California’s hourly minimum wage is set to increase again, from $15.50 to $16.00, for all employers effective January 1, 2024. Last month, the Director of California’s Department of Finance (“Department”) published a letter stating that the minimum wage is increasing by 3.5% to account for an inflation adjustment.
California Labor Code Section 1182.2
California Labor Code section 1182.2 delegates authority to the Director of Finance to annually determine and certify to the Governor and State Legislature whether an adjustment to the minimum wage is appropriate. This year, the Department calculated that the Consumer Price Index for Urban Wage Earners and Clerical Workers increased by over 6% from July 1, 2022, to June 30, 2023. Therefore, the Department determined that a minimum wage increase of 3.5% needs to be implemented. Starting January 1, 2024, the minimum wage for all employers with California employees will increase from $15.50/hour to $16.00/hour.
Takeaways for California Employers
California employers should consider the following when reviewing and updating their compensation policies:
- Small businesses are not provided with any relief or grace period under the law.
- The minimum wage for employees who are required to provide and maintain hand tools and equipment will increase from $31.00/hour to $32.00/hour.
- California’s white-collar exemption minimum annual salary will increase from $64,480 to $66,560 ($5,546.57/month).
- The minimum annual compensation for employees who qualify for the inside sales exemption from overtime will increase from $48,360 to $49,920.
- Split-shift premium calculations need to be adjusted since they will be impacted by the increased minimum wage. Similarly, rates of pay for meal period premiums, rest period premiums, and paid sick leave need to be adjusted accordingly.
- Local ordinances that establish minimum wages higher than the state’s minimum wage should be closely monitored. For example, the minimum wage in the City of San Francisco increased to $18.07/hour last month.
MNK Law will continue to monitor developments with respect to California’s minimum wage increase. For more information on minimum wages, exempt salaries, and wage and hour laws in California, please contact us at firstname.lastname@example.org.
This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between MNK Law and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.