On July 1, 2014, California’s minimum wage increases to $9 per hour, up $1 from $8 per hour. On January 1, 2016, California’s minimum wage increases will again increase to $10 an hour.

This not only effects those employers with employees who earn the minimum wage, but also employers who have overtime exempt employees. Remember that to qualify for many of California's exemptions from overtime, the employee must be paid at least twice the minimum wage. Effective July 1, 2014, to be exempt under the executive and administrative overtime exemptions, the employee must receive a monthly salary of at least $3,120.00, or $37,440 per year.

Employers with employees who earn commissions must also be mindful of this new wage increase. To be exempt under the commissioned salesperson overtime exemption, California requires employees who work on commission to receive at least 1.5 times the minimum wage for each hour worked with at least half of the employee’s earnings representing commissions. An increase in the minimum wage creates a corresponding increase in the amount of commissions that must be earned to maintain the exemption.

Before July 1, 2014, all California employers should:

1. Review the hourly rate and/or salary paid to each employee, with particular attention on employees who are presently being paid the state's minimum wage and on employees classified as exempt from overtime; If any of the employees wage rates are borderline, the employer should consider adjusting said wages upward to ensure continued compliance with the state's new $9 minimum wage and overtime rules; and

2. Review the wage and commission split of each employee that is paid on a commission to ensure continued compliance with the state's new $9 minimum wage and overtime rules.