California’s minimum wage increase not only effects those earning the minimum wage, but also the minimum salary that must be paid to overtime pay exempt executives, administrative employees, and creative professionals, as well as exempt software engineers and physicians.
Executives, Administrative Employees, and Creative Professionals. Effective January 1, 2016, the new minimum salary required to be exempt from overtime pay increased from $37,440 to $41,600.
California Computer Professionals Exempt from Overtime Pay. Effective January 1, 2016, the new minimum salary required to be exempt from overtime pay as a Computer Software Engineer increased from $85,981.40 to $87,185.14, an effective hourly rate of $41.85, up from $41.27, or a monthly salary of at least $7,265.43 (up from $7,165.12).
California Physicians and Surgeons Exempt from Overtime Pay. Similarly, effective January 1, 2016, to be exempt from overtime pay as a Licensed Physician or Surgeon, the doctor must be paid an effective hourly rate of $75.24 (increased from $75.24).
Commissioned Salespeople. California’s 2016 minimum wage increase also affects the overtime pay exemption for commissioned salespeople. To be exempt from overtime pay as a commissioned salesperson the employee must earn more than 1.5 times the California minimum wage for all hours worked during each pay period, with over half that amount representing commissions. As a result of the new minimum wage increase, commissioned salespeople must earn at least $15.01 per hour for each hour worked to remain exempt from overtime pay. That said, please remember that the minimum salary requirement is only one part of the test to establish the exempt from overtime pay status and all other factors must also be met.
Recommendations for California Employers.
First, update your posters. Second, check your payroll for both exempt and non-exempt employees. Remember to be exempt from overtime pay, most administrative, executive, and professional employees must earn a minimum monthly salary of at least twice the California minimum wage for full-time employment (presently $800). Third, ensure that all non-exempt employees – tipped and non-tipped – are paid at least the minimum wage—going to $15 per hour. If you are using a third party payroll processor, confirm that they have updated your account to reflect the increases.
Tags: overtime pay
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