As of January 1, 2020, to be considered an exempt employee in the U.S., a worker must be paid a minimum salary of $684 per week, or $35,568 per year. Exempt workers in California, meanwhile, must be paid a salary that is at least twice the state’s minimum wage. The 2021 California minimum wage is $13.00 per hour for employers with 25 or fewer workers, and $14.00 per hour for employers with 26 or more workers.
This means that state law in California provides a higher salary basis for exempt workers than what is provided under federal law.
What is the minimum salary across the country?
The federal Fair Labor Standards Act (FLSA) requires all exempt employees be paid at least $684 per week. This is equal to a $35,568 annual salary.
This does not apply to non-federal employees in the following U.S. territories:
- Northern Mariana Islands,
- Puerto Rico,
- S. Virgin Islands, or
- American Samoa.
In these territories, the minimum salary is now $455 per week, except for American Samoa, where it is $380 per week.
The new amounts are the result of a recent change in federal labor law. The U.S. Department of Labor (DOL) announced a final rule on September 24, 2019. The new rule changed the federal regulations for minimum salary requirements for exempt employees. This rule increased the minimums for an employee’s salary from $455 per week – or $23,660 in annual compensation – to the current minimum. It became effective January 1, 2020.
How does the California minimum wage affect my salary?
In California, the minimum salary for exempt employees is based on the applicable minimum hourly wage for non-exempt employees in the state. Exempt employees must be paid at least twice the minimum hourly wage for full-time employment.
Full-time employment is considered to be 40 hours per workweek.
Calculating an exempt employee’s minimum salary level, then, depends on the current applicable minimum wage. The state minimum wage is scheduled to increase across California over the next few years. It also differs for large and small employers:
|Effective Date||Minimum Wage for Employers with 25 or Fewer Employees||Minimum Wage for Employers with 26 or More Employees|
|January 1, 2020||$12.00 / hour||$13.00 / hour|
|January 1, 2021||$13.00 / hour||$14.00 / hour|
|January 1, 2022||$14.00 / hour||$15.00 / hour|
|January 1, 2023||$15.00 / hour||$15.00 / hour|
Additionally, some counties have their own minimum wage laws that entitle workers in the county to higher wages. For example, starting on January 1, 2021:
- Berkeley’s minimum hourly rate is $16.07,
- Los Angeles’ rate is $14.25 for employers with 25 or fewer employees, and $15.00 for larger employers, and
- Emeryville’s minimum wage rate is $16.84 per hour.
Because exempt employees are entitled to a minimum salary that is twice as high as the minimum hourly wage of nonexempt workers, the location and size of their employer can matter, as well as the date.
In January, 2021, an exempt employee at a small business with 25 or fewer workers in a county without its own minimum wage law is entitled to a salary level of at least $54,080. Exempt employees who work for larger businesses or in counties with their own minimum wage law will have a higher minimum salary threshold.
As you can see, exempt employees in California benefit from state employment laws that require a higher minimum salary than what would be required, under federal law. In some cases, the difference is quite significant.
What is an exempt employee?
In California, an exempt employee is a white-collar worker who plainly and unmistakably:
- is paid at least the minimum salary,
- spends at least half of their time performing duties that consist of administrative, executive, or professional tasks, and
- uses their discretion and independent judgment while performing these job duties.
If an employee meets all of these requirements, they can be classified as an exempt employee. These employees are exempted from California labor laws that entitle them to:
- overtime pay,
- a minimum hourly wage, and
- rest and meal breaks during overtime hours.
Some specific jobs have their own rules regarding exemption. These include professional employees working as:
- doctors and surgeons,
- computer professionals,
- outside salespeople,
- private school teachers, and
- commissioned employees making at least one and one-half the minimum wage and with more than half of their compensation coming from commissions.
The jobs may come with their own duties tests to determine a worker’s exempt status.
 29 CFR 541.600(a).
 29 CFR 541.600(a).
 California Labor Code 515(c) LAB.
 California Labor Code 515(a) LAB and Nordquist v. McGraw-Hill Broadcasting Co., 32 Cal.App.4th 555 (1995).
 8 California Code of Regulations 11040(1)(A).