California Minimum Wage and Salary Increases for 2025
California voted against Proposition 32, which would have increased the state’s minimum wage to $18.00/hour for medium to large employers and $17.00/hour for small employers with 25 or fewer employees. However, consistent with existing law that increases California’s minimum wage annually based on the consumer price index (CPI), California’s minimum wage will nevertheless increase to $16.50/hour effective January 1, 2025.
As is always the case, California’s increase in minimum wage also increases the minimum salary requirement for most white-collar exemptions (those for which the minimum salary is two times the minimum wage, e.g., the administrative, executive, and professional exemptions). Effective January 1, 2025, the minimum salary required for those exemptions will be $68,640/year or $5,720/month.
The minimum wage increase also impacts wages that must be paid to employees subject to collective bargaining agreements (CBAs) that rely upon exemptions for overtime, sick pay, and (in some industries) meal periods. To satisfy those exemptions, employees must earn 30% above the minimum wage, increasing the wage threshold for those employees to $21.45/hour effective January 1, 2025. Employers with union employees should review their CBAs to ensure these minimum wages are satisfied in order to take advantage of these exemptions.
In addition, 2024 brought about increases in minimum wages for specific industries. Since April 1, 2024, certain fast food restaurant employees must be paid at least $20.00/hour. For more information, go to Fast Food Minimum Wage Frequently Asked Questions. Fast food employers must post the state’s Minimum Wage Order Supplement for Fast Food Restaurant Employees. In addition, certain health care workers must be paid a higher minimum wage, beginning at $23.00/hour effective October 16, 2024, followed by increases to $24.00/hour effective July 1, 2025 and $25.00/hour effective July 1, 2026. For more information on when the minimum wage increases and which workers are covered, go to the Health Care Worker Minimum Wage FAQs. For more information on the clinic waiver program, go to the Health Care Minimum Wage Clinic Waiver Program FAQs and access the Application for Waiver.
Separate from these increases, the hourly minimum wages for exempt licensed physicians and surgeons and computer software employees also increase with the CPI effective January 1, 2025. To be exempt from overtime, licensed physicians and surgeons will need to be paid $103.75/hour and computer software employees must be paid $56.97/hour. Computer software employees may also be exempt from overtime if they are paid a salary of $118,657.43/year or $9,888.13/month.
Finally, many municipalities have their own hourly minimum wage requirements that must be considered depending upon an employer’s operations.
This legal update and any use of its information does not create an attorney-client relationship. Nothing contained on this website should be considered legal advice for any specific employer or employment situation. Consult legal counsel before taking any action as a result of information contained herein.
