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Oakland—California’s minimum wage will increase to $15.50 per hour for all employers on January 1, 2023. Some cities and counties in California have a local minimum wage that is higher than the state rate.

State law requires that most California workers be paid the minimum wage. Workers paid less than the minimum wage are urged to contact the Labor Commissioner’s Office in their area to file a wage claim.

The change in the minimum wage also affects the minimum salary an employee must earn to meet one part of the overtime exemption test. Exempt employees are not subject to the payment of overtime for working overtime hours. An employee must earn no less than two times the state’s minimum wage for full-time work to meet this initial requirement of the exemption test. As of January 1, 2023, employees in California must earn an annual salary of no less than $64,480 to meet this threshold requirement.

In 2016, California passed a law to raise the minimum wage to $15.00 per hour statewide by 2022 for large businesses with 26 or more employees, and by 2023 for small businesses with 25 or fewer employees. This law increased the minimum wage over time, consistent with economic expansion while providing safety valves if adverse economic conditions emerged.

One of the protections outlined in the minimum wage law involves an annual review of the United States Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W) by the Department of Finance. This past July, the Department of Finance found that the inflation rate had increased by 7.9%, which required an increase in the minimum wage by 3.5%, resulting in the $15.50 per hour rate for 2023.

After 2023, the minimum wage will increase based on the lesser of 3.5 percent and the rate of change in the averages of the two most recent U.S. CPI-W unless those averages are negative. If the averages are negative, there shall be no increase or decrease in the minimum wage for the following year.

Employers must post information on wages, hours and working conditions at a worksite area accessible to employees. Notices for the wage orders in English and Spanish can be downloaded and printed from the workplace postings page on the DIR website.

Employers must ensure that the wage rate is displayed on the employee’s pay stub, and that employees are paid at least the minimum wage even when employees are paid at piece rate.

Employees with work-related questions or complaints may contact the Labor Commissioner’s Office Call Center in English or Spanish at 833 LCO-INFO (833 526-4636).

Contact: Communications@dir.ca.gov, (510) 286-1161

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