Minimum Wage Increases & New Caselaw Regarding Out-of-State Remote Employees
New legal developments continue to make California employment law compliance considerations more complex, with recent and upcoming changes encompassing higher minimum wage rates, and a court decision addressing the application of California law to remote workers in other states.
Minimum Wage & Exempt Salary Threshold Increases
For all California employers regardless of size, the state minimum wage will go up from $16.90 to $17.40 per hour on January 1, 2027. Further, the minimum annual salary for full-time employees to be considered exempt will increase from $70,304 to $72,384. Many employers are also subject to various local ordinances in cities such as San Francisco, Oakland, Berkeley, Santa Rosa, and Los Angeles which require a higher minimum wage than the state minimum for employees performing work in those areas. Many of those rates increased as of July 1, 2026, and a table listing current rates of pay for those cities is available here. Employers should review their payroll practices ahead of the new year to ensure compliance with the higher California minimum, as well as all local rates applicable to employees performing work in those jurisdictions.
New Published California Court of Appeals Decision Regarding Applicability of California Laws to Multistate or Remote Workforces
A recent state appellate court decision illustrates an added layer of complexity that California employers with remote or out-of-state workers must take into consideration when making employment decisions.
In Saberin v. Alation, Inc., published in July 2026, the First Appellate District Court affirmed the trial court’s decision to uphold an arbitration award in the employer’s favor following the former employee’s claims that the company had terminated him based on an arrest that did not result in a conviction, violating California law. The former employee, who lived and worked remotely in Utah for the California-based defendant company, had been arrested in Florida while on vacation, and terminated by decisionmakers who were physically in Illinois at the time of termination, allegedly with the involvement of an HR employee who was in California. The employer had reportedly discovered the employee’s arrest based upon a public records search.
The employee alleged that his termination was unlawful based upon Government Code section 12952 (part of the Fair Employment and Housing Act (FEHA)), as well as Labor Code section 432.7, which limit employer use of arrest records when no conviction results, The employee argued that these California laws should apply to his termination either because his proprietary information and inventions assignment agreement had a California choice of law provision, or because of the alleged input from the California-based HR employee in the termination decision.
In rejecting these contentions, the appellate court held that even if the choice of law provision in the plaintiff’s inventions assignment agreement applied, that provision would also incorporate California’s presumption that its laws will generally not be applied extraterritorially. In light of the presumption against extraterritorial application, the question is whether a specific California employment law at issue should be applied outside of California.
In analyzing the applicability of Government Code section 12952 and Labor Code section 432.7 to the employee’s claims, the court found that neither the text nor legislative history of either supported their extraterritorial application in this case. On the facts of this case, the court held that the nexus to California was not sufficient due to the plaintiff living and working outside California, the arrest occurring in Florida, and the termination decision also being made out-of-state. The alleged but non-specific involvement of a California HR employee was not sufficient to bring the termination of an out-of-state remote employee within the ambit of these two statutes, despite the employer being based in the state.
Whether a particular California law can extend to remote workers performing work for a California company out-of-state is a fact-specific and increasingly litigated area of the law. Therefore, we recommend that clients carefully review their employment policies and practices to understand its obligations both under California law and the state in which a remote worker is performing work for a California company.