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Minimum Wage Workers? Time for a Pay Increase

12.21.21  

By Jennifer Jacobus, PHRca, SDEA Director of HR Services

This is a reminder that effective January 1, 2022, employers may find it necessary to give pay increases in accordance with new minimum wage requirements. 

On January 1, 2022, the city of San Diego’s minimum wage will increase from $14/hour to $15/hour.  As a reminder, 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, 2022 as follows:

  • For employers with 25 or less employees, the minimum wage will increase to $14/hour
  • For employers with 26 or more employees, the minimum wage will increase to $15/hour

Because the state minimum wage is tied to minimum salary requirements for exempt employees, this too increases effective January 1, 2022.  The minimum salary that must be paid to a properly classified exempt employee (one who meets the salary test AND the duties test) must be equal to two times the current minimum wage as follows:

  • For employers with 25 or less employees, the minimum exempt salary requirement will increase to $58,240/annually
  • For employers with 26 or more employees, the minimum exempt salary requirement will increase to $62,400/annually

While employers do not have any options other than to pay an employee a 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.

Remember that SDEA is here to help and provide guidance. SDEA members have access to unlimited consultation with our HR Consultants; just a call away — 858.505.0024.

Contact us: 858.505.0024