Wage and Hour Expanded – Do You Owe Your Salaried Employees Overtime?

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There’s a commonly held belief among both employers and employees that salaried employees are not entitled to be paid overtime, however, this isn’t always true. In fact, the amount you have to pay an overtime exempt employee from year-to-year has probably changed a lot since the last time you thought about making your valued employee a salary man (or woman!).

California’s overtime exemption rules are based on California’s minimum wage.  As you may or may not know, the minimum wage for Californians is scheduled to increase in phases that started in 2017 and will continue through 2022. That means an exempt employee in 2017 may no longer be exempt in 2019, 2020, and so on based on the salary requirements that must be met to make an employee exempt from overtime pay.

Under California law, the salary threshold (the minimum amount a salaried employee can be paid to be considered “exempt” from overtime) is twice the minimum wage. This means that in 2019 (while the minimum wage is $12 an hour) your exempt employee must be paid over $960 per week, $1,920 bi-weekly, $4,160 per month, and $49,920 per year guaranteed, without accounting for the quantity or quality of their work, in order to be exempt from their right to overtime pay. Below, you can see a visual representation of this increase.

Year Minimum Wage Weekly Salary Monthly Salary Annually Salary
2017 $10.50 $840 $3,640 $43,680
2018 $11.00 $880 $3,813.33 $45,760
2019 $12.00 $960 $4,160 $49,920
2020 $13.00 $1,040 $4,506.67 $54,080
2021 $14.00 $1,120 $4,853.33 $58,240
2022 $15.00 $1,200 $5,200 $62,400

If this wasn’t complicated enough, there are other varying factors to be considered, such as the size of the business and what city and county the business is in.

At Dias Law Firm, Inc., we keep up with the ever changing world of labor law in order to help employers and employees navigate their businesses and careers confidently. Whether you’re a business owner looking to refresh outdated employment policies and procedures, or an employee with questions about working conditions, please contact us for assistance with all of your employment and labor law needs.

By: Shannon N. Wallen, J.D.

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