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Federal Overtime Rule

Currently 21 states are banning together to stop the DOL from imposing the new Federal salary increase from going into effect December 1, 2016.

Until then, you should continue preparations on reviewing your exempt salaries.  This effect ALL employers.

Do exempt salaries increase or are employees reclassified to nonexempt?

Until recently, most California employers only needed to adjust their payroll systems and overtime rates when California’s minimum wage rates increased.

But that’s all changing. Employers must now consider federal and local wage requirements in addition to California’s minimum wage rates—all of which gradually increase over time.

Listed below is a chart that may help you:

* Effective December 1, 2016, the new federal overtime rule changes the salary level for exempt employees. Since the new salary requirement is higher than California’s, employers have decisions to make.


* Local municipalities are passing their own minimum wage requirements that exceed California’s rates. Depending on your business locations, this could mean different pay in different cities—right now and starting January 1, 2017.


* Finally, California’s minimum wage rate will increase on January 1, 2017, and continue to incrementally increase thereafter.


  1/1/2016 7/11/2016 1/1/2017  
FEDERAL $7.25 $7.25 $7.25  
CALIFORNIA 10 10 10.5  
SAN DIEGO CITY   10.5 11.5  
WEEKLY SALARY MINIMUMS (must past salary and duties test to be exempt from overtime)
  1/1/2016 7/11/2016 12/1/2016 1/1/2017
FEDERAL $455 $455 $913 $913
CALIFORNIA 800 800 913 913
SAN DIEGO CITY   840 913 920