CA Minimum Wage
Governor Brown and the Califonria Legislature crafted compromise legislation that increased California’s minimum wage rate to $15 per hour in annual, incramental steps.
Formerly, the minimum wage in California was $10 per hour; the new legislation went into effect on January 1, 2016, with annual incrammental increases until $15 was achieved in 2023. By comparison, the federal minimum wage is currently $7.25 per hour. In situations where there are local minimum wage rates are higher than the federal rate, the law that is applicable to the employee is the highest minimum wage rate. This includes rates set by municipalities within California that may have rates higher than the current California minimum wage rate in effect.
Employers are required to pay the state’s minimum wage level, regardless of how many employees a farming or ranching operation may have at any given time.
Minimum wage rate in California for 2023 is $15.50 per hour.
Each year before August 1st, the California Director of Finanance will calcluate any cost-of-living increase for the following year based on the U.S. Consumer Price Index. New minimum wage rates will be effective on January 1st each year.
The minimum wage rate for 2024 is announced as $16.00 per hour.
The minimum wage law has a provision to slow the step-up increases depending on economic conditions around the state. Each July, the California Director of Finance will make a determination if the State’s economy can support the minimum wage increase. Based on that determination, the Governor may then suspend the minimum wage increase for the following year; however, this can only be done twice during these years of step-up increases.
During the years of minimum wage increases, employers need to review their exempt employees to ensure the qualification level of two times the state minimum wage is being met for full-time employment. This means exempt employees must earn at least $62,400 per year in order to qualify for the exemption status in 2023.
Employers will also face additional costs associated with overtime, employment taxes, worker compensation, and social securtiy contributions as the minimum wage increases take effect.