The One BIG HR Thing for the New Year

I’m often asked, “What should employers know for the new year?” And there’s LOTS of new stuff coming out and happening with employment law, new laws, new trends, new best practices…the list goes on.

But there is one BIG HR thing that will always stand out in my mind.

Asking employees never to wear Crocs in the workplace.  It’s not fashion…it’s offensive!.  LOL, I am just kidding!  Kinda.  Please make good fashion choices.

The one BIG HR thing is salary exemption requirements.

Let’s start with a quick definition in easy terms.  You have two types of ways, in general, you pay employees.  One is hourly the other is salary.  Hourly folks are entitled to overtime pay, meal and rest periods, and in some states like CA, pay for working through lunch.  Salaried folks don’t get that.  They are just paid one flat rate for the week.

There are rules that classify each.  It’s a two part test.  First part is the salary basis test.  The second is the administrative, professional or executive exemptions test (very complicated stuff and we’ll not talk about such things today as to save our brains haha). 

The salary basis test says, in short, the employee must make X amount in order to salaried exempt.  If they don’t, they should be paid hourly and entitled to all the hourly stuff I mentioned above.

Here is what an employee needs to make to be salaried:

Federally/nationwide = $35,568 annually.

BUT in California, because it knows how to party (think Tupac) it’s higher.  AND it goes up everytime minimum wage goes up because the “CA White Collar Exemption” (fancy term they use for this) says an employee must make twice the minimum wage to be considered exempt which is the first step I mentioned in the two step process to be classified as exempt (salaried).

SO….again…everytime minimum wage goes up so does this minimum threshold.  

Now, minimum wage USE to be different for employers under 25 employees than employers over 25 but this coming year, IT’S THE SAME!  $15.50 PER HOUR!

So, an employee must make…

I’ll show you the math…

$15.50 X 2 X 2080 (magic number that makes it an annualized salary) = $64,480

^^^ if the employee doesn’t make that in CA they should be hourly.

There are other states like Washington, Maine, NYC and surrounding counties, Colorado that have similar rules.

Things to think about if you’ve got workers that don’t make the cut starting January 1, 2023:

  1. Increase their salary to meet the requirement
  2. Do nothing and roll the dice of risk
  3. Make them hourly 

Other things to think about:

  1. If you increase salary, does that create more of a wage gap for other workers?
  2. If you increase salary, does that create a wage compression for those above that rate?
  3. Look at your entire workforce’s wages and do a comp analysis to see if everyone is being paid fairly.
  4. Do you have wage gaps between genders, races or ethnicities, and/or those in the LGBTQ+ communities?
  5. Hiring HR Pros like us who can walk you through all this craziness.

And now you know the one BIG thing I think every business should be paying attention to in 2023 AND my thoughts on Crocs.  😉

Written by LeiLani E. Quiray, Founder and CEO of be the change HR, and a person who isn’t a fan of Crocs