Name: jeff kuzmich - jeff kuzmich - Migrate_CA_Nav_Salary_and_Minimum_Wage_01222026_5178302
Uploaded: 2026-02-26T05:52:43.850Z
Duration: 18 min 41 s
Description: jeff kuzmich - jeff kuzmich - Migrate_CA_Nav_Salary_and_Minimum_Wage_01222026_5178302

Transcript for "jeff kuzmich - jeff kuzmich - Migrate_CA_Nav_Salary_and_Minimum_Wage_01222026_5178302": Hey everybody, it's Gene Marks, all of you California people. We are back again for second session here, our second webinar on some regulations that are really going to be impacting your business in 2026. This webinar is navigating salary and minimum wage, and by way of introduction, I am a certified public accountant and also cover business and small business for a number of different outlets like the Guardian and the Hill and Forbes. Not only that, and more importantly, I am also host of the Paychex Thrive podcast which I hope you're catching up with us where we interview all sorts of guests and cover all sorts of topics that impact your business and mine as a business owner. But let's talk about the topic at hand and before we do that, let me first of all go through just a few tech tips for operating during this session. We are streaming via your computer. There is no dial in option for this webinar. Check to make sure that your volume is correct. Hopefully you have checked. Otherwise, you wouldn't be hearing me right now and if you need to refresh your webinar browser, if you're on a Windows computer press F5. If you're on a Mac, you can press command R. In addition, if you want to download and print a copy of today's deck for future reference, there's all sorts of additional resources as well. Look at the file and resources window of your consult. If you have questions during today's webinar, please submit them during the ask us a question window. We will look at them all and we will respond to them for sure. All these kinds of questions help us do these webinars better in the future, so they are very much appreciated. And of course, we are required to show this slide as a legal disclaimer with this presentation. Does not constitute legal advice either from myself or from our panelist Alex, you'll hear from in a minute, so you can read the screen and hopefully understand what those legal disclaimers are. Alright, we're going to bring on our experts from Paychex. Alex Papazis, he is an HR risk and response partner at Paychex. I want to make sure Alex is to get your bio correctly because it really is important. Alex is a seasoned HR professional with over ten years of experience in employee relations, people management, and HR compliance. He's currently based in San Antonio, Texas and SHRM certified. He also leverages his extensive expertise to assist California clients across all industries with high risk employee relations situations and compliance issues. Before joining Paychex four years ago, Alex worked across the country in various states where he supported retail companies with new store openings and employee relationship challenges. This diverse background has equipped him with a comprehensive understanding of complex workplace dynamics and state specific employment laws. Alex, really, really glad to have you here. And just for all of you guys that are, again, as a reminder, this is the second of a three part webinar series on California compliance changes. We have another, about twenty minute episode or so on uncovering pay transparency and another episode on decoding employee rights and, your personnel files. All of these things are super important if you're operating a business in California. My business is in Pennsylvania so I don't have to worry about this stuff. But boy oh boy, if you're running a business in California, lot of benefits but there are definitely some things that you want to keep in mind. Okay, enough about me. Let's move on to Alex. Alex, why don't you tell us what we're going to talk about in this session? Awesome. Thanks Gene. Happy to be here again for part two of this three part series. So today's agenda can be pretty straightforward. So we're gonna be providing you information on the updates in regards to minimum wage increases in California. Something that will be a little bit more complex, we'll go into more in-depth on is gonna be regarding overtime exemption exemption rules and salaries for employees in California. So, I mean, that's very important. And then finally, we'll close it out as always with how can Paychex and Paycor help you as a business, be more efficient and be in compliance with California laws, which are always changing, it seems like, all the time. So here we go. We'll go ahead and we'll jump right into it. So minimum wage increases for the state of California. Back in 2025, minimum wage, for hourly employees was $16.50 an hour. Jumping into 2026, the minimum wage has now increased to $16.90 an hour for the hourly minimum wage rate in California. That's what was required on the state level. And as we know, every single year now, it seems like we're seeing an additional minimum wage increase over and over again. And the reason for this is California ties their minimum wage rate increases to the CPI, the consumer price index. So if we're going to see the consumer price index go up, and we're going to see the minimum wage most likely go up as well year to year in the state of California, that's something that we're going to see happen, and it's been going on for years now, as I'm sure most of you are well aware. So that's on a state level. The reason we always draw attention to this is where this can get even more tricky or complicated is within California, there's specific counties or individual cities who have additional minimum wage rates that are even higher than the state of California. So you think San Francisco or Los Angeles or even San Diego, there's areas where those cities have minimum wage rates per hour that are higher than the state. So it's really important that you make sure wherever your business is located, but also wherever your employees are being sent to conduct most of their work, that you're making sure you're in line with what that wage rate is for the locality in which they're operating in. So that's something we see all the time. And we know as business owners, payroll is probably one of, if not the highest expense that you're going to have hit your bottom line. So it's really important to make sure you have all this information ahead of time so you can budget for the year to come. So that's minimum wage on an hourly basis in California. Before you move on, Alex, just very, very quick question. Does this apply to all businesses in California? Is there anybody that's exempt? Are there very small businesses exempt or nonprofits or people in other industries or unions? I mean, does this apply to everybody? I usually say rule of thumb, more than likely it's going to apply to you as a business. Usually, if you're in one of those very unique specialty industries, you're usually aware that you have an exemption from some wage compliance issues for California. So yes, minimum wage rate on an hourly basis usually applies to almost every single type of business in California. There are sometimes we'll see a random obscure carve out in some of these wage laws. In those situations, I usually say, when in doubt, if you're partnering with us, come to your HR business partner that's assigned to your account and we'll go through an analysis and say, okay, we'll go through legislation. Is there a carve out for your industry for overtime for minimum wage? But usually as a rule of thumb, yes, this is applying to businesses of all sizes. I have one more question for you before you move And by the way, for you guys watching, this is not scripted or anything. It's just it pops in my head as I hear you. In Pennsylvania, we have a tipped minimum wage. You know what I mean? Like service workers that work in in restaurants, the restaurant owners can actually pay them a lot less than the state minimum. It's it's actually federal minimum wage. And as long as they're making a certain amount, you know, in tip rates or anything like that in California? Yeah. A lot of the updates we've actually seen in California are to where, people in service industries are usually still having to be paid the minimum wage rate prior to tips. So depending on what's going on, we usually see that happening. California was in the news a lot over the last year or so to where, you know, the fast food industry might have an even higher minimum wage than the required state minimum wage for certain, company sizes. So, you know, it's just another thing where California has a lot of loopholes. It's very complex when it comes to wage and hour law and really just employment law in general. But yes, that is something that we see. Other states have a lot of these other types of things. On a federal basis, usually those things are allowed. California has more restrictive requirements for businesses. And that's why it's really important you're on top of these things and working with your HR professional as well. Thank you. Yeah, absolutely. So we're gonna go ahead and we'll jump into the next, portion. And this is probably the thing that, stands out to most business owners because, you know, hourly minimum wage rate, we usually know it increases and we're good to go. But it's very important, much like the hourly minimum wage rate for the state rising each year, the minimum salary amount that overtime exempt employees almost always have to get paid each year also increases. And the reason for this is California state law mandates that salary exempt employees are paid at least double what the state minimum wage is for forty hours of work in a week on a salary basis. So as we see that hourly minimum wage rate increase each year, this means the threshold is gonna increase for what salaried employees that are exempt from overtime are paid in California. So we saw that now increase for 2026. As you see the number on your screen there, $70,304 is the minimum for almost all exempt overtime employees, but they must be paid on a salary basis. So something else to really watch out for. But the reason we're going to pause here on this point and jump into a little bit more details is it's really easy all the time we talk about, Oh, someone's exempt from, overtime in our eyes because we pay them a salary that's substantially high. So it was over $70,000 near. We assume they're exempt from overtime because we hit that limit for compensation. In California, and for the most part on a federal basis, that's not always going to be the case. So in California, there's two parts that you have to make sure you meet in order to ensure your employee is going to be exempt from overtime. So as you see, number one, we have to make sure they're being paid on a yearly basis, that $70,304 amount. But the additional consideration we have in California, if you want to make sure your employees are exempt from overtime, in addition to paying them that amount, you have to make sure they pass what we call the quote unquote duties test for that position. So, you know, employees can be classified as exempt from overtime in California under a variety of different types of overtime exemptions, but it usually means to meet that exemption, the employee has to be actively engaged in job duties that the state deems as eligible to meet the requirement. So I'll kind of go into that to clarify a little bit more. We don't have time to go over every single overtime exemption that California allows, as a state, but I can give you an example that we see. So here's an example. Many times clients will come to us and they'll say, Oh, know, I have an office manager or a high, administrative assistant or something of that nature. You know, I pay them over $70,000 a year. So they're exempt from overtime. And that's what the client or an employer assumes is correct because they're paying this employee a certain amount and because they think their job title, sounds a certain way or has a certain level of importance, they assume they're exempt from overtime in California. Unfortunately, that's not necessarily the case. We'll do an assessment with you because you have to be able to prove that that employee, their actual individual job functions meet the requirements that the state outlines. So we always tell our clients, watch out for this. There's a lot of things that we see happen to where, you know, clients will pay the employee a certain amount of money, think they're all good, but it turns out the job duties that they complete don't meet the second part of that requirement. And these issues are usually what we see as the most costly for employers. You know, all the time in the news, you might see a headline about, Oh, like, there was a harassment case with a business and there was a huge payout of money and ensure those are headline grabbing events or incidents that happen. A lot of costs that hit employers that are a little bit quieter, but are more frequent are these situations where a company has been paying an employee for the last five years as a quote unquote exempt from overtime employee, and they think they're all good because they're paying them a certain salary, but it turns out the duties of that job don't meet that requirement. Now the employer is getting sued and has to do a look back period and say, okay, over the last five years, how much overtime did this person work? And now I have to pay that plus penalties. Plus you have your lawyers or attorney's fees. There's all that that comes into play. So there's a long way of me saying, please make sure you're doing those individualized assessments for your position and thinking twice before you assume someone is exempt from overtime. Alex, before you move on, I don't know if it's a question or just a statement, if I can just jump in as a CPA here. Be very careful as well. We all know that there's new tax legislation that allows individuals to deduct their overtime pay for 2025 and also for future years through 2028, which is great. But be super careful because not all of your employees might be eligible to deduct their overtime pay only because the California overtime requirements exceeds the Fair Labor Standards Act or overtime rules. So you really want to work with your payroll professional or your CPA or accountant to make sure that the wages that you're going to be reporting in future are truly eligible for deduction for your employees and you want to make sure your employees are aware of that as well. Yeah, great call out Gene. We did an initial webinar months back discussing this with the Tax Act, but we've had a ton of questions recently because as we know, we're going into tax filing season. So yes, if you have questions on that, consult your CPA or even start with consulting with your HR partner assigned to your account, cause they will be able to help you distinguish what overtime is eligible under that tax act and what overtime is ineligible. There's a lot of things that can come into play here. So great call out there. All right. So that's a lot of talk about what the laws are, what you could be compliant with, but let's go into the most important part of every single one of these presentations. How can we help you? So in order for us to support you with that, Paychex and Paycor has a couple of different things that we handle. As you know, if you're on one of our HR solutions platforms, you usually have an assigned HR business partner to assist you. And what that person's gonna do is they're gonna make sure that they're helping you, you know, stay updated on what the latest minimum wage rates are for the state or the locality you're in, and they can help you do an assessment to make sure that you're meeting that and you're in compliance. So a lot of the times we see clients, they're like, Oh, I have a business. My office is in San Diego, but I send employees to do work in Los Angeles all the time. Well, that's something maybe we want to look at. Is the wage rate in LA different than the wage rate in San Diego? Vice versa. So we always just want to go ahead and support you with compliance on that. In addition to that, we have a technology platform, both Paychex and Paycor that makes it really easy for you just to update those wage rates in the system to keep you compliant, helps you with overtime calculations. As Jean mentioned, you know, not all overtime is eligible maybe for that new tax act, but we have software that helps you mark what overtime is or isn't eligible. So it's very useful to use those software programs that we have. And then the final thing I'm gonna say, and I view this as probably one of the most beneficial parts of being on our service, your HR partner that's assigned to your account will sit with you and do an individualized assessment for every single position you want them to regarding if the position should or should not be exempt from overtime. So not only are we going to look and make sure you're paying them in line with what the law requires, but we're going to go over that duties test with you. We're going to go line item by line item on your job description, compare it to the state law, make sure you're either in compliance or not, and give you an analysis and a recommendation on how to proceed for every single position that you want us to take a look at. That is the most valuable thing we have, because if you take the time to do that with your HR partner, you're probably saving yourself thousands of dollars and tons of time trying to rectify it down the road with an attorney when it becomes a big deal. So, very useful there. I always recommend reach out to your HR partner for more information on that. And with all that being said, I'm gonna go ahead and pass it back over to Gene. Yeah, thanks Alex. Guys, I just want everybody just to remember as well. We talked about this in the first webinar that we did in this three part series about sort of the recourse for doing this. I mean, just be super careful if you are not working with an expert and if you are not classifying your employees correctly. If you're underpaying your employees that they deserve overtime and they're not getting it. I hate to tell you, some aggressive attorneys will consider that as wage theft and, they'll go after you. So it's not your exposure just to the state, but it's also your exposure to potential lawsuits as well. So, please make sure you're paying close attention to this issue because it is really it is really an important money. California is tough. They really are a lot more requirements than a lot of other states in the country. Okay, so you can see on the screen, there is a poll question that has been popped up separately. So please just take a moment and answer that. Hopefully Alex and I have scared you enough into reaching out and getting help from a Paychex representative or from some other payroll or accounting professional so that you can make sure you're covered. Running a business is tough and complicated and complex and these are the kinds of things that you want to really make sure that you are addressing. Alright, so first of all I want to thank Alex for joining us. Great, great information. He's going to be back on either if you go to the first webinar or the third webinar in this three part series, you'll see lots of Alex giving you lots of advice on making sure that you're in compliance with all the new regulations in 2026 if you are a business owner in California. Also, we welcome your feedback from a brief survey. Please respond to that as well. It's gonna pop up your response. It helps us improve resources like this in the future. And hopefully you'll join us if you wanna go back and look at part one, but hopefully you'll join us for part three where we're going to be looking at decoding employee rights and personnel files. So on behalf of Alex, my name is Gene Martz. I want to thank you guys very much for attending this webinar and we will see you hopefully in one of the other webinars that we're doing as well. See you there.