Minimum Wage Laws in California: What You Need to Know

California Minimum Wage Laws

Minimum wage laws prohibit employers from hiring employees or workers for less than the required hourly, daily, or monthly minimum wage. Laws surrounding minimum wage have evolved over time, from their application in certain sectors and the minimum amounts delegated.

There are several minimum wage exceptions. Exceptions apply, only under specific circumstances, to workers with disabilities, full-time students, youth under age 20 in their first 90 consecutive calendar days of employment, tipped employees, and student-learners.

Minimum wage laws vary from state to state. Several states have not passed any minimum wage laws, simply adopting the federal minimum wage laws set forth in the Fair Labor Standards Act. Other states pass their own minimum wage rates accompanied by complex rules and regulations.

California Minimum Wage

The federal minimum wage, for covered nonexempt employees, is currently $7.25 per hour, and has not changed since July 2009. In California, the minimum wage for employers with 25 employees or less is $11.00 per hour. For employers with 26 or more employees, it’s $12.00 per hour. California employers may not pay their employees under $11.00 per hour, unless the employee or occupation is exempt from the minimum wage under state or federal law.

California’s minimum wage will continue to increase over the next several years, commencing on January 1^st of each corresponding year.

Beginning on January 1, 2023, for employers with 26 or more employees and January 1, 2024, for employers with 25 or fewer employees, California will increase its minimum wage by the lesser of:

• 5 percent and
• the rate of change in the averages of the most recent July 1 to June 30, inclusive, period over the preceding July 1 to June 30, inclusive, period for the United States Bureau of Labor Statistics non-seasonally adjusted United States Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W) rounded to the nearest ten cents ($0.10).

Also, there are regional variances in minimum wage. For example, the minimum wage in Berkeley is $12.53 per hour, while it’s $15.00 per hour in Cupertino. Minimum wage resources help outline current rates and future increases by city.

Because California’s current law mandates a higher minimum wage rate than federal law, all California employers who are subject to both laws must pay the state minimum wage rate, unless their employees are exempt under California law. Similarly, if a local entity (city or county) has adopted a higher minimum wage, employees must be paid the higher, local minimum wage rate.

Overtime Pay in California

Employees are entitled to overtime pay in certain scenarios. The overtime premium rate starts at 1 ½ times the employee’s regular pay rate, unless otherwise specified. For example, an employee earns $12.00 per hour; she works 10 hours or 2 hours over 8 standard hours; she must be paid $12.00 per hour for the first 8 hours worked and then $18.00 per hour for the 2 overtime hours worked.

For employers with over 26 employees, “overtime” work is any work in excess of 8 hours in one workday, in excess of 40 hours in one workweek, or in the first 8 hours worked on the seventh day of work in any one workweek.  The overtime rate of pay is one-half times the employee’s regular hourly rate. Any work in excess of 12 hours in one day or in excess of 8 hours on any seventh day of a workweek shall be paid no less than twice the regular rate of pay, according to California Labor Code section 510.

California Minimum Wage Exemptions

According to IWC Orders 1-16: Section 1(A)(1), California exempts certain employees from minimum wage laws (meaning, the employee is not subject to the minimum wage laws), such as under the Executive Exemption. To qualify as an executive employee, an employee must:

• perform duties and have responsibilities that involve the management of the enterprise in which he/she is employed or of a customarily recognized department or subdivision thereof;
• customarily and regularly direct the work of two or more other employees;
• have the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight;
• customarily and regularly exercise discretion and independent judgment;
• primarily engage in exempt job duties as compared to non-exempt job duties (California relies on the federal regulations when determining if an employee performs exempt or non-exempt job duties (see 29 C.F.R. Sections 541.102, 541.104-111, and 541.115-116);
• be paid a monthly salary that is equivalent to no less than two (2) times the state minimum wage for full-time employment, which is defined in Labor Code Section 515(c) as 40 hours per week.

There are also the Administrative Exemption and the Professional Exemption. Some job-specific exemptions include commissioned employees, outside salespersons, and union employees. It is important to note that, aside from these specific exemptions, an employee may not agree to work for less than minimum wage. Employers are obligated to meet minimum wage requirements and follow the law.  Their obligation cannot be waived by any agreement, including collective bargaining agreements.

In Conclusion

If an employee thinks their employer is not in compliance with minimum wage laws, they can file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner’s Office) or file a lawsuit in court against the employer to recover lost wages. Consult an employment litigation attorney to ensure your business is in compliance with California’s current minimum wage laws.