July 1 Local Minimum Wage Hikes Don’t Change Exempt Salary Test

A local minimum wage applies to our nonexempt employees. When the minimum wage increases on July 1, does that mean the salary test for our exempt employees also increases?

There are 11 cities and one county that have minimum wages which increase on July 1. These increases to the minimum wage rates apply only to an employer’s nonexempt employees. The increases don’t alter the salary test for the employer’s exempt employees.

Increases Don’t Affect Exempt Employees

Employees classified under the executive, administrative or professional exemptions must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment.

For employers with 26 or more employees, the required monthly salary is $4,160 per month, and for employers with 25 or fewer employees, the required monthly salary is $3,813.33 per month.

The exempt salary test is based on the California minimum wage, which means that it increases every year on January 1 as the state minimum wage increases. The salary test is not affected, however, by any applicable local minimum wage.

The exempt salary test is calculated using the current California minimum wage, even if an employer’s nonexempt employees may be entitled to receive a higher minimum wage under a local ordinance.

Raise for Nonexempt Employees

If you have nonexempt employees working in any of the following localities, the required local hourly minimum wage will increase on July 1, 2019 as follows:

Northern California

Alameda: $13.50.

Berkeley: $15.59.

Emeryville: $15 for “small independent restaurants” (as defined by the ordinance); $16.30 for all other employers.

Fremont: $13.50 for employers with 26 or more employees (employers with 25 or fewer employees are subject to the California minimum wage).

Milpitas: $15.

San Francisco: $15.59.

San Leandro: $14.

Southern California

City of Los Angeles, County of Los Angeles (unincorporated areas only), Malibu, Pasadena, and Santa Monica: $14.25 for employers with 26 or more employees; and $13.25 for employers with 25 or fewer employees

Local Posters

Don’t forget your posters! Increases in the local minimum wage also mean updates to required workplace posters. Check at the CalChamber Store, calchamberstore.com, to make sure you have the current version of the applicable local poster in your workplace.

California Chamber of Commerce members can find more information about local ordinances in the HR Library on HRCalifornia.

Column based on questions asked by callers on the Labor Law Helpline, 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: Erika Pickles