By Jennifer Jacobus, PHRca, SDEA Director of HR Services.

Effective January 1, 2024, California’s minimum wage will increase to $16.00/hour.  This naturally will apply to all minimum wage workers but will also have an impact on those exempt employees who are paid the minimum salary required to be classified as exempt.

Because the state minimum wage is tied to minimum salary requirements for exempt employees, the minimum salary for exempt employees will also increase on January 1, 2024.  The minimum salary that must 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 or $66,560 again, effective January 1, 2024.  Even though San Diego’s current minimum wage is higher than the state, currently $16.30, 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, if an employer considers this increase a financial hardship, there is an option to re-classify 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.

For those employers who have non-exempt employees working within the city boundaries, the higher rate of $16.30 must be paid to your non-exempt hourly employees.  At this time, there are no updates on whether the San Diego minimum wage will increase. 

SDEA members have unlimited access to HR consultants.  If you have any questions on the above, or anything else, please reach out; 858-505-0024.  Remember we are your HR Partner, we are HeRe with you, not just for you.

Contact us: 858.505.0024