Seyfarth Shaw LLP | www.seyfarth.com Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) 5 The salary must be set at a level at least twice the California minimum wage, which, as of 2024, is $16.00 per hour.16 Accordingly, to satisfy the salary basis test in California, a manager must now be paid $66,560 per year in 2024. The other executive-exemption requirements are that the manager must: (1) have the power to hire and fire, or make recommendations on those topics that are given particular weight; (2) supervise at least two full-time equivalent positions; (3) “primarily” be engaged in managerial duties; and (4) “customarily and regularly“ exercise discretion and independent judgment.17 Most litigation in California arises out of element (3) above, because the California Supreme Court in Ramirez v. Yosemite Water Co.18 held that an employee meets element (3) only when the employee spends more than onehalf of the work time on exempt duties. By contrast, under the FLSA’s executive exemption, the employer need only establish that management is the employee’s “primary duty,” an element that focuses on the relative importance of the duty rather than just the amount of time devoted to the duty.19 Beyond emphasizing the percentage of work time that must be devoted to exempt duties, California case law has not extensively explained just which duties qualify as exempt “managerial work.” Since July 2000, however, the Wage Orders have expressly incorporated by reference the then-existing FLSA regulations defining “managerial” duties.20 Accordingly, federal authority construing those specific regulations is relevant in interpreting the California executive exemption.21 Examples of exempt work set forth in the federal regulation include interviewing, selecting Rulemaking that contained a proposal for raising the salary threshold to $1,059 per week ($55,068). 88 FR 62152. It is anticipated that this rule could be adopted by mid-2024. 16 Pursuant to AB 1228, the minimum wage for fast-food workers in California will be $20.00 starting on April 1, 2024. The law applies to chains of limited-service restaurants consisting of more than 60 establishments that share common branding, marketing and products. The federal minimum wage has remained at $7.25 per hour since 2009. 17 See IWC Wage Order 1-2001(1) (A) (1); Nordquist v. McGraw-Hill Broad. Co., 32 Cal. App. 4th 555, 573 (1995) (“‘Discretion and independent judgment’ within the meaning of IWC Order No. 11-80 involves the comparison of possible courses of conduct, and acting after considering various possibilities. It implies that the employee has the power to make an independent choice free from immediate supervision and with respect to matters of significance ... [meaning matters] of substantial significance to the policies or general operations of the business of the employer.”). 18 20 Cal. 4th 785 (1999). 19 Id. at 797; see also Baldwin v. Trailer Inns, Inc., 266 F.3d 1104, 1113-16 (9th Cir. 2001) (although store managers spent less than one-half of their time on duties that met the federal executive exemption, they still qualified as exempt because management was found to be their “primary” or most important duty). 20 29 C.F.R. § 541.102; Safeway Wage & Hour Cases, 43 Cal. App. 5th 665, 676 (2019). 21 See, e.g., United Parcel Serv. Wage & Hour Cases, 190 Cal. App. 4th 1001, 1015 (2010) (“Federal law interpreting similar components of the FLSA exemptions is properly considered as persuasive authority, even if not binding on this court. … As such, we may properly consider federal decisions interpreting the FLSA and the federal Department of Labor's implementing regulations as set forth in the Code of Federal Regulations that were in effect as of January 1, 2001”); Bldg. Material & Constr. Teamsters Union v. Farrell, 41 Cal. 3d 651, 658 (1986) (“Federal decisions have frequently guided our interpretation of state labor provisions the language of which parallels that of federal statutes.”); Alcala v. Western Agric.
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