What Do the DOL’s New Exemption Regulations Mean for California Employers? 

The U.S. Department of Labor (DOL) issued its final regulations on the white-collar exemptions that will increase the weekly salary requirement for exempt employees to $913 per workweek ($47,476 per year) effective December 1, 2016. As we previously reported, California enacted its own legislation this year that increases that state’s minimum wage. California also has its own requirements for determining which positions are exempt from overtime and minimum wage. So, employers in California need to implement the new DOL regulations carefully to ensure they remain in compliance with California’s wage and hour laws.

In California, the minimum salary for exemptions is based on the state’s minimum wage. It requires that an exempt employee’s salary be at least twice the state minimum hourly wage based upon full-time employment (defined as 40 hours per week). The current minimum salary requirement in California is $41,600 annually, or $800 weekly and $3,466.67 monthly. So, when the new federal regulations take effect in December, California employers will need to comply with them, as they are higher and more beneficial to an employee than the current California minimums. However, in January 2019, California’s minimum wage will require a minimum salary requirement of $49,920 annually, or $960 weekly and $4,160 monthly, for employers with 25 or more employees. So, at that time, California employers with 25 or more employees will need to ensure they’re in compliance with California’s requirements.

It is important to remember that the duties requirements for exemptions in California are more restrictive than under federal law. Also, while the new DOL regulations allow employers to count non-discretionary bonuses and commissions to satisfy up to 10 percent of the salary requirement, that is not the case in California.

California employers must monitor both state and federal salary requirements to ensure they remain in compliance with both. MSEC will continue to alert employers to changing requirements.