California's minimum wage rate increased on January 1, 2018, to $11.00 per hour for businesses employing 26 or more employees and $10.50 per hour for those with 25 or fewer employees. The increase is a result of California Senate Bill 3, which was signed into law in 2016. The law will increase California’s minimum wage to $15 per hour by 2023. Thereafter, the minimum wage will change based on cost of living increases.
California’s minimum annual salary for executive, administrative, and professional exempt employees of large businesses increased to $45,760 from $43,680. The minimum salary for exempt small businesses employees also increased to $43,680 from $41,600. This is because the state’s minimum salary for exempt employees is tied to the state minimum wage. These minimum salary increases went into effect on January 1, 2018.
Additionally, California employers must comply with 23 city and county ordinances. In nearly all of these local jurisdictions, the minimum wage increased for 2018. In 13 cities, the minimum wage increased on January 1, 2018, and in most of the remaining jurisdictions, the minimum wage rate will increase in July of 2018 or later.
All of the 2018 local minimum wages are higher than the California state minimum wage. Five cities have reached the $15 rate ahead of the California’s statewide increase: Berkeley, Emeryville, Mountain View, San Francisco, and Sunnyvale. Large employers located in Emeryville will pay the highest rate, which is expected to reach $15.60 in July of 2018. Only seven of the local jurisdictions—Emeryville, the City of Los Angeles, Los Angeles County, Malibu, Pasadena, Richmond, and Santa Monica—give smaller employers a break. Only one city, San Mateo, allows nonprofits to pay their employees a lower rate.
Note that increases in the local minimum wage do not affect the statewide minimum exempt salary level referenced above.
The chart below summarizes the increases scheduled for 2018: