California’s 2025 minimum wage law raises hourly rates statewide, while many cities and industries apply separate local pay rules. Employers must follow updated wage requirements for hourly, exempt, tipped, fast-food, and healthcare workers across California.
By Brad Nakase, Attorney
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California Minimum Wage Law has continued to evolve. California was the first to introduce or adopt the $15 minimum wage for big businesses in the form of a statutory minimum wage in 2022, which has been increasing annually based on the public CPI-W data released by the Labor Department.
California has legislated a rise in minimum wage, which stands at $16.50/hour from Jan 1, 2025.
Since employers are not allowed to take a tipped credit under California minimum wage law, tipped workers do not have their own rate.
Given the aforementioned rates, Proposition 32, California’s minimum wage campaign initiative, is set to be put to a vote on election day. It would raise the state’s minimum salary to $18.00 for large companies & $17.00 for smaller employers on January 1, 2025, in accordance with the official California Minimum Wage Law.
Since numerous cities are raising their minimum pay rates while they remain below the $18 threshold, if the increase in wages is authorized, it would have a major effect on the local minimum wage situation.
California’s many municipal minimum wage rules, which frequently surpass the state and federal minimum pay rates in 2025, require employers to abide by them. These are governed and enforced through the California Minimum Wage Law.
California has over forty local governments that have their own minimum wage laws. Additionally, many of them have switched to indexed rates, which rise according to the relevant CPI (Consumer Price Index) rather than a predetermined schedule.
It should be mentioned that there are no different rates for workers who receive tips on a regular basis because the state prohibits employers from taking tip credits. Additionally, hotel employees in several cities are paid at different rates.
The numerous Californian cities with particular minimum wage rates are updated twice a year, on January 1 and July 1.
Of course, California regularly enacts new employment legislation, and firms ought to stay on the lookout for any changes to the state’s minimum wage. Businesses must ensure they follow the higher of the two rates (local or state) as mandated by the California Minimum Wage Law.
For over ten years, the standard minimum wage (federal) of $7.25 has remained unchanged. This is the longest length of time without an increment in the minimum wage in the history of the country.
As a result of this situation, there have been many new minimum wage laws passed by local governments in recent years. In addition, the minimum wage has become a hot topic in employment law in progressive areas such as the state of California.
It is going to be increasingly hard for employers who are operating in California to monitor the variable minimum wages within the local California minimum wage law as the latter changes from regular spikes to indexing increases.
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