California Regulators Certify State Minimum Wage for 2024—It Will Increase to $16.00
On August 1, 2023, the California Department of Finance sent a letter to Governor Gavin Newsom certifying the statewide minimum wage increase for next year. As of January 1, 2024, the state-level minimum wage will jump by 3.5 percent—increasing from $15.50 per hour to $16.00 per hour. In this article, our California employment attorney highlights some key things that employers should understand about the minimum wage increase.
California Law Built Automatic Adjustments Into the Statewide Minimum Wage
Unlike most states, California contains a provision that requires the automatic annual review—and likely upward adjustment—of the state minimum wage. Under California Labor Code § 1182.12, the California Department of Finance must assess the changes in the Consumer Price Index (CPI) over the preceding 12 month period from July 1st to June 30th. The minimum wage will then increase by the amount of CPI, up to a maximum increase of 3.5 percent, rounded to the nearest ten cent increment. For 2024, the Department applied the maximum 3.5 percent increase, and the minimum wage will jump to $16.00.
Additional Effects: White Collar Wage and Hour Exemption Tied to California Minimum Wage
In California, the wage and hour exemption for “white collar” workers is tied directly to the state’s minimum wage. For a salaried employee to be properly exempted from minimum wage and overtime requirements on the grounds that they are a professional, executive, or administrative employee, they need to earn a sufficient total salary of two times minimum wage. How much they need to be paid will adjust each year, in proportion to the adjustment applied to the California minimum wage. For the year 2024, the annual threshold for a white collar wage and hour exemption in California will be $66,560. Similar to the minimum wage, it is increasing by 3.5 percent, up from $64,480 in 2023.
Salary alone does not meet the test for classifying your employees as exempt. Employers must also meet the “duties test,” to ensure that the employee is actually performing exempt duties over 50% of their day.
California Employers Must Ensure Full Compliance With Minimum Wage Laws
Ensuring full compliance with minimum wage laws—and other wage and hour regulations—is imperative for employers in California. Our state has more comprehensive wage and hour regulations than federal law. Further, there are some local municipalities in California that have even more extensive requirements than does state law. Non-compliance exposes employers to the risk of a lawsuit as well as the risk of significant financial penalties. Employers should proactively ensure continued compliance with minimum wage laws when the new rate takes effect in January of each year.
Contact Our California Wage and Hour Lawyer for Employers Today
At the Law Office of Karen J. Sloat, APC, our California wage and hour lawyer is an experienced advocate for employers. If you have any specific questions about state minimum wage or another wage and hour matter, please do not hesitate to contact us today for a confidential appointment. We represent employers in the Coachella Valley, Riverside County, and throughout all of California.