California’s Minimum Wage Set to Rise to $16 an hour in January 2024

California is set for a significant increase in its minimum wage, rising to $16 per hour for all employers from January 1, 2024. It’s important to note that some cities and counties in the Golden State have a local minimum wage that exceeds the state rate.

Under state law, the vast majority of California workers are entitled to receive the minimum wage. Any worker who suspects they are being paid less than the minimum wage should get in touch with their local Labor Commissioner’s Office to file a wage claim.

This increase in the minimum wage also impacts the minimum salary required for an employee to qualify for the overtime exemption test. To meet the initial requirement of this exemption test, an employee must earn at least double the state’s minimum wage for full-time work. Hence, starting from January 1, 2024, to meet this stipulation, employees in California must earn an annual salary of no less than $66,560.

In 2023, all employees, irrespective of employer size, are entitled to a minimum wage of $15.50.

Among the safeguards 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). The Department of Finance determined a 6.16 percent increase in the U.S. CPI-W from July 1, 2022, to June 30, 2023. The minimum wage increases each year by the lesser of 3.5 percent or the rate of change in the averages of the two most recent U.S. CPI-W, unless these averages are negative. If the averages are negative, the minimum wage remains unchanged for the following year. Governor Newsom certified the minimum wage increase for all employers for 2024 on July 31, 2023.

Employers are required to post the Minimum Wage Order and the Wage Order applicable to their workplace in an area accessible to employees. These orders can be downloaded and printed from the workplace postings page on the DIR website.

Employers must also ensure that employee pay stubs display the wage rate and that employees are paid at least the minimum wage, even when employees are paid at a piece rate.

In addition, starting in April next year, the minimum wage for California’s 500,000 fast-food workers will rise to $20 per hour – a significant increase from the average hourly wage of $16.21 in 2022. The Fast Food Council will empower workers by allowing them to have a greater say in setting minimum wages and working conditions, including health and safety standards.