2025 California Minimum Wage Increase
As the new year approaches, the State of California and many local jurisdictions are implementing their own local minimum wage increases. Employers across the state should carefully review the minimum wage rates in effect in the jurisdictions where their employees work and make any necessary adjustments to take effect for any services performed on or after January 1, 2025.
California Minimum Wage
Starting January 1, 2025, California’s statewide minimum wage will increase to $16.50 per hour for all employers, regardless of size.
Updated (higher) rates are also in effect for qualified computer professionals:
o Hourly rate: $56.97
o Monthly salary: $9888.13
o Annualized Salary: $118,657.43
Updated (higher) minimum rate of pay for qualified licensed physicians: $103.75/ hr.
Employers should also prepare for certain statewide industry specific minimum wages:
Fast Food Employee Minimum Wage Law ( $20.00/ hr. effective April 1, 2024 and increasing on January 1, 2025 TBD)Health Care Worker Minimum Wage Law ($23.00/ hr. effective October 16, 2024; going to $24.00/hr. effective July 1, 2025)
Exemption Salary Threshold Adjustments
The statewide minimum wage, not local rates, is used to determine the salary threshold for overtime exemptions for administrative, executive, and professional employees that qualify for those exemptions on account of their duties. Beginning January 1, 2025, the minimum salary threshold will rise to $68,640 annually(two times the state minimum wage). Note that new wage schedules for fast food and health care workers impact exemption thresholds for overtime exempt employees working in those industries.
Local Minimum Wages
State and federal law allow municipalities to set even higher minimum wages for employees who perform services in their jurisdictions. Below is a breakdown of updated local minimum wage rates effective January 1, 2025:
Belmont: $18.30 per hourBurlingame: $17.43 per hourCupertino: $18.20 per hourDaly City: $17.07 per hourEast Palo Alto: $17.45 per hourEl Cerrito: $18.34 per hourFoster City: $17.40 per hourHalf Moon Bay: $17.47 per hourHayward:$17.36 per hour for employers with 26+ employees$16.50 per hour for employers with 25 or fewer employees (per state law)Los Altos: $18.20 per hourMenlo Park: $17.10 per hourMountain View: $19.20 per hourNovato:$17.27 per hour for employers with 100+ employees$17.00 per hour for employers with 26–99 employees$16.42 per hour for employers with 1–25 employees (but small employers must comply with California’s higher state minimum wage rate of $16.50 per hour)Oakland: $16.98 per hourPalo Alto: $18.20 per hourPetaluma: $17.97 per hourRedwood City: $18.20 per hourRichmond: $17.77 per hourSan Carlos: $17.32 per hourSan Diego (city): $17.25 per hourSan Jose: $17.95 per hourSan Mateo (city): $17.95 per hourSan Mateo County: $17.46 per hourSanta Clara: $18.20 per hourSanta Rosa: TBDSonoma (city):$18.02 per hour for employers with 26+ employees$16.96 per hour for employers with 25 or fewer employeesSouth San Francisco: $17.70 per hourSunnyvale: $19.00 per hourWest Hollywood: $19.65 per hour
In addition, certain municipalities have established a hospitality industry-specific higher minimum wage rate for covered non-union employees working in the hospitality industry (as defined) and for unionized workers where their union contract does not contain a waiver of this higher minimum wage.
Oakland: $18.36 effective January 1, 2025 City of Santa Monica: $20.32 effective July 1, 2025; will increase July 1. 2025)City of West Hollywood: $19.61 effective July 1, 2024; will increase July 1, 2025City of Los Angeles: $20.32
o $22.50 an hour on July 1, 2025 (+ $8.35 per hour for healthcare)
o $25.00 an hour on July 1, 2026
o $27.50 an hour on July 1, 2027
o $30.00 an hour on July 1, 2028
Compliance Reminder
Each local ordinance includes specific requirements for:
Notice and Posting: Updated wage posters must be displayed in a prominent location, such as a break room, and provided to remote employees.Recordkeeping: Employers must maintain accurate records to demonstrate compliance.
Failure to meet these requirements may result in fines, penalties, or civil action. In addition, under California law, failure to pay minimum wage or applicable overtime pay is a crime (i.e., a misdemeanor).
Action Steps for Employers
If your business operates in any of the listed jurisdictions, ensure compliance by:
Updating payroll systems to reflect new minimum wage rates.Displaying updated posters in conspicuous locations.Providing physical copies of notices to remote employees.Reviewing and adjusting exempt employee salaries to reflect the new minimum.
Content provided by Ballard, Rosenberg, Golper and Savatt, LLP www.brgslaw.com.