California Seeks to Raise Minimum Salary for White Collar Exemptions
The minimum salary to qualify for a “white collar” overtime exemption in California has been higher than that required under federal law for many years. Because California's exempt salary threshold is tied to the state minimum wage (an exempt employee generally must earn a salary of at least two times the state minimum wage), it goes up as California's minimum wage goes up. The current minimum salary for exempt executive, administrative, or professional status in California is $43,680 per year. However, as employers know, last year the federal Department of Labor enacted regulations increasing the minimum salary to qualify for exempt status under the federal Fair Labor Standards Act (“FLSA”) to $47,476 per year. California employers would have had to comply with the higher salary threshold under the FLSA, except that the regulations were blocked by a Texas court late last year. The Texas court's ruling is now on appeal, but most believe that the overtime regulations will not be reinstated—at least in current form—under the Trump administration.
California is now seeking to accomplish what the Obama administration could not accomplish at the federal level, by proposing to raise the minimum annual salary to qualify for exempt status in California to $47,472. AB 1565 (Thurmond) is a spot bill that was amended on Tuesday to propose the salary hike. Under the bill, the minimum salary for exempt executive, administrative, or professional workers would be $47,472 or twice the state minimum wage, whichever is greater. As California's minimum wage continues to rise, a salary of twice the state minimum wage eventually will be a number greater than $47,472. Until that time, $47,472 would be the minimum salary for exempt status in California.
This is brand new proposed legislation, and it remains to be seen whether it will pass. We will keep you posted of developments on this issue.