On July 31, 2023, California’s Director of Finance certified that the state’s minimum wage for all employers will increase to $16 per hour, effective on January 1, 2024.
This announcement followed the completion of an annual review by the state’s Department of Finance in order to determine if the minimum wage must be increased due to inflation and, if so, to calculate the new minimum wage in accordance with state Labor Code requirements.
California employers should also take note that the increase in the California state minimum wage to $16 per hour in 2024 will result in a higher base salary requirement for employees deemed exempt under the so-called “white collar” exemptions (i.e., the professional, administrative, and executive exemptions). In order to be considered exempt, among other requirements, such employees must be paid a fixed salary equivalent to no less than two times the state minimum wage for full-time employment, which cannot be pro-rated for part-time work. For 2024, this salary requirement will increase to a monthly salary of $5,546.67 (or an annualized salary of $66,560).
California’s current statewide minimum wage is $15.50 for all employers. Numerous cities and counties have passed local minimum wages that surpass the state minimum, and employers must pay non-exempt employees the higher wage as between any local ordinance and state law.