alerts & publications
Governor Brown Signs Bill Increasing California Minimum WageSeptember 26, 2013
On September 25, 2013, Governor Edmund G. Brown Jr. signed Assembly Bill No. 101, approving a two step increase in California’s minimum wage. The bill amends California Labor Code § 1182.12, and will raise the minimum wage from $8/hour to $9/hour effective July 1, 2014, and then to $10/hour effective January 1, 2016. Note that some cities in California have ordinances that already provide for minimum wage rates at or above these levels—such as San Francisco (currently $10.24/hour) and San Jose (currently $10/hour).2
In addition to creating a higher floor for the compensation of hourly (i.e., non-exempt) workers, the increase in the state minimum wage also has important ramifications for the compensation of salaried (i.e., exempt) workers.
In order to qualify for exempt status in California under the administrative, executive, or professional exemptions, an employee must satisfy both a duties test and a salary test. The latter requires that the employee earn a salary of no less than twice the minimum wage for forty (40) hours of work. Accordingly, the increase in the state minimum wage will also raise the minimum salary necessary to pass the salary test. Pursuant to the formula used by the California Division of Labor Standards Enforcement3, the new minimum salaries may be calculated as follows:
- Effective July 1, 2014: $720 per week / $3,120 per month / $37,440 per year
- Effective January 1, 2016: $800 per week / $3,466.67 per month / $41,600 per year
There are, however, other considerations when adjusting and/or determining an exempt employee’s minimum salary. Before making any such adjustments, you should consult with an attorney knowledgeable in California wage and hour law.
 The bill can be found here.
 Both San Francisco’s and San Jose’s ordinances also contain provisions for automatic future increases based on the Consumer Price Index for urban wage earners and clerical workers (“CPI”). Increases under San Francisco’s ordinance are tied to the San Francisco-Oakland-San Jose CA metropolitan statistical area CPI, whereas increases under San Jose’s ordinance are tied to the U.S. City average CPI.
 California Division of Labor Standards Enforcement, Enforcement Policies and Interpretations Manual § 184.108.40.206. See also Combs v. Skyriver Communications, Inc., 159 Cal. App. 4th 1242, 1251 (2008).
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Apalla Chopra, an O'Melveny partner licensed to practice law in Califonia, Adam KohSweeney, an O'Melveny partner licensed to practice law in California and New York, and Mark Robertson an O'Melveny partner licensed to practice law in New York, California, the District of Columbia, and Texas contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York's Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, Phone:+1-212-326-2000. © 2013 O'Melveny & Myers LLP. All Rights Reserved.
Thank you for your interest. Before you communicate with one of our attorneys, please note: Any comments our attorneys share with you are general information and not legal advice. No attorney-client relationship will exist between you or your business and O’Melveny or any of its attorneys unless conflicts have been cleared, our management has given its approval, and an engagement letter has been signed. Meanwhile, you agree: we have no duty to advise you or provide you with legal assistance; you will not divulge any confidences or send any confidential or sensitive information to our attorneys (we are not in a position to keep it confidential and might be required to convey it to our clients); and, you may not use this contact to attempt to disqualify O’Melveny from representing other clients adverse to you or your business. By clicking "accept" you acknowledge receipt and agree to all of the terms of this paragraph and our Disclaimer.