California minimum wage increases in ’14 & ’16. Impact on exempt status for staff.

California increases minimum wage from $8 to $9 per hour starting July 1, 2014. Another increase to $10 starts January 1, 2016, two years from now.

This affects the minimum that employers can pay their staff.

It also has another impact – on determining if other staff are exempt from overtime rules.

This and other info on new labor laws effective the start of this year can be found in the January/February issue of the California Society of CPAs’ magazine. Check out new year, new labor laws. (Oops, the article says $9 at 1-1-16, which isn’t correct.)

The article explains the exemption for professional, administrative, and executive staff only applies in California if the person is paid double the state minimum wage. This means in addition to the other tests which determine if a person is considered professional, administrative or executive, there is a minimum salary test.

The minimums are:

  • $33,280 – based on $8/hour – until 6-30-14
  • $37,440 – based on $9/hour – starting 7-1-14
  • $41,600 – based on $10/hour – starting 1-1-16

If you pay someone who would otherwise be exempt less than those amounts, you must still track their actual hours worked and pay overtime as specified in state law.

Check out the CalCPA article for more news on labor law changes in 2014.

If you have any questions, please contact a labor law attorney. If you don’t have any idea what I’m talking about, you might want to make that call right now.

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