Effective New Year’s Day 2024, the minimum wage employers of all sizes must pay California employees will increase from $15.50 per hour to $16.00 per hour.  The minimum salary for exempt status will increase at the same time from $64,480 per year ($5,373.34 per month) to $66,560 per year ($5,546.67 per month). 

In what may be a happy surprise, the Golden State does not have the highest minimum wage in the U.S.  The minimum wage in the District of Columbia is now $17 per hour for non-tipped EEs.  The current minimum wage in the State of Washington is $15.74 per hour and may increase effective January 1, 2024, in tandem with the Consumer Price Index. 

Effective January 1 in California, the minimum wage to be paid to employees who are required to provide and maintain hand tools and equipment customarily required by their trade or craft will increase from $31 per hour to $32 per hour, e.g., technicians in auto dealerships who are required to bring their own tools.  The minimum annual pay for employees to qualify for the inside sales exemption from overtime will increase from $48,360 to $49,920.

Don’t Make These Mistakes!  When increasing employees’ pay rates, remember that the raises must be reflected in the rates at which you pay premium wages for deficient meal periods and rest breaks along with the rates for paid sick leave and split-shift premiums.  Distribute new Wage Theft Prevention Act Notices within seven days of the raise taking effect as required by state law and update paystubs.

Regularly monitor developments in cities and counties where your employees work as ordinances may be in effect with scheduled minimum wage increases.

In October 2023, California may hike the minimum pay for employees to qualify for the computer professional exemption from overtime.   

Is $18 Per Hour Coming?  The November 2024 statewide ballot will include a proposition that would raise the California minimum wage to $18 per hour by January 1, 2025, for large employers (26 or more employees) and January 1, 2026, for smaller employers (25 or fewer employees).  The proposition, named The Living Wage Act of 2022, failed to qualify for the 2022 ballot but has qualified for the 2024 ballot.  

If you have questions or we may assist with this or other employment law challenges, please contact your Fox Rothschild LLP attorney or the author.

This post provides general information and does not constitute legal advice to any person with respect to any circumstance.  This post does not create an attorney-client relationship with any person.