California’s Prop 32, an initiative to raise the minimum wage to $18 an hour, has failed by a very narrow margin (49.2% in favor and 50.8% against).  

The failure of Prop 32 means that the state’s minimum wage will increase in accordance with existing law:  

California Minimum Wage Increase for 2025 

• Current Minimum Wage: $16.00 per hour 

• New Minimum Wage: $16.50 per hour (Effective January 1, 2025) 

• Inflation Adjustment: 3.18% increase based on U.S. CPI-W from July 1, 2023, to June 30, 2024 

Impact: 

• Minimum Salary for Exempt Employees: 

• Current: $66,560 per year ($5,546.67 per month) 

• New: $68,640 per year ($5,720 per month) (Effective January 1, 2025) 

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.