California Salary Laws
Explained by California Employment Lawyers

Under California employment law, 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; however, employers have to pay salaried exempt employees at twice the minimum hourly wage based on a 40-hour workweek.1

Below, our California wage and hour lawyers discuss the following frequently asked questions about salary laws for California employees:

Also see our article on vacation pay.

Salaries
Under California employment law, salaried employees can be classified as exempt or non-exempt.

If you have further questions after reading this article, we invite you to contact us at Shouse Law Group.

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

"Exempt employees" are employees who are exempt from California's wage and hour laws. However, in order to qualify as an exempt employee, the employee must meet specific duties requirements and earn a minimum salary equivalent to twice the state minimum wage based on a 40-hour workweek.3

Some non-exempt employees may also be paid a salary. Salaried non-exempt employees cannot be paid less than the state minimum wage. Salaried non-exempt employees are also protected by California wage and hour laws--including overtime laws and laws requiring meal and rest breaks.4

Under the California Equal Pay Act, employers are prohibited from paying 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

2. How much is the minimum salary for non-exempt employees?

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 California 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 a wage/hour lawsuit or class action lawsuit.6

In 2017, the statewide minimum wage in California is $10.50 per hour (or $10 per hour for employers with 25 or fewer employees).7

A salaried employee should be paid no less than the number of hours worked at the California minimum wage. For employees working a full-time job at 40 hours per week, the minimum salary should be no less than $420.00 per week, or $21,840 per year.

As a non-exempt employee, 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 50 other employees. Toni is paid a salary based on her working 40 hours a week. In 2017, Toni's weekly salary should be no less than $420.00 (40 x 10.50 = 420).

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 $483.00 (40 hours at $10.50/hour ($420.00), plus 4 hours at $15.75/hour of overtime ($63.00).

The California minimum wage will increase every year between 2017 and 2023, based on the following schedule:8

Year

California Minimum Wage for Employers with 26 or more employees

California Minimum Wage for Employers with 25 or fewer employees

2017

$10.50/hour

$10.00/hour

2018

$11.00/hour

$10.50/hour

2019

$12.00/hour

$11.00/hour

2020

$13.00/hour

$12.00/hour

2021

$14.00/hour

$13.00/hour

2022

$15.00/hour

$14.00/hour

2023

$16.00/hour

$15.00/hour

Example: Toni continues working for the same call center in 2018. Beginning on January 1, 2018, Toni's salary should increase to reflect the increased California minimum wage. In 2018, Toni's weekly salary should be no less than $484.00 (40 hours at $11.00/hour = $484.00).

However, many cities and counties in California have a minimum wage higher than the state minimum. For example, the minimum wage in Los Angeles County in 2017 is $12.00 per hour (or $10.50 per hour for employers with 25 or fewer employees).9

Other Cities and Counties with Higher Minimum Wages

  • Berkeley: Minimum wage of $13.75/hour effective October 1, 2017, increasing to $15.00/hour effective October 1, 2018.10
  • City of Los Angeles: Minimum wage of $12.00/hour for employers with 26 or more employees/$10.50/hour for employers with 25 or fewer employees effective July 1, 2017, increasing every year to $15.00/hour effective July 1, 2021.11
  • Oakland: Minimum wage of $12.86/hour effective January 1, 2017.12
  • San Diego: Minimum wage of $11.50/hour effective January 1, 2017, with increases tied to the Consumer Price Index (CPI) effective January 1, 2019.13
  • San Francisco: Minimum wage of $14.00/hour effective July 1, 2017, increasing to $15.00/hour effective July 1, 2018. Increases tied to the CPI effective July 1st each following year.14
  • San Jose: Minimum wage of $12.00/hour effective July 1, 2017, increasing to $13.50/hour effective January 1, 2018, and to $15.00/hour effective January 1, 2019.15

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

Example: Toni's call center job relocates from Riverside to Los Angeles on July 15, 2018. Even if Toni is doing the same job, Toni's employer has to increase Toni's salary to reflect the increased local minimum wage. As an employee in Los Angeles, effective July 1, 2018, Toni's salary should be no less than $530.00 (40 hours at $13.25/hour = $530.00).

3. How much is the minimum salary for “white-collar” workers?

Exempt employees are not covered by most California wage and hour laws. However, in order to qualify as an exempt employee, an exempt employee must be paid a salary of no less than twice (2x) the California minimum wage based on a 40-hour workweek.

Exempt employees may include:

  • Independent contractors
  • White-collar workers
  • Unionized employees in certain industries

The largest group of exempt employees are generally known as “white-collar” workers, employed in administrative, managerial, executive, or professional capacities.17

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 dedicate about 50% or more of his or her 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).18

As of January 1, 2017, the minimum annual salary to qualify for an exempt employee would be $43,680 (Double the state minimum wage $10.50/hour for employers with 26 or more employees is $21.00/hour x 40 hours/week x 52 weeks = $43,680). For employers with 25 or fewer employees, the minimum annual salary would be $41,600.

The salary minimum for exempt workers is tied to the California minimum wage. Each year, on January 1st from 2017 and 2023, the minimum wage is set to increase. This will increase the minimum salary requirement for exempt workers each year, based on the following schedule:19

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

2017

$43,680

$41,600

2018

$45,760

$43,680

2019

$49,920

$45,760

2020

$54,080

$49,920

2021

$58,240

$54,080

2022

$62,400

$58,240

2023

$66,560

$62,400

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. 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

Equalpay

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 which prohibits an employer from reducing an employee's compensation. However, your employer cannot reduce your salary to a rate below the minimum wage.

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 June of 2017, Megan's employer compensates Megan based on a 40-hour workweek at $1,000 per week, or $25.00/hour.

In July of 2017, 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 $10.00 per hour for smaller businesses.

However, an employer cannot lower an employee's salary for an unlawful reason, or in retaliation for protected actions.

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

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 2017 for white-collar workers is $41,600 for employers with 25 or fewer employees and $43,680 for employers with 26 or more employees.

If an exempt employee's salary drops below the minimum salary requirement, the employee may no longer be considered 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

However, if the employer reduces an exempt employee's salary based on a reduction of hours, 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.

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.

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

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

Call us for help....

Img minor copulation help optimized

For questions about California salary laws and violations or to discuss your case confidentially with one of our skilled California labor and employment attorneys, do not hesitate to contact us at Shouse Law Group.

We have local employment law offices in and around Los Angeles, San Diego, Orange County, Riverside, San Bernardino, Ventura, San Jose, Oakland, the San Francisco Bay area, and several nearby cities.


Legal References:

  1. 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. Any hearing conducted pursuant to this subdivision shall be concluded not later than July 1, 2000.")
  2. 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.")
  3. Same.
  4. 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.")
  5. 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.”)
  6. Labor Code 1197 LC, endnote 4 above.
  7. See California Department of Industrial Relations, Minimum Wage.
  8. Labor Code 1182.12 LC -- Minimum wage; scheduled increases; adjusted minimum wage; temporary suspension of increases.
  9. See Los Angeles County Minimum Wage Ordinance.
  10. See City of Berkeley Minimum Wage Ordinance.
  11. See City of Los Angeles, Office of Wage Standards, Raise the Wage LA.
  12. City of Oakland, January 1 2017 Minimum Wage Increase.
  13. City of San Diego, Minimum Wage Program.
  14. City of San Francisco, Minimum Wage Ordinance.
  15. Office of the City Manager of San Jose, Minimum Wage Ordinance.
  16. 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.”)
  17. 8 C.C.R 11040, endnote 2 above.
  18. 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).
  19. Labor Code 1182.12 LC, endnote 8 above.
  20. Labor Code 1197.5 LC, endnote 5 above.
  21. Same.
  22. Same.
  23. 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.”)
  24. 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.”)
  25. 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.”)
  26. Labor Code 1197 LC, endnote 4 above.
  27. 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.”)
  28. Labor Code 1197.5 LC, endnote 5 above.
  29. Labor Code 1197 LC, endnote 4 above.
  30. 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.")
  31. 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.”)
  32. 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.”)

Free attorney consultations...

Our attorneys want to hear your side of the story. Contact us 24/7 to schedule a FREE consultation with a criminal defense lawyer. We may be able to get your charges reduced or even dismissed altogether. And if necessary, we will champion your case all the way to trial.

Regain peace of mind...

Shouse Law Defense Group has multiple locations throughout California. Click Office Locations to find out which office is right for you.

Office Locations

Shouse Law Group has multiple locations all across California, Nevada, and Colorado. Click Office Locations to find out which office is right for you.

To contact us, please select your state:

Call us 24/7 (855) 396-0370