Salaries Up For Review

“I know the minimum wage increased but, when that happens, no one explains how it affects the salaries I pay.”

Your HR Survival Tips

Every time the minimum wage changes in any state, you need to review exempt salaries. State and federal laws have always used the same calculation to determine the minimum amount an exempt salaried employee can be paid in each state. The calculation is:

2 X state minimum wage X 2,080 = minimum salary

There are two important things to remember about salaried exempt employees:

1. According to law, you must pay an exempt (salaried) employee at least twice as much as a minimum wage non-exempt (hourly) full-time employee, regardless of how few or how many hours the exempt employee works.
2. The minimum salary is truly the minimum. That means there can be no unpaid days or hours off if you’re only paying the minimum. So if they take a day off or run out of sick time, you must keep paying the full salary. The moment you pay less than that minimum, you automatically turn that employee into a non-exempt hourly employee. This is why your exempt positions should really be earning more than the minimum.

You need to determine if each exempt salaried position is worth more than the minimum salary to your company. Yes, there is a limit to how much a position is worth. If it is worth the new minimum, you may already be paying your employee that amount or more. If the value of that position is below the minimum salary to you, get help to start making plans to convert the position to non-exempt (hourly).

When we say pay exempt salaried employees more than the minimum, consider at least $5,000 above the minimum. This gives you breathing room if the employee needs more time off and may help you avoid another increase when the minimum wage increases again. If you are paying ever below the minimum, get professional help to correct it because there are many things to consider to avoid claims.