United States: 2024 Employment Law Annual Update

New Legislation

Minimum Wage and Minimum Salary Level Increases to Watch Out For

Although the state minimum wage is set at $16.00 for 2024, employers should remember that cities and counties have the ability to set their own minimum wages higher than the state minimum and many have chosen to do so. For example, the following cities and counties have established these local minimum wages that will be effective as of January 1, 2024:

If the city or county where employees perform work requires a higher minimum wage rate than the state, employers must pay their employees in those locations the higher rate. Each local law also has its own provisions that define which employees are entitled to the local minimum wage, and many local laws apply to employees who work as little as two hours per week within the jurisdiction.

The increase in the state minimum wage increase also proportionally increases the minimum salary that must be paid to employees classified as exempt under the so-called "white-collar exemptions" (the executive, administrative, and professional exemptions) to $66,560 per year ($5,546.67 per month).

The minimum compensation required in order to qualify for California's computer professional exemption also increases as of January 1, 2024. To qualify for the computer professional exemption in 2024, employees must be paid a minimum hourly rate of $55.58, a minimum monthly salary of $9,646.96, or a minimum annual salary of $115,763.52.

Additionally, the minimum annual compensation for employees who qualify for the inside sales exemption from overtime will increase from $48,360 to $49,920 on January 1, 2024.

Local minimum wages are irrelevant to the salary required for exempt status and do not operate to raise it above these levels.

Employers that fail to pay at least the minimum salary to employees they classify as exempt risk facing significant liability, including unpaid minimum and overtime wages and a cavalcade of penalties under the California Labor Code. If violations occur on a broad scale, employers could also risk additional exposure from class actions, Private Attorneys General Act (PAGA) claims, and audits by the Department of Industrial Relations.

What Should Employers Do Now?

• Review hourly pay rates under both state and local laws and adjust as necessary – Employers should review the base hourly rates of pay for their non-exempt employees under both California law and the laws of any local jurisdictions that may be applicable, and increase rates of pay as necessary to comply with the new minimums in effect as of January 1, 2024.
• Review the salaries paid to exempt employees – Employers should also review the salaries paid to exempt employees. To the extent that they are paying any exempt employees less than $66,560 annually, they should consider whether to raise salaries or convert employees paid less than that amount to non-exempt status.
• Review other forms of pay affected by the minimum wage – Employers should recognize that a variety of forms of compensation may be influenced by the change in the minimum wage, including split-shift premiums, meal period and rest break premiums, paid sick leave, and commissions.
• Address past underpayments strategically – Employers who discover they have paid employees less than the minimum wage or minimum salary in the past should seek advice from counsel regarding their options, and develop a plan to address the situation strategically and reduce the risk of triggering expensive litigation or drawing the attention of government audits.

Just in Time for Flu Season! California Increases Paid Sick Leave Requirement

In 2015, California became the first state in the nation to pass a law requiring employers to provide paid sick leave to most employees. Now, the Legislature has amended the law, increasing the amount of paid sick leave that employers must provide to eligible employees. 

As originally enacted, the law permitted eligible employees to accrue sick leave at a rate of one hour for every 30 hours worked, to a maximum balance of six days or 48 hours per year. Alternatively, pursuant to the so-called "lump sum method," employers could grant a lump sum of 24 hours or three days of paid sick leave (without proration) to eligible employees each year.

As of January 1, 2024, eligible employees still accrue sick leave at a rate of one hour for every 30 hours worked, but they now must be allowed to accrue a total balance of at least ten days or 80 hours of sick leave, and they must be able to accrue 24 hours of sick leave by the 120^th day of their employment, and 40 hours of sick leave by the 200^th day of their employment. Employers may still grant paid sick leave in a lump sum, but those electing to utilize the lump sum method must grant 40 hours or five days of paid sick leave per year.

Employers should also recognize that some cities, such as San Francisco and Oakland, have enacted their own local sick leave ordinances. Employers that are subject to local ordinances must comply with both the state law and all applicable local laws (to the extent that local laws are not preempted by the state law), meaning that employees may be entitled to the most generous provisions of each law in some circumstances.

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