At present, state minimum wage in California is $15 per hour for companies with 26 or more employees and $14 per hour for companies with 25 or fewer employees.
On May 12, 2022, Governor Newsom announced that because inflation is projected to increase by 7.6% for the 2022 fiscal year, California’s minimum wage will increase to $15.50 per hour for all employees, regardless of employer size effective January 1, 2023.
With the minimum wage increasing to $15.50 in 2023, employers should be aware that it will affect the following employees:
- Hourly workers: employers must ensure that employees currently being paid less than $15.50 per hour are properly paid the increased wage in 2023.
- Administrative, executive or professional exemptions: For these exemptions to apply, employees must, among other matters, be paid a salary of at least double the State minimum wage. With the minimum wage increase, the minimum annual salary for such exemptions will increase to $64,480. Employers should adjust salaries accordingly in 2023.
- Commissioned inside salespersons: Commissioned inside salespersons are exempt from state overtime laws if, among other matters, they are paid more than 1.5 times state minimum wage in each pay period. That means the employees must earn the equivalent of at least $23.25 per hour in 2023.
Employers should also be aware that many cities and counties have their own local minimum wage which is higher than the state minimum wage. (For a list of such jurisdictions, click here) Employers must pay the higher of the two for their hourly workers.
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