to minimum salary requirements for exempt employees, this too increases effective January 1, 2023.  The minimum salary that can be paid to a properly classified exempt employee (must meet the salary test AND the duties test) must be equal to two times the current minimum wage which will equal $64,480 effective January 1, 2023.  To clarify, only the state minimum wage is used to determine the minimum salary for exempt employees; the local city minimum wage need not be considered.

While employers do not have any options other than to pay an employee at least minimum wage, an employer, who may consider this increase a financial hardship, could change an exempt employee to a non-exempt hourly employee and pay them on an hourly basis, including any applicable overtime.  This should be done on a consistent basis in order to avoid any discrimination issues.

To download the new San Diego minimum wage poster, click here

This poster needs to be posted if you have workers in San Diego, even if you do not have minimum wage workers.

If you have questions or need assistance, please give us a call at 858-505-0024.

Contact us: 858.505.0024