Saturday, November 26, 2022

California Minimum Wage Projected to Increase to $15.50

On May 12, Governor Gavin Newsom announced that California’s minimum wage is projected to increase to $15.50 per hour for all employers, regardless of size, on January 1, 2023.

The current minimum wage is $15 per hour for employers with 26 or more employees and $14 per hour for employers with 25 or fewer employees. Small businesses anticipated increasing their minimum wage to $15 per hour in 2023; however, when inflation exceeds 7%, a provision in the law triggers the accelerated increase.

The California Department of Finance projects inflation for the 2022 fiscal year (which ends June 30) will be 7.6%. As such, California’s minimum wage for all employers, regardless of size, will likely rise to $15.50 per hour starting January 1.

The minimum wage increase will also increase the minimum salary for exempt employees in California. Currently, for employers with 25 or fewer employees, the exempt employee salary threshold is $58,240 per year ($4,853.33 per month), while the salary threshold for employers with 26 or more employees is $62,400 per year ($5,200 per month).

Beginning January 1, 2023, under the projected minimum wage increase to $15.50, the new exempt salary threshold will be $64,480 per year ($5,373.33 per month) for all employers, regardless of size.

Lastly, another minimum wage development that employers should keep an eye on is a possible November 2022 ballot measure that could further increase the state minimum wage.

Proponents of the measure announced last week that they have enough signatures to put the measure on the ballot. If the ballot measure passes, the minimum wage would be $16 per hour on January 1, 2023, increasing annually until it reaches $18 per hour.

Staff Contact: James Ward

James W. Ward
James W. Ward
James W. Ward joined the CalChamber in June 2019 as an employment law subject matter expert/legal writer and editor. He enhances the ongoing efforts of the CalChamber legal affairs team to explain for nonlawyers how statutes, regulations and court cases affect California businesses and employers. Ward came to the CalChamber following his time as an associate attorney at Kronick Moskovitz Tiedemann & Girard of Sacramento, where he provided advice and counsel to public and private employers on labor and employment matters. He holds a B.A. in humanities, magna cum laude, and an M.A. in history from California State University, Sacramento. He earned his J.D. with great distinction from the McGeorge School of Law, University of the Pacific.

Related Articles

Minimum Wage Hikes Effective January 1 Include Local Rate Increases

I just heard West Hollywood passed a local minimum wage ordinance. How do local minimum wage ordinances interact with the statewide minimum wage and how do we know which wage rate to apply to...

Governor Declines to Delay Minimum Wage Hike Scheduled for 2021

Last week, Governor Gavin Newsom announced that he won’t delay the minimum wage increase scheduled to begin on January 1, 2021. While acknowledging that current economic conditions give him the authority to suspend the scheduled...

Conditions Right for Delay in Minimum Wage Increase

The 2016 legislation setting up the schedule to increase the minimum wage, SB 3 (Leno; D-San Francisco), enabled the Governor to postpone by a year any of the annual step increases in the event...