The short answer – they probably won’t, because California already significantly limits who can be considered exempt for overtime purposes.
There are two major regulations under the federal Fair Labor Standards Act which will be changed by order of the President. First, the minimum salary for exempt status, which is currently $455 a week, will be increased significantly. While the exact amount will be determined by the Department of Labor, the expectation is for an increase to $600 or more.
California’s minimum salary is based on converting a monthly salary to an hourly equivalent, which must be twice the minimum wage (which comes to $640 per week). However, with the minimum wage increases slated to go into effect in July of this year and January of 2016, the minimum weekly salary will be climbing to $800 a week. It is likely that the federal increases will not outstrip these increases to California’s minimum exempt salary.
The second significant change to the federal regulations concerns the executive exemption, which encompasses managerial or supervisory employees. Under the current federal regulations, an employee’s “primary” duties must be supervisory in nature to qualify as exempt. This standard is hard to define, and allows employers to categorize supervisors as exempt even if they spend the majority of their work time on non-exempt tasks. The President has ordered the DOL to discard the primary duties test and instead require that an employee spend a majority of their time on supervisory or managerial tasks to be exempt. In other words, if the employee spends most of their work day performing the same work as their subordinates, they cannot be exempt. This is the same standard that California uses, so employers here should not be affected by this change.
Nevertheless, the publicity surrounding the President’s actions will raise awareness among employees and could possibly result in more claims that employees are misclassified. California employers should routinely audit their exempt classifications to make sure that the minimum salary requirements are being met and that “supervisors” are not spending the majority of their day on non-supervisory duties.