Inflation Triggers Increase in California Minimum Wages

The California minimum wage is currently $15 an hour for employers of 25 or more employees and $14 an hour for all employers of less than 25 employees. Federal law currently sets the minimum wage at $7.25 per hour. However, federal law allows states and cities to set a minimum wage that is higher than the federal rate.

There are some employees who are exempt from the California minimum wage law, such as outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards.

Several local California jurisdictions have also passed minimum wage laws, such as San Francisco, San Jose, Los Angeles, San Diego, Oakland, and Berkeley, The University of California at Berkeley has compiled and maintains local city and county level minimum wage rates.

A 2016 statute signed into law by former Gov. Jerry Brown, Senate Bill 3, amended sections 245.5, 246, and 1182.12 of the Labor Code, and set forth a plan to gradually increase the statewide minimum wage to $15 per hour over the past six years. SB 3 also included a provision requiring an automatic increase in the minimum wage as determined by the Consumer Price Index..

The California state minimum wage law as amended – Labor Code 1182.12 – provides that the state minimum wage must increase to $15.50 per hour for everyone in 2023 if inflation increases by more than 7% between the 2021 and 2022 fiscal years. Thursday, the California Department of Finance said it projects inflation for the 2022 fiscal year – which ends June 30 – will be 7.6% higher than the year before, triggering the minimum wage increase.

Governor Newsom subsequently announced that all California employers will be required, regardless of size, to pay a new minimum wage of $15.50 per hour, effective January 1, 2023.

This development also increases the minimum salary for most exempt employees in California to $64,480 annually and $5,373.33 per month, effective January 1, 2023. This increase is most significant for smaller employers, who currently have a salary floor of $58,240 annually.

Finally, in other minimum wage developments, earlier last week supporters of California’s ballot initiative to raise California’s minimum wage to $18 per hour announced having submitted more than 1 million signatures – way beyond the 623,000 required to land it on the November ballot. If this ballot measure passes, and many expect that it will, the minimum wage in the Golden State would go to $16 per hour on January 1, 2023, and move up for all hourly employees annually until reaching $18 an hour on January 1, 2028.

“Increasing the minimum wage at this time of spiking prices is a just and urgently needed measure,” said David Huerta, president of SEIU California and SEIU-United Services Workers West. But according to the report by Cal Matters, some small business owners said it could further impede California’s economic recovery.

John Kabateck, state director of the National Federation of Independent Business California said “We recognize this is the law but this has the opposite effect on the people they’re trying to help.

Ironically, Newsom on Thursday proclaimed May “Small Business Month” in California.

Inflation Triggers Increase in California Minimum Wages

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