When Local Minimum Wage Affects Exempt Salary Requirement

herman_gary_SMDo the locally mandated minimum wage ordinances in cities like Oakland, San Diego, San Francisco and San Jose affect the minimum salary requirements for exempt employees?

As a general rule, no!

The salary requirement for exempt employees is spelled out in the California Labor Code and is not affected by any local minimum wage ordinance—unless that municipality has adopted a higher wage requirement for exempt employees.

Section 515 of the Labor Code creates an overtime exemption for executive, administrative and professional employees, if the employee is engaged primarily in the duties that meet the test for the exemption.

The salary requirement in that section provides that the exempt employee must earn a monthly salary equivalent of no less than two times the state minimum wage for full-time employment.

At the current minimum wage of $9 per hour, the monthly salary equivalent would be $3,120. In January 2016, the state’s minimum wage will increase to $10 per hour, thereby increasing the monthly salary equivalent to $3,467.

While most municipalities have not yet done so, it is possible that a local municipality might adopt an ordinance providing for a higher required salary for exempt employees.

Therefore, if an employer has an exempt employee subject to the jurisdiction of a local municipality with a living or minimum wage ordinance, it would be prudent to contact that municipality to determine if it has enacted an exempt employee salary requirement.

The Labor Law Helpline is a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.

Staff Contact: Gary Hermann