The California Labor Code mandates the state’s Director of Finance annually determine and certify whether an adjustment for inflation should be applied to the minimum wage once it reaches $15.00 per hour. California’s minimum wage is currently $16.00 per hour.  

This year, the Department of Finance calculates that the average U.S. Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W) increased by 3.18% from July 1, 2023, to June 30, 2024. Consequently, the minimum wage will rise by 3.18% to $16.50 per hour, effective January 1, 2025. 

Employers should also keep in mind that this increase will also affect the minimum salary requirements for full-time exempt employees (currently $66,560 per year or $5,546.67 per month).  Effective January 1, 2025, the minimum salary for a full-time exempt employee will increase to $68,640 per year or $5,720 per month. 

To prepare for the upcoming increase employers should: 

• Update Payroll Systems: Ensure that payroll systems are adjusted to reflect the new minimum wage rate beginning January 1, 2025. 

• Budget Adjustments: Review and adjust budgets to accommodate the increased labor costs. 

• Employee Communication: Be prepared to inform employees about the wage increase and how it will affect their pay by posting updated mandatory notices.  

• Compliance Check: Verify that all wage-related policies and practices comply with the new minimum wage requirements.