California’s minimum wage rate will rise to $16.00 per hour, beginning on January 1, 2024, due to a cost-of-living increase provision found in the state’s minimum wage law.
California Labor Code section 1182.12 requires the state to determine annually if the minimum wage rate should be adjusted for inflation. The California Department of Finance is responsible for reviewing U.S. Bureau of Labor Statistics data. This year, although the relevant consumer price index (CPI) increased 6.16 percent, the law limits the minimum wage increase to 3.5 percent. The Department of Finance announced its determination on July 31, 2023.
Many local minimum wage ordinances establish a higher minimum wage than the state’s for employees working within their jurisdiction.
California employers may also want to note that the minimum salary to qualify for the executive, administrative, and professional employee exemption from the state’s minimum wage and overtime requirements will also increase on January 1, 2024, because that figure is tied to the state’s minimum wage. The new minimum salary will increase to $66,560, an increase of $2,080.
Steeper increases may be on the horizon as Californians will be able to vote on a new measure in 2024 that would raise the state’s minimum wage to $18.00 per hour. If the measure passes in next year’s election, the minimum wage would immediately jump to $17, before increasing to $18 on Jan. 1, 2025.