California’s Minimum Wage
Although California voters rejected Proposition 32, which would have increased the state minimum wage pursuant to California Labor Code 1182.12, the state minimum wage will increase to $16.50 per hour effective January 1, 2025, for all employers, regardless of employee count.
The increase comes as a result of inflation, and Labor Code 1182.12’s requirement that the Director of Finance calculate the increase to minimum wage by either a 3.5% increase or the actual rate of change per the U.S. Consumer Price Index ("CPI"), whichever results in a lower increase.
For the 12-month period from July 1, 2023 to June 30, 2024, the CPI increased by 3.18% compared to the 12-month period from July 1, 2022 to June 30, 2023. As a result, the minimum wage will increase by 3.18% to $16.50 per hour.
This hourly increase also affects the minimum salary requirements for full-time exempt employees. Beginning January 1, 2025, the minimum salary for a full-time exempt employee will be $68,640 per year.
Some cities and counties in California have adopted their own local minimum wage rates that are separate from the state rate. Delve into California's current city and county minimum wages.
Fast Food Employees
Fast food restaurant employees continue to have their own minimum wage of at least $20 per hour for non-exempt employees and $83,200 annually for exempt employees (see Labor Code Sections 1474–1476). The Fast Food Council may adopt an increase as early as January 2025.
Health Care Workers
Effective October 16, 2024, workers who (1) work for certain “health care facilities” that are covered in the new law and (2) provide health care services or support the provision of health care are entitled to an increased minimum wage depending on the type of health care facility for which they work. The Department of Industrial Relations recently issued FAQs to help employers understand how to comply with the new law. Qualifying employers must post a supplement to the minimum wage order advising of the increase.
Contact your trusted GRSM Employment Law team member if you need assistance correctly classifying employees or complying with the new wage rates.