In California, salaried employees can be classified as exempt or non-exempt. Non-exempt salaried employees are eligible for overtime. Exempt salaried employees may not be eligible for overtime.
Here are three key things to know about salaries under California employment law:
- California employers must pay salaried exempt employees at least twice the minimum hourly wage based on a 40-hour workweek.1
- As of 2023, the California minimum wage is $15.50 an hour. Though many California cities and counties have higher minimum wage requirements than the state minimum.
- Also as of 2023, the minimum annual salary to qualify for an exempt employee is $64,480. This minimum salary has steadily increased over the past several years:
|Year||Minimum Salary for Exempt White-Collar Workers at Employers with 26 or more employees||Minimum Salary for Exempt White-Collar Workers at Employers with 25 or fewer employees|
Below, our California labor and employment law lawyers discuss the following frequently asked questions about salary laws:
- 1. What are the California salary laws?
- 2. How much is the minimum salary for non-exempt employees in California?
- 3. How much is the minimum salary for “white-collar” workers?
- 4. Can my employer pay men and women different salaries?
- 5. Can my employer reduce my salary?
- 6. Can I sue my employer for not following California salary laws?
- 7. Additional resources
Also see our article on vacation pay.
1. What are the California salary laws?
California wage and hour laws affect salaried and non-salaried workers. Non-exempt salaried employees are protected by California minimum wage laws. However, there is also a minimum salary requirement for exempt employees.2
1.1. Definition of exempt employees
“Exempt employees” are employees who are exempt from California’s wage and hour laws. However, in order to qualify as an exempt employee, the person must
- have primary duties that involve executive, administrative, or professional tasks,
- have duties that require exercising discretion and independent judgment, and
- earn a minimum salary equivalent to twice the state minimum wage based on a 40-hour workweek.3
Note that there are various job-specific overtime exemptions under California’s wage orders that apply to certain occupations like outside salespersons, commissioned employees, commercial truck drivers, and live-in housekeepers. The duties, pay structure, and overtime rules can vary.
Also note that some unionized employees qualify for exemptions from overtime rules under certain collective bargaining agreements that provide premium overtime pay rates and at least 30% higher base wages than the minimum wage. The agreement must expressly outline wages, hours, and working conditions.
1.2. Salaries do not always mean exempt
Most non-exempt employees are paid by the hour, but they may also be paid a salary as long as it amounts to no less than the state minimum wage. Like hourly non-exempt workers, salaried non-exempt employees are protected by California wage and hour laws, including
- overtime laws and
- laws requiring meal and rest breaks.4
1.3. Equal pay, fair pay, and transparency
Under the California Equal Pay Act, employers may not pay a lower salary to employees of the opposite sex for equal work. The Fair Pay Act also provides protections for equal pay based on race or ethnicity.5
Note that California’s pay transparency laws under Senate Bill 1162 require many employers with 15 or more employees to include a pay range in their job postings. If you are already working there, you can request a pay range for your own position.
2. How much is the minimum salary for non-exempt employees in California?
Non-exempt employees are protected by California’s minimum wage laws, even if they are paid a regular salary. It is against the law for employers to pay employees less than the minimum wage. If your employer violates minimum wage laws, you can recover the money you are owed in
2.1. Minimum wage
In 2023, the statewide minimum wage in California is $15.50 per hour.7
A salaried employee should be paid no less than the number of hours worked at the California minimum wage rate. For employees working a full-time job at 40 hours per week, the minimum salary should be no less than
- $620.00 per week, or
- $32,240 per year.
As non-exempt employees, salaried employees who work over the maximum number of hours should be paid based on California overtime laws. An employer cannot ask a non-exempt salaried employee to work more than the maximum hours without providing overtime compensation.
Example: Toni works in a call center with about 20 other employees. Toni is paid a salary based on her working 40 hours a week. In 2022, Toni’s weekly salary should be no less than $620.00 (40 x 15.50 = 620).
Toni’s boss asks Toni to come in on Saturday to work an extra 4 hours. Toni should be compensated at no less than one and one-half (1 ½) times the California minimum wage for those 4 hours worked over the 40-hour workweek maximum. Toni’s weekly salary for that week should be no less than $713.00 (40 hours at $15.50/hour ($620.00), plus 4 hours at $23.25/hour of overtime ($93.00).
The California minimum wage increased every year between 2017 and 2023, based on the following schedule. It is now $15.50 an hour:8
|Year||Minimum Wage for Employers with 26 or more employees||Minimum Wage for Employers with 25 or fewer employees|
Each year, California’s Director of Finance determines on or before August 1st whether the minimum wage should be adjusted based on the Consumer Price Index (CPI). If the CPI increased by more than 7%, the minimum wage must be raised by the lesser of 3.5% or the change in CPI. For 2024, because the CPI rose by 6.16%, the minimum wage will go up by 3.5% to $16 per hour.
If Initiative 21-0022 passes on the November 2023 ballot, the minimum wage would rise to $18 per hour by January 1, 2025 for employers with 26 or more employees. For employers with 25 or fewer employees, minimum wage would reach $18 per hour by January 1, 2026.
As outlined below, many cities and counties in California have a minimum wage higher than the state minimum.
2.2. Cities and counties with higher minimum wages
- Los Angeles County: Minimum wage of $16.90/hour9
- Berkeley: Minimum wage of $16.99/hour10
- City of Los Angeles: Minimum wage of $16.04/hour11
- Oakland: Minimum wage of $15.97/hour12
- City of San Diego: Minimum wage of $16.30/hour13
- San Francisco: Minimum wage of $16.99/hour. Increases tied to the CPI effective July 1st each following year.14
- San Jose: Minimum wage of $17.00/hour15
Additionally, there is a federal minimum wage of $7.25 per hour. However, if you work in California, you must be paid the higher state minimum wage. If you work in a city or county with a higher minimum wage, you must be paid the higher local minimum wage.16
3. How much is the minimum salary for “white-collar” workers?
The minimum annual salary to qualify as a white-collar worker (“exempt employee”) is $64,480.17 This is twice California’s minimum wage based on a 40-hour workweek.18
Exempt employees (which includes independent contractors and certain unionized employees in addition to white-collar workers) are not covered by most California wage and hour laws.
Note that there are separate minimum salary requirements for certain exempt occupations like physicians ($97.99 per hour), computer professionals ($112,065.20 per year), and teachers at private schools (twice minimum wage if they meet education requirements).19
4. Can my employer pay men and women different salaries?
The California Equal Pay Act requires equal pay for employees who perform “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions.”20
The Fair Pay Act and Equal Pay Act are intended to reduce the disparity in how men and women are compensated for performing similar jobs.
4.1. Equal Pay Act
An employer cannot pay men and women different salaries for similar work, except where the employer can demonstrate the wage differential is based on one or more of the following factors:
- A seniority system.
- A merit system.
- A system that measures earnings by quantity or quality of production.
- A bona fide factor other than sex, such as education, training, or experience.21
The employer has to demonstrate that the bona fide factor
- is not based on or derived from a sex-based differential in compensation,
- is job-related with respect to the position in question, and
- is consistent with a business necessity.
A “business necessity” is “an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve.”22
Even if the employer demonstrates that a bona fide factor other than sex was used to differentiate compensation, the defense does not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without the wage inequality.23
4.2. Fair Pay Act
The Fair Pay Act provides similar protections to employees of another race or ethnicity.24
Employers who violate the Equal Pay Act are liable to employees for unpaid wages and interest. In addition, the employee may be able to recover an additional equal amount as liquidated damages.25
5. Can my employer reduce my salary?
In general, your employer can reduce your salary for any lawful reason. There is no specific California labor law that prohibits an employer from reducing an employee’s compensation. However, your employer cannot reduce your salary to a rate below the minimum wage.
5.1. Non-Exempt Employees
An employer can reduce a non-exempt employee’s salary as long as the employee is compensated at no less than the California minimum wage. In addition, the employer must compensate the employee for any overtime at no less than one and one-half (1 ½) times the minimum hourly wage.26
Example: Megan is a non-exempt employee working at a bar with 10 total employees. In January of 2022, Megan’s employer compensates Megan based on a 40-hour workweek at $1,000 per week, or $25.00/hour.
In January of 2023, Megan’s employer says her salary will be reduced because there has been a drop in sales. Megan’s next paycheck is only $800 per week for working the same 40 hours she worked the previous week. Megan may not have a claim against the employer because the employer is compensating Megan at $20.00/hour, which is higher than the California minimum wage at the time of $15.50 per hour.
However, an employer cannot lower an employee’s salary
- for an unlawful reason, or
- in retaliation for protected actions.
5.1.1. The Equal Pay Act lets you inquire about salaries
The Equal Pay Act protects employees who ask about another employee’s wages or disclose their own wage or salary. An employer shall not discriminate against an employee for
- disclosing the employee’s own wages,
- discussing the wages of others, or
- encouraging other employees to exercise their equal pay rights.27
Example: After Megan had her salary reduced, she speaks to her co-worker, Joe, a male, who does substantially the same job. Megan asks Joe if his salary was reduced. Joe tells Megan he is making $1,200 a week for working 40 hours, doing the same type of job.
Megan speaks to her employer about her reduction in salary while her co-worker was being paid substantially more money. Megan’s employer tells Megan her salary will further be reduced to $700 per week because she was asking other employees about their salaries, which is none of her business.
Megan’s employer cannot retaliate against Megan by reducing her salary because inquiring about salary is protected by the Equal Pay Act in California. Additionally, Megan may have a claim against her employer for violating the Equal Pay Act by paying male employees at a higher rate than female employees for performing substantially similar work.28
5.2. Exempt Employees
In general, an employer may reduce an exempt worker’s salary, as long as the salary does not fall below the minimum salary requirement for exempt workers. The minimum salary requirement for 2023 for white-collar workers is $64,480.
If an exempt employee’s salary drops below the minimum salary requirement, the employee may no longer be exempt. As a non-exempt employee, the employee would be protected by California’s wage and hour laws, including
- overtime pay,
- meal breaks, and
- rest breaks.29
5.2.1. Reduced hours can make exempt employees non-exempt
If the employer reduces an exempt employee’s salary based on a reduction of hours or partial day absences, that may disqualify the employee’s exempt status. A reduction of salary based on hours worked is inconsistent with the “salary basis” standard of exempt employees. Exempt employees are presumably paid based on their position and not for the number of hours worked.
Note that docking the salary of an exempt employee for disciplinary reasons can potentially nullify their exempt status and entitle them to overtime pay.
6. Can I sue my employer for not following California salary laws?
California employees may file a lawsuit against employers for violating California labor laws. Successful wage and hour class action lawsuits often involve
- equal pay violations,
- failure to properly classify employees, or
- failure to pay overtime.
6.1. Misclassification damages
When an employee is improperly classified as “exempt,” the employer may owe the employee damages for unpaid overtime. The employer may also owe the employee one hour’s pay for each meal break the employee was denied.30
If an employer violates the California Equal Pay Act, the employer may be liable to the employee for
- the deprived wages, including interest,
- reasonable attorney’s fees, and
- an additional equal amount as liquidated damages.31
6.2. Workplace retaliation damages
If an employer retaliates against an employee in violation of the California Equal Pay Act, through a reduction in salary, reduced hours, or termination, the employee may be able to recover damages. An employee may recover reinstatement and reimbursement for lost wages and work caused by the acts of the employer, including interest and appropriate equitable relief.32
For more information on California salary laws, refer to the following:
- Industrial Welfare Commission Wage Orders – Compilation of labor laws by the California Department of Industrial Relations.
- Exempt and Nonexempt Employees – Explanation of the two classifications of workers by the California Chamber of Commerce.
- California Paycheck Calculator For Salary & Hourly Payment – Free online tool from Forbes.
- California Tax Service Center – Information about income taxes (and other types of taxes) in the state.
- 8 ways to stretch your paycheck further – Tips from Bankrate.com.
- Labor Code 515 LC — Exemptions from wage/hour laws. (“(a) The Industrial Welfare Commission may establish exemptions from the requirement that an overtime rate of compensation be paid pursuant to Sections 510 and 511 for executive, administrative, and professional employees, if the employee is primarily engaged in the duties that meet the test of the exemption, customarily and regularly exercises discretion and independent judgment in performing those duties, and earns a monthly salary equivalent to no less than two times the state minimum wage for full-time employment. The commission shall conduct a review of the duties that meet the test of the exemption. The commission may, based upon this review, convene a public hearing to adopt or modify regulations at that hearing pertaining to duties that meet the test of the exemption without convening wage boards [See also California Labor Code 1179.]. Any hearing conducted pursuant to this subdivision shall be concluded not later than July 1, 2000.”).
- 8 California Code of Regulations (“C.C.R.”) 11040(1)(A). (“1. Applicability of Order This order shall apply to all persons employed in professional, technical, clerical, mechanical, and similar occupations whether paid on a time, piece rate, commission, or other basis, except that: (A) Provisions of sections 3 through 12 shall not apply to persons employed in administrative, executive, or professional capacities.”)
- Labor Code 1197 LC — Payment of lower wage than minimum wage. (“The minimum wage for employees fixed by the commission or by any applicable state or local law, is the minimum wage to be paid to employees, and the payment of a lower wage than the minimum so fixed is unlawful. This section does not change the applicability of local minimum wage laws to any entity.”). Negri v. Koning & Associates (2013) 216 Cal.App.4th 392.
- Labor Code 1197.5 LC — Wages, Hours and Working Conditions. (“(a) An employer shall not pay any of its employees at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: (1) The wage differential is based upon one or more of the following factors: (A) A seniority system. (B) A merit system. (C) A system that measures earnings by quantity or quality of production. (D) A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity.”)
- Labor Code 1197 LC, endnote 4 above.
- See California Department of Industrial Relations, Minimum Wage.
- Labor Code 1182.12 LC — Minimum wage; scheduled increases; adjusted minimum wage; temporary suspension of increases. John Myers, California’s minimum wage will rise to $15.50, triggered by soaring inflation, Los Angeles Times (May 12, 2022).
- See Los Angeles County Minimum Wage Ordinance.
- See City of Berkeley Minimum Wage Ordinance.
- See City of Los Angeles, Office of Wage Standards, Raise the Wage LA.
- City of Oakland, Minimum Wage Increase.
- City of San Diego, Minimum Wage Program.
- City of San Francisco, Minimum Wage Ordinance.
- Office of the City Manager of San Jose, Minimum Wage Ordinance.
- 29 U.S.C. 218 — Relation to other laws. (“(a) No provision of this chapter or of any order thereunder shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum workweek lower than the maximum workweek established under this chapter, and no provision of this chapter relating to the employment of child labor shall justify noncompliance with any Federal or State law or municipal ordinance establishing a higher standard than the standard established under this chapter. No provision of this chapter shall justify any employer in reducing a wage paid by him which is in excess of the applicable minimum wage under this chapter, or justify any employer in increasing hours of employment maintained by him which are shorter than the maximum hours applicable under this chapter.”)
- 8 C.C.R 11040, endnote 2 above. Double the state minimum wage at $15.50/hour is $31.00/hour x 40 hours/week x 52 weeks = $64,480.
- 8 C.C.R 11040. (“(1)(A)(1)(f) Such an employee must also earn a monthly salary equivalent to no less than two (2) times the state minimum wage for full-time employment. Full-time employment is defined in Labor Code Section 515(c) as 40 hours per week.”) See also sections (1)(A)(2)(g); and (1)(A)(3)(d). The largest group of exempt employees is generally known as the administrative exemption – workers employed in administrative, managerial, executive, or professional capacities. In order to qualify as an exempt employee in California, the employee must meet the following tests: 1) Be primarily engaged in executive, administrative or professional duties (generally, this requires the employee to dedicate about 50% or more of their work time to these duties); 2) Regularly and customarily exercise discretion and independent judgment on the job; and 3) Earn a salary equivalent to at least twice the state minimum wage for full-time work (based on a 40-hour workweek).
- Labor Code 1182.12 LC, endnote 8 above. See also Bernstein v. Virgin Am., Inc. (9th Cir., 2021), 990 F.3d 1157. Overtime Exemption for Licensed Physicians and Surgeons, DIR. Overtime Exemption for Computer Software Employees, DIR.
- Labor Code 1197.5 LC, endnote 5 above.
- Labor Code 1197.5 LC(a)(1)(D) (“A bona fide factor other than sex, such as education, training, or experience. This factor shall apply only if the employer demonstrates that the factor is not based on or derived from a sex-based differential in compensation, is job related with respect to the position in question, and is consistent with a business necessity. For purposes of this subparagraph, “business necessity” means an overriding legitimate business purpose such that the factor relied upon effectively fulfills the business purpose it is supposed to serve. This defense shall not apply if the employee demonstrates that an alternative business practice exists that would serve the same business purpose without producing the wage differential.”)
- Labor Code 1197.5 LC — Wages, Hours and Working Conditions. (“(b) An employer shall not pay any of its employees at wage rates less than the rates paid to employees of another race or ethnicity for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions, except where the employer demonstrates: (1) The wage differential is based upon one or more of the following factors: (A) A seniority system. (B) A merit system. (C) A system that measures earnings by quantity or quality of production. (D) A bona fide factor other than sex, such as education, training, or experience.”)
- Labor Code 1197.5 LC — Wages, Hours and Working Conditions. (“(c) Any employer who violates subdivision (a) or (b) is liable to the employee affected in the amount of the wages, and interest thereon, of which the employee is deprived by reason of the violation, and an additional equal amount as liquidated damages.”)
- Labor Code 1197 LC, endnote 4 above. See also Auer v. Robbins (1997) 519 U.S. 452; Prachasaisoradej v. Ralphs Grocery Co., Inc. (2007) 42 Cal.4th 217; Conley v. Pacific Gas & Elec. Co. (2005) 131 Cal.App.4th 260. Rhea v. General Atomics (2014) 227 Cal.App.4th 1560.
- Labor Code 1197.5 LC — Wages, Hours and Working Conditions. (“(k)(1) An employer shall not discharge, or in any manner discriminate or retaliate against, any employee by reason of any action taken by the employee to invoke or assist in any manner the enforcement of this section. An employer shall not prohibit an employee from disclosing the employee’s own wages, discussing the wages of others, inquiring about another employee’s wages, or aiding or encouraging any other employee to exercise his or her rights under this section. Nothing in this section creates an obligation to disclose wages.”)
- Labor Code 1197.5 LC, endnote 5 above.
- Labor Code 1197 LC, endnote 4 above. See also Rodriguez v. Nike Retail Servs. (9th Cir. Cal., 2019), 928 F.3d 810.
- 8 C.C.R 11040. (“11 . . . (B) If an employer fails to provide an employee a meal period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the meal period is not provided. . . . 12 . . . (B) If an employer fails to provide an employee a rest period in accordance with the applicable provisions of this order, the employer shall pay the employee one (1) hour of pay at the employee’s regular rate of compensation for each workday that the rest period is not provided.”)
- Labor Code 1197.5 LC, (“(h) An employee receiving less than the wage to which the employee is entitled under this section may recover in a civil action the balance of the wages, including interest thereon, and an equal amount as liquidated damages, together with the costs of the suit and reasonable attorney’s fees, notwithstanding any agreement to work for a lesser wage.”)
- Labor Code 1197.5 LC, (“(k)(2) Any employee who has been discharged, discriminated or retaliated against, in the terms and conditions of his or her employment because the employee engaged in any conduct delineated in this section may recover in a civil action reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer, including interest thereon, as well as appropriate equitable relief.”)