Starting January 1, 2024, the California Department of Finance has announced that the state minimum wage is set to increase to $16 per hour.  This increase will apply to all California employers, regardless of size.  

This increase may come as a surprise with the recent state-wide increase to $15.50 just this past January 2023.  However, due to inflation, the Department of Finance has determined that an increase of 3.5% is appropriate.

This increase will not only impact non-exempt hourly employees.  The hourly increase will adjust the minimum salary requirement for salaried, exempt employees, which is set at two times the hourly minimum wage.  The increase means that as of January 1, 2024, in addition to meeting all of the other exemption criteria, exempt employees must earn a minimum of $66,560 per year to maintain their exempt status.  This is an increase from the current exempt minimum salary requirement of $64,480 per year.

Please keep in mind, there may be city or industry minimum wage requirements that are higher than $16 per hour that must be considered, and as of July 1, 2023, many local ordinances have already increased minimum wage for workers beyond $16 an hour.  For example, the minimum wage in Alameda is now $16.52, Berkeley is now $18.07, Emeryville is now $18.67, Fremont is now $16.80, City of Los Angeles is now $16.78, County of Los Angeles (unincorporated areas only) is now $16.90, Malibu is now $16.90, Milpitas is now $17.20, Pasadena is now $16.93, San Francisco is now $18.07, Santa Monica is now $16.90 ($19.73 for hotel workers), and West Hollywood is now $19.08.

You will be required to provide notice of the pay increase to employees and can do so by ensuring all changes are reflected in a timely wage statement or posting a notice along with other employment law posters in a conspicuous place.

Now is a good time to start preparing to ensure these wage increases are accounted for in next year’s budget and employees are paid properly.

Reprinted with permission from Scott & Whitehead.