California’s minimum wage is set to increase to $16.00/hour for all employees beginning on January 1, 2024. The new minimum wage obligation is applicable to all employers regardless of size.

Under California Labor Code § 1182.12 (c), once minimum wage exceeds $15.00/hour, the Director of Finance is required to determine on or before August 1 whether the minimum wage must be adjusted for inflation, and if it is, to set the increase by the lesser of 3.5% or the rate of change for the United States Bureau of Labor Statistics Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W).

Between July 1, 2022 and June 30, 2023, the U.S. CPI-W increased by 6.16% compared to the same period from July 1, 2021 and June 30, 2022.

As a result, on July 31, 2023, Director of the Department of Finance Joe Stephenshaw sent a letter to Governor Newsom and members of the state legislator determining and certifying that effective January 1, 2024, the minimum wage for all employers will increase by 3.5% and be set to $16.00/hour.

The increase in minimum wage affects both non-exempt and exempt employees. Beginning January 1, 2024, exempt employees must earn a minimum of $66,560/year on a salaried basis. Under California Industrial Welfare Commission Order § 11040, the minimum salary requirement for exempt employees is set as two times the state minimum wage for full-time employment, with full employment defined as 40 hours per week.