Wage & Hour Issues

If you run a business in California, you already know the Private Attorneys General Act (PAGA) can turn routine payroll mistakes into staggering liability. A single missing line item on a wage statement, repeated across hundreds of pay periods for employees can generate a penalty with five, six or even seven figures attached. What a lot of employers don’t realize is how much control they still have over that number. A recently published decision is one of the clearest illustrations yet of that principle in action.

In California, properly classifying an employee as exempt from overtime and other wage protections requires more than just a job title. Employers must satisfy both:

1. The Duties Test: The employee performs primarily exempt executive, administrative, or professional functions.
2. The Salary Basis Test: The employee earns a fixed salary that is at least twice the minimum wage for full-time work (40 hours/week, 52 weeks/year).

Most employers know the salary basis test is tied to the state minimum wage, which in 2025 is $16.50/hour, meaning the minimum exempt salary is $68,640/year. However, if your employees work in a city or county with a higher local minimum wage, failing to account for that higher rate could cost you significantly.

Governor Newsom has signed into law SB 616, increasing the number of paid sick days that California employers will be required to provide their employees starting next year.