Do you remember all of the hoopla back in 2016 when the Department of Labor published new overtime rules, and then at the last minute, after everyone did audits (and many reclassified), the rule was halted? We wrote about it here.
Now the Department of Labor has proposed a new set of rules, setting the minimum salary threshold for white-collar exemptions at $35,308 (up from $23,660). The new rules do not include many of the more controversial elements, including automatic increases, regional salary levels, or changes to the duties tests. Here is a helpful alert that summarizes the new rules.
Despite what will like be a lot of press, these federal changes won’t have any effect on employers in California employers who already need to pay twice the state’s minimum wage to satisfy the requirements for exempt status. With a minimum wage of $12 an hour (for employer’s with 26 or more employees), that is $49,920 in 2019. And that amount goes up as the minimum wage increases a dollar a year until it hits $15 for all employers in January 1, 2023; at that time the minimum salary level for exempt status in California will be $62,400.
Even though many cities have their own minimum wages, it is still the state’s minimum wage that triggers the minimum salary threshold.
The highly compensated exemption threshold also went up from $100,000 to $147,414, but that doesn’t apply in California either.
Bottomline, since California’s minimum wage is already so much higher than the federal minimum wage, these proposed DOL changes won’t impact the golden state.