Notice to California Employers: The Minimum Wage has Increased

With the start of a new year, a number of new and modified California laws have gone into effect. The most impactful and widely applicable of these is the increased minimum wage rate in California. On January 1, 2023, the California state minimum wage rate increased to $15.50 per hour for all employers, regardless of size. In cities with local minimum wage rates that are higher, employers should confirm and abide by the local rate if applicable. For example, the local minimum wage in San Diego is $16.30 per hour, so employers in San Diego should apply that rate instead of the lower state rate. In cities without a local minimum wage ordinance or with a local wage rate that is lower than the California state minimum wage, the state minimum wage rate will apply.

An increase in the state minimum wage also brings with it additional considerations for employers that hire exempt employees. The new state minimum wage rate will be used to calculate the salary threshold requirement for administrative, executive and professional exemptions. That threshold is two times the statewide minimum wage, so in 2023, employers must ensure that all exempt employees earn at least $64,480 per year. Failure to do so may cause the employee to pursue a legal claim for misclassification of exempt status.

As an additional reminder, notice, posting and recordkeeping requirements remain in effect for employers, and therefore must be updated to comply with the new minimum wage rate. Failure to comply with these obligations may result in fines, penalties or even civil action, including a class action lawsuit. Employers must implement these updates promptly to avoid the potentially costly consequences.