Governor Arnold Schwarzenegger and legislators have agreed to raise the state's minimum wage $1.25 to $8 an hour. Once signed into law, the agreement will increase the minimum wage by $0.75 in January 2007 and another $0.50 in January 2008.

The governor vetoed two minimum wage bills during the past two years. This year, however, Governor Schwarzenegger has supported an increase in the minimum wage, so long as legislation does not build in automatic future increases tied to inflation.

The minimum wage increase will also effect the minimum salary threshold for businesses to classify many workers as exempt from overtime. To avoid overtime pay obligations, employers must pay certain employees a salary equivalent to at least two times the state minimum wage for hours worked. For a 2,080-hour work year, the current minimum salary is $28,080 (two times the current minimum wage of $6.75 per hour). That minimum salary will increase to $31,200 for 2007, and to $33,280 for 2008.

For more information,
please contact a member of our employment group:

Robert M. Coelho
rmc@hogefenton.com

Kathryn Meier
kkm@hogefenton.com

Lisa Aguiar
lea@hogefenton.com

Jonathan Hicks
jdh@hogefenton.com

Vanessa Inman
vri@hogefenton.com

Alison Buchanan
apb@hogefenton.com