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All California employers will begin paying minimum wage of at least $15.50 in January 2023

Local minimum wage higher in many cities and will increase again this July

June 15, 2022 5857
A binder rests on a stack of papers on a desk. The binder's spine reads: PAYROLL

Quick Summary:

Current law caps the California minimum wage at $15, but a provision in the law allows wages of at least $15 to be raised annually for any increase in inflation of over 7% as measured by the national Consumer Price Index. And that is what is now happening. Gov. Newsom announced that employers of every size will begin paying $15.50 beginning Jan. 1, 2023. However, employers in at least 30 cities are already paying a higher local minimum wage, and new increases will take effect in some cities this July.

California’s minimum wage will rise again in January 2023 – to $15.50 for all employers of every size as a result of inflation. But more than 30 California cities or counties have their own local ordinances that set the minimum wage even higher and with increases that take effect each January or July. Employers in at least six cities will begin paying a higher minimum wage effective July 1.

Employers always must pay the local minimum wage in the employer’s place of business if it is higher than the state minimum wage. And employers with exempt employees should evaluate their workers’ salaries because exempt employees in California generally must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employment.

January 2023 wage increase tied to inflation

The state minimum wage has increased every year for employers of all sizes since 2017 in accordance with legislation signed into law by former Gov. Jerry Brown.

That law caps the minimum wage at $15. Employers with 26 or more employees reached the cap in January of this year; employers with fewer than 26 employees are currently paying a minimum wage of $14 and will reach the $15 cap Jan. 1, 2023.

However, a provision in the law allows wages of at least $15 to be raised annually up to 3.5% (rounded to the nearest 10 cents) for any increase in inflation of over 7% as measured by the national Consumer Price Index. And that is what is now happening. Gov. Gavin Newsom announced in May that all employers of every size will begin paying a minimum wage of $15.50 beginning Jan. 1, 2023.

Some city minimum wages will increase July 1

Minimum wages or “living wages” are rising more quickly than the state minimum wage in some areas of California. Employers in more than 30 cities or counties are already required to pay an hourly minimum wage ranging up to over $17.

Dentists should familiarize themselves with their local government wage order and ordinances and are encouraged to review CDA’s resource listing minimum wage and paid sick leave ordinances by city and county (CDA login required). CDA updated the resource in May to note the following cities where local wages will rise July 1: Berkeley, Emeryville, Los Angeles, San Francisco, Santa Monica and West Hollywood. The resource includes links to local ordinances. 

Employers must follow the stricter wage standard

Again, when paying employees, employers must follow the stricter wage standard — specifically, the one that is the most beneficial to the employee. 

Some employees, including outside salespersons or the employer’s spouse, child or parent, are exempt from the state minimum wage law. The governor can suspend a scheduled wage increase in the event of an economic slowdown (defined as negative job growth combined with negative retail sales for a specified time period) or if a budget deficit is forecasted for the current budget year up to two additional years. 

The California Minimum Wage notice for 2023 will be available later this year on the Department of Industrial Relations’ website.