Minimum Wage in California 2025: State and City Rates Explained

The minimum wage in California will rise to $16.50 per hour in 2025, with some local rates set even higher. Employers must follow state, city, and industry-specific wage regulations carefully to remain compliant and avoid penalties.

By Douglas Wade, Attorney

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Table of Contents

1. Introduction

2. What is the minimum wage in California in 2025?

3. How should owners of small businesses get ready for increases in the minimum wage in California in 2025?

4. Frequently Asked Questions

Introduction

There are multiple minimum wages in California.

Businesses may find the many minimum wage regulations in California to be perplexing and burdensome.

The minimum wage in California in 2025 is set by legislation and is correlated with the cost of living. To put it another way, workers always receive a fair income that enables them to live comfortably in the state with wage increases that keep pace with inflation.

California employers must contend with numerous local minimum wage rules in addition to the state and federal minimum wages. The minimum wages set by numerous counties and localities in the state are much greater than the federal and state minimum wages.

According to the local CPI (Consumer Price Index), which measures inflation, the local minimum wages normally rise annually. Additionally, certain areas have a different, lower minimum wage regulation specifically for small firms. In accordance with the rate of inflation, the Director of Finance (California) decides whether to raise the minimum wage before or on August 1st of each year.

What is the minimum wage in California in 2025?

The minimum wage in California in 2025 will be $16.50 per hour for every hourly staff starting on 1^st January 2025, and $68,640 will be the base yearly pay for exempt workers. Employees who get tips do not have a separate minimum wage in California in 2025.

There are, however, several exceptions to this minimal wage. The minimum pay for fast food workers who are employed by a company with more than sixty locations nationwide is $20 per hour. The minimum salary for certain employees in healthcare facilities ranges from $18 to $24, based on the kind of facility.

California’s labor rules are made much more complex by local regulations. Operating in several locations may expose you to different minimum wage rates in just one day. You risk wage & hour lawsuits if your figures are incorrect.

Please take note that the minimum wage (federal) is still at $7.25 per hour, even though the minimum (California) wage is $16.50 per hour.

Certain jurisdictions have lower minimum wages or exemptions for nonprofit organizations. For young exempt employees who are categorized as “learners,” exemptions and reductions may also be applicable. Certain industries, such as the healthcare and automobile sectors, may also have higher minimum wage requirements. There is no distinct tipped minimum rate in California since, in contrast to other jurisdictions, employers are not permitted to accept tip credits.

How should owners of small businesses get ready for increases in the minimum wage in California in 2025?

Increases in the minimum wage have certain advantages, but they may also provide difficulties for small firms. A raised minimum wage is associated with more jobs, according to a recent study. In California, for instance, the fast food business created 11,000 fresh positions in just four months after Governor Gavin Newsom signed legislation raising the minimum wage for the industry.

There are strategies for staying ahead of the pack when it involves raising the minimum wage. By staying informed about minimum wage increases, small businesses can prevent surprises by adjusting prices & compensation appropriately.

You should review your financial records and budget if the minimum wage hike is imminent. You can get ready for the transition by carefully going over your operating expenses. Paying all of your employees, not just those who benefit from the higher minimums is important. These new regulations may reduce the gap between your more senior personnel and hourly workers, which could have an effect on the workplace.

In order to maintain compliance, you might have to make some difficult financial choices. That can entail raising prices, reevaluating your operating hours, or laying off employees. It’s critical to advise your team of your decision.

The effect on your company can be reduced by ensuring that professional staff members are informed of the modifications and how they might be impacted. Lastly, informing clients of any price adjustments might help to guarantee that they are aware of and ready for the changes.

Frequently Asked Questions

Do you have further inquiries about California’s wage requirements? Continue reading.

1. What is the minimum wage in California in 2025?

For all company sizes, the statewide minimum wage in California in 2025 is set to be $16.50 an hour as of January 1, 2025. However, minimum wage rules in other areas may be greater than the state’s minimum wage.

California has very high living expenses, particularly in big cities like Los Angeles and San Francisco, therefore workers must be paid more to maintain the same quality of life as those in less expensive areas. Workers can make enough to survive thanks to the minimum wage, which also lessens income disparity.

2. What does a good California hourly wage look like?

Using the daily wage calculator, the Dept. of Urban Studies & Planning at MIT determined the minimum pay, poverty wage, and living wage for families in different states. Importantly, their data is refreshed every January, so more recent alterations, like as inflation, won’t be reflected in these figures.

MIT’s research indicates that a single individual in California earning $27.32 per hour in January 2024 was earning a “living wage.” The poverty wage of $9.83 per hour and the minimum wage of $16.00 per hour in 2024 are contrasted with this.

In contrast to the minimum pay of $16.00 per hour and the poverty wage of $8.80 per hour, a living wage for two adults residing together with only one person working is $36.35 per hour.

The minimum pay is $16.00 per hour, the poverty wage is $4.91 per hour, and the living wage for two adults residing together who simultaneously work is $18.17 per hour.

These all assume that you are childless and that your 2024 minimum salary is $16.00 per hour, which will increase to $16.50 per hour from January 1, 2025.

Depending on how many people in the family work and how many children you have, the living wage estimate varies.

3. In California, what are full-time hours?

According to the California Labor Code, 40 hours per week is considered full-time. However, it is up to the company, and some might consider fewer hours to be full-time. Anyone in California who works at least thirty hours a week for a firm with 50 or more workers is entitled to benefits under the Affordable Care Act.

4. Is $50,000 a year enough to support a person in California?

It will be difficult to make ends meet in California with $50,000 annually. In order to make a living, one needs to make some compromises due to the high expenses and the state’s comparatively high income tax burden.

Even with a respectable salary, it could be challenging to pay for everything in the state because much of it is highly costly. It can make sense to search for more reasonably priced locations if you have a $50,000 annual budget. Given the cheaper cost compared to other regions of the state, locations like Sacramento and Riverside can be suitable choices.

Additionally, you might land a better-paying job, which would increase your monthly income. Another option is to find employment that pays more for working on holidays or during odd hours.

Living expenses in California are often higher than those in other regions of the nation. However, if you are prepared to be innovative, you can save money in a variety of ways. A person might live happily in California on $50,000 annually with a little preparation.

5. How are rates for the local minimum wage set and maintained?

In California, different towns and counties’ ordinances define and adjust the local minimum pay rates. Frequently greater than the minimum wage imposed by the state, some local governments determine their particular minimum wage rates. The local economy, changes in the cost of living, and the objectives of public policy are some of the factors that affect how these rates are determined and updated.

6. What are the consequences of breaking California’s minimum wage laws?

An employer who fails to pay a worker correctly faces back pay to make up the gap between what was paid and what should have been paid, as well as a $50 penalty for every underpaid pay period.

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Minimum Wage in California 2025: State and City Rates Explained

Introduction

What is the minimum wage in California in 2025?

How should owners of small businesses get ready for increases in the minimum wage in California in 2025?

Frequently Asked Questions

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