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Time to Review Employee Wages and Salaries for 2021

The California 2020 legislative session has closed, and employers should be preparing for 2021 by updating policies and procedures. Employers should ensure that the minimum wage for non-exempt employees’ wages will be appropriately increased for 2021. Since 2017, California has been working its way up to an eventual $15 minimum wage. Industry groups rallied for “pausing” 2021’s increase, but to date, there is no indication this will happen.

On January 1, 2021, the state minimum wage will increase to $14.00 for employers with 26 employees or more, and to $13.00 for employers with 25 employees or less, unless the employees perform work in one of the many cities that have their own local minimum wage ordinance.   Employers should review non-exempt employee wages and make appropriate adjustments to ensure compliance for 2021.

While many employers are familiar with the need to increase non-exempt employees’ wages as state minimum wage increases on January 1st, employers might overlook the need to also increase some of their exempt employees’ salaries to meet the salary basis requirement of California law.

Exempt employee’s salaries must meet a certain threshold for the employees to be exempt under the executive, administrative, and professional exemptions. In California, exempt employees must receive a salary of at least twice the state minimum wage for a 40-hour workweek, in addition to meeting the general duties and other requirements. For 2021, this means exempt employees must receive a minimum annual salary of $58,240 for employers with more than 26 employees, and $54,080 for employers with 25 employees or less.  The base salary must be fixed and recur each pay period without variance due to hours, quantity, or quality of work performed.

For certain exempt positions, the Department of Industrial Relations (“Department”) annually sets the minimum salary requirement by following a formula set by the California Labor Code. This month the Department released the salary requirements for Computer Software EmployeesPhysicians, and Surgeons.

Computer software employees in 2021 may be exempt from overtime if their hourly rate is not less than $47.48, the minimum monthly salary requirement is not less than $8,242.32, and the annual salary requirement is $98,907.70.

Jackson Lewis P.C. © 2023National Law Review, Volume X, Number 301

About this Author

Cary G Palmer, Attorney, Jackson Lewis Law Firm
Office Managing Principal

Cary G. Palmer is Office Managing Principal of the Sacramento, California, office of Jackson Lewis P.C. He represents management in employment, labor and benefits law and related litigation.

Mr. Palmer practices before the state and federal courts in California, the United States Department of Labor, the United States Equal Opportunity Commission, the California Department of Fair Employment and Housing, the California Division of Labor Standards Enforcement, and the California Workers’ Compensation Appeals Board. Mr. Palmer also defends management in statewide...

Shiva Anari Labor & Employment Attorney Orange County, California, Jackson Lewis P.C. Law Firm

Shiva Anari is an Associate in the Orange County, California, office of Jackson Lewis P.C. Her practice focuses on representing employers in workplace law matters, including preventive advice and counseling.

Ms. Anari regularly advises clients on compliance with federal, state and local employment laws, including Family and Medical Leave Act, Fair Employment and Housing Act, Fair Labor Standards Act, National Labor Relations Act, and Americans with Disabilities. She also counsels clients on other aspects of employment laws...