California Minimum Wage Laws

Federal minimum wage law is governed by the Fair Labor Standards Act (FLSA). The current federal minimum wage rate is $7.25 per hour for nonexempt employees. California law complements federal law and, in some cases, prescribes more stringent or additional requirements that employers must follow. Whenever employers are subject to both state and federal laws, the law most favorable to the employee will apply. The Division of Labor Standards Enforcement (DLSE), part of the California Department of Industrial Relations, enforces and investigates minimum wage violation claims.

Minimum Wage Rates

Under California law, “employee wages” include the entire amount of compensation employees receive for their labor or services. Wages may be fixed or based on time, task, piece, commission or other factors.

As of Jan. 1, 2023, California’s minimum wage rate no longer depends on employer size and will be adjusted annually to account for the cost of inflation. On July 27, 2022, California’s Department of Finance certified that based on the annual inflation rate from July 1, 2021, to June 30, 2022, the state minimum wage must increase from $15 to $15.50 an hour for all employers.

The table below outlines previously scheduled rate changes. Employers should note that California law allows the governor to temporarily suspend a rate increase if the state’s economic condition does not support it.

Current Minimum Wage Rate as of January 1, 2023 in California is $15.50 per hour (all employers)

Local Minimum Wage Rates

The tables below provide an overview of California's minimum wage. Click on the links provided for posters and additional wage information, including certain details on coverage, exemptions, tips, deductions, and immigration status.

January Updates

*Applies to employers with 25 or fewer employees

**Applies to employers with 26 or more employees

July Updates

*Applies to employers with 25 or fewer employees

**Applies to employers with 26 or more employees

Tipped Employee Wages

California law does not allow employers to deduct any tip credits from their employees’ wages or to pay tipped employees less than the state minimum wage rate. Tip payments include any tip, gratuity, money or other gift a patron gives an employee over and above the actual amount of the goods, food, drink, items or services the patron received from that business.

Meals and Lodging Credits

If an employee voluntarily agrees in writing, his or her wages may include part of the employer’s cost to provide the employee with meals and lodging. The adjacent table outlines the maximum amounts employers may credit for these items.

However, special rules apply for sheepherders and employees of organized camps. Specifically:

Sheepherder wages may not be offset by meal and lodging credits; and

Organized camps may deduct the entire value of meals and lodging from the salary of a student-employee, camp counselor or program counselor.

Please refer to the California wa ge ordersfor more information on industry-specific meal and lodging credits.

Employees with Disabilities

On Sept. 27, 2021, California repealedthe provision that enabled employers to pay wages below the state’s minimum wage rate to employees who are mentally or physically disabled, or both. As a result of the repeal, the state’s Department of Industrial Relations stopped issuing new subminimum wage licenses on Jan. 1, 2022. Employers with current licenses may be allowed to renew existing licenses under limited conditions.

However, California will continue to allow nonprofit organizations, such as sheltered workshops and rehabilitation facilities, to pay subminimum wage rates to employees with disabilities without requiring individual licenses of these employees until Jan. 1, 2025.

The bill that repealed subminimum wages also requires the State Council on Developmental Disabilities, in consultation with stakeholders and relevant state agencies, to develop a multiyear phaseout plan so that subminimum wages for workers with disabilities cease by Jan. 1, 2025.

Students and Learners

California law allows employers operating an organized camp to pay their student-employees, camp counselors and program counselors as low as 85 percent of the state minimum wage rate. These employers may also deduct the entire value of meals and lodging they provide to these employees.

In addition, employers may obtain special DLSE licenses that allow them to pay their employees a wage as low as 85 percent of the state’s minimum wage rate for each of their first 160 hours of employment in occupations in which they have no previous similar or related experience.

Minimum Wage Rate Exemptions

California’s minimum wage rate requirements do not apply to employees in certain occupations and industries. When applying an exemption, employers should carefully review and apply all qualifications and requirements for that exemption. Notable exemptions apply to:

Individuals who are closely related to their employer (parent, spouse or child); Outside sales personnel; and

Individuals who qualify for an exemption under a California wa g e order.

Notice and Postings

Employers must post and maintain updated information on the state’s minimum wage rate in their employees’ workplaces. Employers may use the most current minimum wa g e poster to satisfy these requirements. Employers covered under one of California’s industry-specific wage orders must also display a copy of the applicable wa g e order.

Penalties

Employers that violate California’s minimum wage laws may be charged with a misdemeanor, punishable by fines of up to $1,000, imprisonment for up to 60 days or both.

The DLSE may also issue citations to any employer that violates the state’s minimum wage laws. Cited employers may be subject to a fine of:

$100 per underpaid employee for each pay period in which the employee is underpaid, for a first offense; and

$250 per underpaid employee for each pay period in which the employee is underpaid, for a second or subsequent violation.

In addition, noncompliant employers may be sued in civil court and ordered to pay:

The difference between what an employee’s wages should have been and what they actually were (plus interest); Liquidated damages (in an amount equal to the wage difference plus interest); and Court costs and reasonable attorneys’ fees.

Employee lawsuits may be filed within two years of when a violation takes place (or within three years for willful violations). Additional fines and penalties may apply to unpaid wages.

This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. It is provided for general informational purposes only. Readers should contact legal counsel for legal advice. © 2017-2022 Zywave, Inc. All rights reserved.