On September 25, 2013, California Governor Jerry Brown signed a new law making California the first state to reach a $10 per hour minimum wage. The new law raises the minimum wage from the current $8 per hour to $9 per hour July 1, 2014, and then to $10 per hour January 1, 2016.
This rise in the state minimum wage will also increase the minimum salary levels required for workers who are exempt from overtime. Workers who are considered “executive,” “administrative” or “professional” employees (including teachers, learned/artistic professionals, and licensed professionals) must, among other things, be paid a salary of at least two times the state minimum wage for full-time employment in order to be considered exempt from state overtime laws. In addition, adult employees in certain industries, including retail, who make more than half of their compensation from commissions, are exempt from state overtime pay as long as their earnings exceed one-and-one-half times the state minimum wage.
We are currently advising our CA Employers to review their compensation policies for all employees—hourly, salaried and exempt—to insure timely compliance with the new changes in California’s minimum wage.