Statewide Minimum Wage Increase
Effective January 1, 2025, California’s statewide minimum wage increases to **$16.50 per hour** for all employers, regardless of size. This applies to all hourly, non-exempt workers, including those in industries without special wage orders that already have higher rates. Employers must ensure every hourly worker receives at least this rate at minimum. If a city or county has its own higher minimum wage law, the employer must follow the higher standard.
Impact on Exempt Employee Salary Thresholds
Because the minimum wage has increased, that also raises the minimum salary required for employees classified as “exempt” (administrative, executive, professional exemptions). To qualify under those exemptions, exempt employees must earn at least **$68,640 annually** (which works out to the new hourly rate multiplied over a full-time schedule). Employers should review which workers are classified as exempt and adjust salaries if necessary to meet the updated standard.
Industry-Specific Minimum Wages
Certain industries have higher minimum wage requirements than the state standard. For example, fast food workers and employees in many health care facilities are covered by laws that mandate higher pay. Employers in those sectors must pay at least those higher rates. It’s essential for employers to check whether their business is subject to these special wage laws.
Local (City or County) Minimum Wage Ordinances
In addition to state law, many California cities and counties enforce local minimum wages that are higher than the state level. These local minimums may also increase on annual schedules or tied to cost-of-living metrics. Employers must pay the wage that is highest among state, federal, or local laws. This means if you operate in a jurisdiction with a higher local wage, you must follow the local rate.
Important Compliance Steps for Employers
- Audit all hourly employee pay rates to ensure no one is paid below $16.50/hour.
- Review exempt status designations and adjust salaries to meet the new minimum for exempt employees.
- Verify whether your business is covered by industry-specific wage laws and applicable local ordinances.
- Update payroll systems and job classifications to reflect new wage rates.
- Post any required wage notices or posters reflecting the updated minimum wage where required by state and local law.
What Employees Should Know
- If you are hourly and non-exempt, your pay should reflect at least $16.50/hour starting January 1, 2025.
- If you are “exempt”, check whether your salary meets the minimum required for exempt status—if your earnings are below the threshold, you may need to be reclassified and eligible for overtime.
- Find out whether your city or county has a wage rate higher than the state minimum—if yes, your employer should pay you the higher one.
- If you believe your rate is below the minimum required, you can inquire with HR or seek guidance from the state's labor department.
Timeline & Key Effective Dates
The main effective date is January 1, 2025, for the statewide rate. Local ordinances may also have scheduled increases, often on July 1 or at other preset dates. Employers should monitor those local schedules and ensure compliance by those dates.
Conclusion
The 2025 increase in California’s minimum wage to $16.50/hour means changes for both employers and employees. Employers must update payroll processes, salary thresholds for exempt workers, and conform to local wage laws where applicable. Employees should confirm that they receive the correct rate and understand their classification. To compare your pay stub layout, check that your wage, pay period, and classification are clearly shown—generate a sample pay stub now—and see standard fields in our Regular Pay Stub guide.
