CA Minimum Wage Set to Increase to $16.50/Hr. On January 1, 2025
The California Department of Finance has recently determined that the minimum wage shall increase by 3.18 percent to $16.50 per hour and shall be implemented for all employers starting on January 1, 2025. Based on the calculations required by statute, the Department certified that the minimum wage increase shall include an inflation adjustment of 3.18 percent for all employers effective January 1, 2025.
State law requires that most California workers be paid the minimum wage. Workers paid less than the minimum wage have recourse to the Labor Commissioner’s Office in their area to file a wage claim.
One of the protections of the minimum wage law is an annual review of the wage rate using the U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W). This year, the Department of Finance calculated that the average U.S. CPI-W for the 12-month period from July 1, 2023, to June 30, 2024, increased by 3.18 percent compared to the 12-month period from July 1, 2022, to June 30, 2023. As a result, the minimum wage was increased to $16.50 for all employers to begin at the start of next year.
The minimum salary for exempt status employees will also increase from $66,560 per year ($1,280 per week) to $68,640 per year ($1,320 per week) beginning January 1, 2025.
These numbers may be impacted, however, with the upcoming November election with Proposition 32 on the ballot. A nod to Proposition 32 would increase California’s minimum wage for employers with 26 or more employees to $17 for the rest of 2024 and then to $18 per hour starting in 2025, while for employers with 25 or less employees, the minimum wage would increase to $17 on January 1, 2025, and then to $18 on January 1, 2026. Starting in 2027, minimum wage increases would then be tied to the U.S. CPI-W. Proposition 32 does allow the Governor to retain the power to suspend these increases twice should an economic downturn ensue.
Passage of Proposition 32 does not directly affect fast food and certain health care workers as their rates are already higher than the base rate. Recently enacted legislation provides that as of April 1, 2024, all fast-food restaurant employees must be paid at least $20.00 per hour. In addition, certain health care workers will soon be paid a higher minimum wage effective sometime between October 15, 2024, and January 1, 2025.
It should also be noted that some cities and counties have already moved ahead of the state minimum, including locations in the Bay Area and Los Angeles. If you have questions about the new minimum wage and salary increases, contact the Rosasco Law Group APC.
