On May 12, 2022, Governor Gavin Newsom announced that the California minimum wage will likely increase to $15.50 per hour starting January 1, 2023. Currently, the California minimum wage is $14.00 per hour for employers with 25 or less employees, and $15.00 per hour for employers with 26 or more employees (although some counties and cities have a higher minimum wage).
It was previously projected that the minimum wage for all employers would rise to $15.00 in 2023. However, the accelerated increase to $15.50 is required by California Labor Code Section 246 which requires an additional increase to the minimum wage when inflation exceeds 7% during a fiscal year. The California Department of Finance projects inflation for the 2022 fiscal year (which ends June 30, 2022) will be 7.6% higher than the prior year, thereby triggering the increase.

The increase to the minimum wage will not just affect hourly workers, but it will also impact exempt executive, administrative, and professional employees who must earn a salary of no less than two times the state minimum wage for full-time employment to satisfy the exemption.

In addition, an initiative dubbed the “Living Wage Act of 2022” has been proposed that would increase the minimum wage in California to $18.00 by 2025 (or 2026 for employers with 25 or less employees). The initiative needs approximately 700,000 signatures to be included on the ballot in November. We will keep you updated on this important initiative.

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About The Author

Hilary A. Habib is an attorney in Sheppard Mullin’s Labor and Employment Practice Group in the firm’s Los Angeles office. Ms. Habib’s practice involves representing employers in all aspects of labor and employment counseling and disputes under federal and state law, including discrimination, harassment, retaliation, wrongful termination, and wage and hour.

Ms. Habib handles all facets of the litigation process in labor and employment disputes. She has experience in defending complex wage and hour class actions, including rounding claims, claims for overtime pay, meal and rest period violations. Ms. Habib also represents employers before state and federal administrative agencies, such as the California Department of Fair Employment and Housing, the Equal Employment Opportunity Commission, and the Division of Labor Standards Enforcement. She is a frequent co-speaker for the Castle Seminar Series and has written a number of articles for the California Labor and Employment ALERT Newsletter.