Base Salaries for Exempt Employees - A Refresher Course
The recent increase in the California minimum wage to $7.50 per hour currently, and another raise to $8.00 per hour on January 1, 2008, raised the minimum salary requirements for California's exempt executive, administrative and professional employees who must meet minimum salary requirements (in addition to a duties test) that are tied to the state minimum wage. These exempt employees must earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. On January 1, 2007, the minimum salary requirement to qualify as an exempt employee increased to $31,200 per year. On January 1, 2008, the amount these exempt employees must earn will increase to $2,773.33 per month, or $33,280 per year.
Employers also need to be aware of the increased base salary for the inside sales exemption provided for in Wage Orders 4 and 7. If an inside sales employee earns more than one-and-one-half times the minimum wage and more than one-half of the employee’s wages are commissions, then the employee may qualify as exempt. With the increase in minimum wage, a commissioned sales person must earn $23,400 per year or $11.25 per hour as of January 1, 2007. Starting on January 1, 2008, exempt commissioned sales person must earn $24,960 per year or $12.00 per hour.