California state law regarding employee pay is changing in 2018. Here are several things you need to be aware of …
The minimum wage has been increased...
Beginning January 1, 2018, California’s minimum wage is going up.
Employers with 25 or fewer employees must pay their workers at least $10.50 per hour
Employers with 26 or more employees must pay their workers at least $11 per hour
Additionally some localities have passed their own ordinances that set the local minimum wage higher than the rate established by the state
There are new salary tests to determine who qualifies as an exempt employee …
Be aware that, due to this change, your salaried-exempt employees may require a pay bump in order to maintain their exempt status. Most exemptions contain a minimum salary test in addition to the job duties tests and these are also impacted by the 2018 increase in minimum wages.
Beginning January 1, for an employee to qualify as exempt under the commonly used administrative, executive or professional exemptions from overtime, the employee’s salary must be no less than two times the state minimum wage for full-time employment, which as of January 1 is $43,680 annually for employers with 25 or fewer employees.
For employers with 26 or more employees, the minimum salary threshold for this exemption becomes $45,760.
And some positions have their own unique salary tests…
Also new in January are rate changes for computer software employees, and licensed physicians and surgeons to qualify as exempt. Simply stated:
A computer software employee may only be considered legally exempt if that employee’s minimum hourly rate of pay is at least $43.58 (up from $42.35)
And for licensed physicians and surgeons to qualify as exempt under the law, their minimum hourly must be at least $79.39 (up from $77.15)
Compliance with all new rules and regulations regarding the exempt designation is imperative. Failure to accurately designate exempt versus nonexempt employees can lead to a multitude of wage and hour claims, such as claims for unpaid overtime and missed meal and rest breaks.
I would be happy to help you ensure you are in compliance with ALL statutes regarding pay rates and minimums that apply to your business. Please contact me directly at 510-263-8333.