California employment laws are not only rigid, they are becoming increasingly complicated and tricky. While it was once simple to identify the state minimum wage governing virtually all employers, the California legislature has no regard for consistency, clarity, or uniformity.
1. California Now Has Many Different Minimum Wage Rates
Now, the minimum wage rules vary based on a variety of factors, such as an employer’s size, industry (such as the fast food and health care rules that differ from the generally applicable minimum wage rules), and the counties and cities where they operate businesses and employ workers. As examples, some health care and fast food workers are covered by minimum wage rules that differ from the rules applicable to other health care and restaurant employees, as well the general minimum wage standards in effect for all other industries. To complicate the analysis, dozens of cities and counties across the state have adopted minimum wage ordinances that differ from the state and federal rules. This has caused the California Department of Industrial Relations to state: “Effective January 1, 2025, the minimum wage is $16.50 per hour for all employers, not otherwise covered by a higher minimum wage specific to an industry or a locality.” Bottom line: The devil is in the details. It is no longer easy to identify, let alone figure out, the governing minimum wage for specific employees.
2. The General Minimum Wage Increased On January 1
In 2024, the generally applicable state minimum wage was $16.00 an hour. On January 1, 2025, the state minimum wage increased to $16.50 for most employers. Variations nevertheless exist in jurisdictions subject to local minimum wage rules, for some fast food industry employers covered by special rules, and for some health care industry employers. Some cities and counties’ ordinances enacted higher local minimum wage rates for 2025.
It should also be remembered that increases in the California’s state minimum wage (as distinguished from changes mandated by local ordinances) have a direct and immediate impact on nine other features of California law, including the minimum salary rules in the white-collar exemptions, the minimum hourly rate that union employees must be paid to qualify for a state overtime exemption, the minimum sums commissioned employees covered by Wage Orders 4 and 7 must receive to meet an overtime exemption, the split-shift premium rule, and meal and lodging credits, among other rules. The derivative consequences of minimum wage increases are explained in Section 6.4(b) of the Wage and Hour Manual for California Employers (27th Edition), by Attorney Richard J. Simmons of Sheppard, Mullin, Richter & Hampton.
3. California’s Minimum Salary Level Increased For Exempt Employees
One of the most significant rules that automatically change whenever the state minimum wage increases involves the “salary level” requirements applicable to exempt executive, administrative and professional employees based on Labor Code Section 515. Because the statute establishes a minimum salary requirement that is a product of 80 times the state minimum wage, the minimum salary was $1,280 a week ($16 x 80) in 2024, i.e., $66,560 a year. When the minimum wage increased to $16.50 an hour on January 1, 2025, the minimum salary level increased to $1,320 a week (which equates to $68,640 a year) on the same date. The salary level for employees covered by a higher state minimum wage, such as some fast food and health care employees, is even higher. Employers were required to be vigilant in order to budget for and implement salary increases, where necessary, that comported with the new rules when they took effect.
4. Meal And Lodging Credits
Some employers may credit the value of meals or lodging provided to employees pursuant to a voluntary written agreement when meeting their state minimum wage obligations. The amount that can be credited is subject to strict limitations established by the Wage Orders. The maximum amounts that can be credited increased on January 1. They are listed in Section 3 of the new Minimum Wage poster (MW – 2025).
5. Posting Rules
Employers are required to post a new Minimum Wage poster along with the Wage Order applicable to their employees. The Minimum Wage notice (MW-2025) and applicable Wage Order can be obtained and downloaded from the Department of Industrial Relations’ website.
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About The Author
Richard J. Simmons is a Partner in the law firm of Sheppard, Mullin, Richter & Hampton LLP in Los Angeles. He represents employers in various employment law matters involving litigation throughout the country and general advice regarding state and federal wage and hour laws, employment discrimination, wrongful discharge, employee discipline and termination, employee benefits, affirmative action, union representation proceedings, and arbitrations. Mr. Simmons received his B.A., summa cum laude, from the University of Massachusetts, where he was a Commonwealth Scholar and graduated in the Phi Kappa Phi Honor Society. He received his J.D. from Berkeley Law at the University of California at Berkeley where he was the Editor-in-Chief of the Industrial Relations Law Journal, now the Berkeley Journal of Employment and Labor Law.
Mr. Simmons argued the only case before the California Supreme Court that produced a victory for employers and business in 2018. He was recently recognized as the Labor and Employment Attorney of the Year by the Los Angeles Business Journal and was inducted into the Employment Lawyers Hall of Fame. He has lectured nationally on wage and hour, employment discrimination, wrongful termination, and other employment and labor relations matters. He is a member of the National Advisory Board to the Berkeley Journal of Employment and Labor Law, published by Berkeley Law at the University of California at Berkeley. He was also appointed by the California Industrial Welfare Commission as a member of three Minimum Wage Boards for the State of California.