California Founder Salary Guide: Legal Requirements and Best Practices

Last updated: January 16, 2025

Legal Requirements for Founder Compensation

Minimum Requirements

As a founder-employee in California, you must comply with state employment laws regarding compensation. You have two main options:

Option 1: Exempt (Salaried) Status

  • Minimum salary: $68,640/year (2024)

  • Benefits:

    • No overtime tracking required

    • No mandatory break tracking

    • Flexible work hours

  • Requirements:

    • Must perform executive, administrative, or professional duties

    • Must have significant independent judgment and discretion

    • Cannot fall below minimum salary threshold

    • Must be paid on a salary basis (no reductions for partial days worked)

Option 2: Non-Exempt (Hourly) Status

  • Minimum wage: $16.50/hour (2024)

  • Annualized minimum: $34,320 for full-time work

  • Requirements:

    • Must track all hours worked

    • Must take mandatory breaks

    • Must receive overtime pay for extra hours

    • Must submit timesheets

    • Eligible for double overtime (2x regular rate) for hours worked beyond 12 in a day

Additional Salary Requirements

Payment Frequency

  • Must be paid at least twice per month

  • Specific paydays must be designated

  • No more than 31 days between payments

  • Regular payroll records must be maintained

City-Specific Minimum Wage Requirements for Non-Exempt Status

Many California cities have higher minimum wage requirements that affect non-exempt compensation. Here are the current rates and their annualized minimums (based on 40-hour workweek, 52 weeks):

  • San Francisco: $18.07/hour

    • Annualized minimum: $37,585.60

    • Applies to all employees working 2+ hours per week in SF

  • Los Angeles: $17.64/hour

    • Annualized minimum: $36,691.20

    • Applies to all employees working in LA city limits

  • Berkeley: $18.07/hour

    • Annualized minimum: $37,585.60

    • Applies to employees working 2+ hours per week

  • San Jose: $17.55/hour

    • Annualized minimum: $36,504.00

    • Applies to employees performing work in San Jose

  • Oakland: $17.68/hour

    • Annualized minimum: $36,774.40

    • Applies to employees working 2+ hours per week

Important Notes:

  • The higher local rate always prevails over state minimums

  • These rates apply only to non-exempt employees

  • Rates typically adjust annually for inflation

  • Some cities require higher rates for specific industries

  • Geographic application is based on where work is performed, not company location

  • Remote workers are subject to the rates of their work location