California continues its commitment to supporting workers by implementing a statewide minimum wage increase effective January 1, 2025. This adjustment reflects the state’s response to inflation and aims to enhance the financial well-being of its workforce.
Statewide Minimum Wage Adjustment
As of January 1, 2025, California’s minimum wage will rise from $16.00 to $16.50 per hour for all employers, regardless of size.
This 3.18% increase aligns with the change in the U.S. Consumer Price Index (CPI) from July 1, 2023, to June 30, 2024, ensuring that wages keep pace with the cost of living.
Impact on Exempt Employees
The minimum wage hike also affects the salary threshold for exempt employees under the professional, administrative, and executive exemptions.
To maintain exempt status, these employees must earn a monthly salary of at least $5,720, equating to an annual salary of $68,640. Employers should review compensation structures to ensure compliance with these updated requirements.
Local Minimum Wage Variations
Several California cities and counties have established local minimum wages exceeding the state rate. Employers must adhere to the higher local wage where applicable. For instance, San Diego’s minimum wage will increase to $17.25 per hour on January 1, 2025.
Other municipalities, such as San Francisco and Los Angeles, have their own scheduled increases. It’s crucial for employers to stay informed about local ordinances to ensure compliance.
Sector-Specific Minimum Wages
Certain industries in California have distinct minimum wage standards:
- Fast-Food Workers: Effective April 1, 2024, legislation raised the minimum wage for fast-food employees to $20 per hour. The Fast Food Council, established under this law, holds the authority to implement annual wage increases through 2029, subject to caps tied to the CPI.
- Healthcare Workers: A special minimum wage for healthcare employees is set to take effect no later than January 1, 2025, depending on the facility type. Employers in the healthcare sector should monitor legislative updates to ensure adherence to these forthcoming wage standards.
Comparison with Federal Minimum Wage
The federal minimum wage remains at $7.25 per hour. California’s minimum wage significantly surpasses this figure, reflecting the state’s proactive approach to addressing the higher cost of living and supporting its workforce.
| Category | Previous Wage (2024) | New Wage (2025) | Effective Date |
|---|---|---|---|
| Statewide Minimum Wage | $16.00 per hour | $16.50 per hour | Jan 1, 2025 |
| Exempt Employee Salary | $66,560 annually | $68,640 annually | Jan 1, 2025 |
| San Diego City | $16.30 per hour | $17.25 per hour | Jan 1, 2025 |
| Fast-Food Workers | $16.00 per hour | $20.00 per hour | Apr 1, 2024 |
When does the new statewide minimum wage take effect?
The increase to $16.50 per hour is effective January 1, 2025.
Are all employers required to comply with the new minimum wage?
Yes, the $16.50 per hour rate applies to all employers, regardless of size.
How does this increase affect exempt employees?
Exempt employees must earn a minimum annual salary of $68,640 to maintain their status, effective January 1, 2025.
