New Federal Overtime Rules Don’t Change a Thing in California
The U.S. Dept. of Labor recently issued a final rule increasing the salary threshold that determines whether employees are exempt from overtime pay under the Fair Labor Standards Act (FLSA).
The new federal rule doesn’t affect California businesses as the state’s standing overtime exemption thresholds are currently some $22,000 per year higher than the new ones rolled out by the Dept. of Labor. And as you’re no doubt already aware, the state’s rules for determining whether a worker is exempt are a bit more … labyrinthine.
Federally, as of July 1 of this year, workers who earn less than $43,888 a year ($844 a week) must be paid overtime for any hours they work in excess of 40 a week, even if they’re classified as a manger or professional and even if they’re salaried. The threshold raises to $58,656 a year ($1,128 a week) on Jan. 1, 2025, and from there the thresholds increase automatically every three years.
California’s overtime exemption salary threshold is currently $66,560 a year ($1,280 a week). The state bases these thresholds on the current minimum wage times two.
Since California increases the minimum wage regularly, your HR department is probably pretty used to reviewing overtime eligibility. And they’re certainly aware California’s guidelines for deciding overtime exemptions are much more labyrinthine. We’re not going to get into those here, but if you’d like a review on California overtime exemption regulations in a future issue, let us know!