California continues to lead the nation in changes to its minimum wage. Earlier this year, we reported on the minimum wage increase from $16.00 to $16.50 across California, regardless of the employer’s size.
Since this increase went into effect on January 1, 2025, the minimum wage across industries, cities, and counties continues to evolve.
This article will inform you of the critical changes occurring this year and ones to expect in the future.
How Minimum Wage is Calculated
The Consumer Price Index (CPI) measures the change in prices that consumers pay for goods and services. As the CPI increases based on inflation, the minimum wage adjusts to reflect the change in cost of living. California’s minimum wage increase is meant to compensate workers for the change in cost of living.
Federal Minimum Wage
The federal minimum wage is $7.25 and has not increased since 2009. When choosing between the federal or state rate, employers must pay the rate most favorable to the employee. In this case, California’s minimum wage at $16.50 is higher than the federal minimum. Thus, employers must pay employees the California minimum wage.
Local Minimum Wage Ordinances
Employers must comply with local ordinances which may require a minimum wage that exceeds the state rate. The following table is a breakdown of the larger California cities and counties with a rate that increased above the minimum in 2025, but employers should also check their local county and city rules when applying minimum wage:
|
Locality |
Minimum Wage |
Effective Date |
|
Belmont |
$18.30 per hour |
January 1, 2025 |
|
Berkeley |
$19.18 per hour |
July 1, 2025 |
|
Burlingame |
$17.43 per hour |
January 1, 2025 |
|
Cupertino |
$18.20 per hour |
January 1, 2025 |
|
Daly City |
$17.07 per hour |
January 1, 2025 |
|
East Palo Alto |
$17.45 per hour |
January 1, 2025 |
|
El Cerrito |
$18.34 per hour |
January 1, 2025 |
|
Emeryville |
$19.90 per hour |
July 1, 2025 |
|
Foster City |
$17.39 per hour |
January 1, 2025 |
|
Fremont |
$17.75 per hour |
July 1, 2025 |
|
Half Moon Bay |
$17.47 per hour |
January 1, 2025 |
|
Hayward |
$17.36 per hour (26 or more employees); $16.50 per hour (25 or fewer employees |
January 1, 2025 |
|
Los Altos |
$18.20 per hour |
January 1, 2025 |
|
Los Angeles |
$17.87 per hour |
July 1, 2025 |
|
Los Angeles (county) |
$17.81 per hour |
July 1, 2025 |
|
Menlo Park |
$17.10 per hour |
January 1, 2025 |
|
Milpitas |
$18.20 per hour |
July 1, 2025 |
|
Mountain View |
$19.20 per hour |
January 1, 2025 |
|
Novato |
$17.27 per hour (100 or more employees) $17.00 per hour (26-99 employees) $16.42 per hour (25 or fewer employees; employers must pay higher state minimum)
|
January 1, 2025 |
|
Oakland |
$16.98 per hour |
January 1, 2025 |
|
Palo Alto |
$18.20 per hour |
January 1, 2025 |
|
Pasadena |
$18.04 per hour |
July 1, 2025 |
|
Petaluma |
$17.97 per hour |
January 1, 2025 |
|
Redwood City |
$18.20 per hour |
January 1, 2025 |
|
Richmond |
$17.77 per hour |
January 1, 2025 |
|
San Francisco |
$19.18 per hour |
July 1, 2025 |
|
San Jose |
$17.95 per hour |
January 1, 2025 |
|
San Mateo |
$17.95 per hour |
January 1, 2025 |
|
San Mateo (county) |
$17.46 per hour |
January 1, 2025 |
|
Santa Clara |
$18.20 per hour |
January 1, 2025 |
|
Santa Monica |
$17.81 per hour |
July 1, 2025 |
|
Santa Rosa |
$17.87 per hour |
January 1, 2025 |
|
Sonoma |
$18.02 per hour (26 or more employees) $16.96 per hour (25 or fewer employees)
|
January 1, 2025 |
|
South San Francisco |
$17.70 per hour |
January 1, 2025 |
|
Sunnyvale |
$19.00 per hour |
January 1, 2025 |
|
West Hollywood |
$19.65 per hour |
January 1, 2025 |
Updates to Minimum Wage Requirements for the Fast-Food industry:
Effective April 1, 2024, the minimum wage for fast-food workers at certain chain establishments increased to $20 per hour. This was the result of Assembly Bill 1229 which established the Fast-Food Council. The Council can make future minimum wage increases affecting fast-food workers. Employers should note the council discussed a possible increase from $20.00 to $20.70 per hour. A final vote on this increase is expected later this year.
The fast-food minimum wage applies if three criteria are met:
(1) the restaurant must be a “limited service restaurant” meaning one that offers limited or no table service;
(2) the restaurant is part of a chain of at least 60 establishments nationwide; and
(3), the restaurant is primarily engaged in selling food and beverages for consumption.
There are notable exceptions to this law: restaurants that produce or sell bread as a stand-alone item; restaurants located within grocery establishments; and restaurants connected to or operating within airports, hotels, event centers, theme parks, museums or gambling establishments.
It is important to note that cities cannot require a higher minimum wage for only fast-food workers. However, cities can set a minimum wage above $20 which broadly applies to all employees. Fast-food employers must pay the higher rate.
Updates to Minimum Wage Requirements for the Healthcare Industry:
The healthcare industry has a different set of rates that dictate their minimum wages based on the facility type and county size.
The following updates and increases are set to take effect January and July 2025:
|
Type of Health Care Facility |
Minimum Wage |
Effective Date |
|
Hospital or Integrated Health System (with 10,000 or more full-time employees) |
$24 |
July 1, 2025 |
|
Dialysis Clinics |
$24 |
July 1, 2025 |
|
Safety Net Hospitals |
$18.63 |
July 1, 2025 |
|
Covered Health Care Facilities run by Large Counties (more than five million people as of 1/1/23) |
$24 |
July 1, 2025 |
|
Covered Health Care Facilities run by Medium Counties (250,000 to five million people as of 1/1/23) |
$21 |
January 1, 2025 |
|
Covered Health Care Facilities run by Small Counties (less than 250,000 people as of 1/1/23) |
$18.63 |
July 1, 2025 |
Updates to Minimum Wage Requirements for Hotel Workers
Some cities set industry specific minimum wage ordinances for groups such as hotel workers. Effective July 1, 2025, hotel workers in West Hollywood will have a minimum wage of $20.22 and employees of independent businesses operating on hotel properties will have a minimum wage of $21.01.
Additionally, the Los Angeles City Council approved an ordinance to increase the minimum wage for hotel workers and airport employees to $22.50 effective July 1, 2025, with an annual increase of $2.50 over three years.
Overtime
The increase in minimum wage will also impact the overtime rates. Overtime rates should be calculated based on the minimum wage paid to the employee.
For example, an employee who is paid the California minimum wage of $16.50 per hour would receive overtime of $24.75 (time and one-half) or $33 (double time) based on the type of overtime work.
Exempt Employees
The California minimum wage directly impacts the base salary that employers can pay exempt employees. As a rule, exempt employees must receive at least twice the state’s minimum wage. With the state’s minimum wage increase to $16.50, the minimum salary for exempt employees will also increase to $68,640.
It is important for employers to note the salary threshold for exempt employees is based on the California minimum wage and not on the city, county or industry specific minimum wage.
Other Considerations Affected By Minimum Wage Increase
If you have an employee that is paid on a commission basis or has some form of alternative pay plan that plan should be reviewed for compliance.
In addition, employers should update their Labor Code 2810.5 Forms for employees if their pay is changed. www.dir.ca.gov/dlse/lc_2810.5_notice.pdf
The Future Of Minimum Wage In California
Since 2017, the California minimum wage increased by at least $.50 every year on January 1st. Following this trend, employers can expect a minimum increase of $.50 from $16.50 to $17.00 on January 1st, 2026. Employers should work with experienced human resource or employment professionals is designing their pay structures to ensure both compliance and minimization of costs.
If you have any questions please feel free to reach out to one of our experienced Employment Attorneys at www.berliner.com or our Department Chair at Christine.Long@berliner.com.