11.20.24
By Jennifer Jacobus, PHRca, SDEA CEO 
Effective January 1, 2025, California’s minimum wage will increase to $16.50/hour. This 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, 2025. 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 $68,640 again, effective January 1, 2025.
San Diego’s minimum wage will also increase effective January 1, 2025 to $17.25. Although this is higher than the state, only the state minimum wage is used to determine the minimum salary for exempt employees; the local city minimum wage need not be considered. But remember, if you have minimum wage workers working within the San Diego city limits, they must be paid at least the San Diego city minimum wage.
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.
If you have questions or need assistance, SDEA can help. Give us a call at 858-505-0024.