If the inflation rate exceeds the 7% threshold as expected, the $15.50 minimum wage will apply to all California workers. The California Department of Finance has projected that inflation will exceed 7.6% during this time, thereby triggering the increase in minimum wage effective January 1, 2023. ![]() ![]() The law specifies, however, that if inflation increases by more than 7% between fiscal years 20 (which ends on June 30), then the state’s minimum wage shall increase by 3.5%. Small Businesses Face Substantial IncreaseĬalifornia’s current minimum wage law, which was passed in 2016, aimed to raise the minimum wage in phases until it reached $15 an hour for all employers in 2023.What are the five biggest takeaways for California employers given these critical developments? Increased wages mean higher employer-side payroll tax obligations and other related costs and will further strain businesses that are already reeling from the impact of the COVID-19 pandemic and the current economic environment. ![]() Combined with labor shortages and supply chain disruptions, the costs associated with a higher minimum wage will undeniably impact businesses in 2023. The minimum wage was supposed to reach $15 an hour for all employers in the Golden State by January 1, 2023, but Governor Gavin Newsom recently projected that the rate will rise to $15.50 due to record-high inflation. Raising wages has been a major focus in the California Legislature – as well as in federal and state courts – and employers in the state will likely see a higher wage hike than expected next year. Please contact your favorite CDF attorney if you have any questions about local or state minimum wage regulations in California.California leads the nation in the call for higher minimum wages, emanating from the agricultural fields and reaching nearly every industry. If this ballot measure passes, and many expect that it will, the minimum wage in the Golden State would go to $16 per hour on January 1, 2023, and move up by $1 an hour for all hourly employees annually, starting January 1, 2023, until reaching $18 an hour on January 1, 2028. This increase is most significant for smaller employers, who currently have a salary floor of $58,240 annually.įinally, in other minimum wage developments, earlier this week supporters of California’s ballot initiative to raise California’s minimum wage to $18 per hour announced having submitted more than 1 million signatures - way beyond the 623,000 required to land it on the November ballot. ![]() This development also increases the minimum salary for most exempt employees in California to $64,480 annually and $5,373.33 per month, effective January 1, 2023. Governor Newsom subsequently announced that all California employers will be required, regardless of size, to pay a new minimum wage of $15.50 per hour, effective January 1, 2023. Thursday, the California Department of Finance said it projects inflation for the 2022 fiscal year - which ends June 30 - will be 7.6% higher than the year before, triggering the minimum wage increase. The California minimum wage is currently $15 an hour for employers of 25 or more employees and $14 an hour for all employers of less than 25 employees.Ĭalifornia law says the state minimum wage must increase to $15.50 per hour for everyone in 2023 if inflation increases by more than 7% between the 20 fiscal years.
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