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Most employers in California will begin paying higher minimum wage Jan. 1, 2022

30 California cities, counties have higher local minimum wages; those wages rise again in 2022

December 13, 2021 11248
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Quick Summary:

Effective Jan. 1, 2022, the state minimum wage for employers with 25 or fewer employees will increase to $14, and the state minimum wage for employers with 26 or more employees will increase to $15 per hour. Legislation signed into law in 2016 requires California’s minimum hourly wage to rise by $1 once more, in January 2023, for employers with less than 26 employees. But employers of every size must pay the local minimum wage in the employer’s place of business if it is higher than the state minimum wage.

Nearly all employers in California will begin paying their employees a higher minimum wage — either the new state or local minimum wage, whichever is higher — in the new year. 

Effective Jan. 1, 2022, the state minimum wage for employers with 25 or fewer employees will increase to $14 per hour from the current $13, and the state minimum wage for employers with 26 or more employees will increase to $15 per hour from the current $14.

Legislation signed into law in 2016 by former Gov. Jerry Brown requires California’s minimum hourly wage to rise by $1 once more, in January 2023, for employers with less than 26 employees so that the hourly wage is capped at $15 for employers of all sizes under the law. 

But employers of every size must pay the local minimum wage in the employer’s place of business if it is higher than the state minimum wage.

Employers with exempt employees should evaluate employee salaries, as 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.

City and county minimum wages will increase Jan. 1, July 1 or both

Minimum wages or “living wages” are rising more quickly than the state minimum wage in some areas of California. Employers in 30 cities or counties are already required to pay an hourly minimum wage ranging from $15 to more than $17 following their local government wage order or ordinance. The minimum wage will rise again in all of these cities and counties beginning either Jan. 1 or July 1, 2022.

Some wages will increase by a fixed dollar amount, while others are tied to the regional consumer price index. Because the local wage increases vary across municipalities and according to the number of employees, employers should review their individual city ordinances and follow wage posting requirements to ensure compliance.

Employers must follow the stricter wage standard

West Hollywood this year implemented a first-time minimum wage ordinance requiring a minimum wage of $15 effective Jan. 1, 2022, for employers with fewer than 50 employees ($15.50 for employers with 50 or more employees). The ordinance requires the wage to increase again to $16 and $16.50, respectively, on July 1.

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. 

CDA members can view CDA Practice Support’s resource on minimum wage and paid sick leave ordinances. Included is a current schedule of increases for 2022 with links to the relevant city or county ordinance. Also included is the exemption threshold for employers with 25 or fewer or 26 or more employees. The California Minimum Wage notice for 2022 will soon be available for download on the Department of Industrial Relations’ website.