California Minimum Wage Projected to Increase to $15.50

On May 12, 2022, 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 percent, 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 percent. 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 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. (Update: Delayed to 2024)

James W. Ward, Employment Law Subject Matter Expert/Legal Writer and Editor

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