Lesson Last Updated: October 15, 2024

Lesson Highlights

As you may know, minimum wage in California increases every year. Because this is old hat for so many employers, we're going to keep it brief, but link to larger lessons in this course if you need additional information.

In this lesson, we'll cover the following topics:

• The minimum wage update for hourly workers in 2025;
• The minimum wage update for exempt workers in 2025; and
• A quick summary of a ballot initiative that's being decided during the 2024 general election.

2025 Minimum Wage Update for Hourly Workers

Effective January 1, 2025, the minimum wage is $16.50 per hour for almost all California employers, unless the location an employee is working in has a "more protective" local minimum wage. [1] This number goes up annually and can get a bit complicated, depending on where your employees work. Be sure to read the full lesson here if you have any confusion, or contact your attorney if you're concerned about your compliance! If your workplace will be affected by the change, suggested next steps include preparing updated employee paperwork memorializing the change and updating your payroll settings.

2025 Minimum Wage Update for Exempt Workers

When the state's hourly minimum wage goes up, so does the minimum salary for exempt workers! If you are utilizing the executive, administrative, or professional exemption, then be aware that the new minimum annual salary as of 2025 is $68,640. That's about a $2K increase from 2024. Read more about it here! If your workplace will be affected by the change, suggested next steps include preparing updated employee paperwork memorializing the change and updating your payroll settings.

Proposition 32: Increasing Minimum Wage on an Alternative Timeline

Proposition 32, a ballot measure up for vote during the November 2024 general election, would increase California’s general minimum wage to $18 per hour over time. The speed of the increase depends on employer size, and goes like this:

• For employers with 25 or fewer employers, the minimum wage would increase to $17 per hour on January 1, 2025, and $18 on January 1, 2026; and
• For employers with 26 or more employers, the minimum wage would immediately increase to $17 upon passage into law, and then increased again to $18 on January 1, 2025 (so barely a few months later!).

Starting in 2027, the minimum wage increases would would be tied to the U.S. Consumer Price Index (CPI-W). This proposition gives the Governor the power to suspend these increases twice if there is an economic downturn. [2]

This proposition would not affect any existing, higher minimum wage requirements (such as those for healthcare workers or based on local ordinance).

It's up to you to vote your conscience, but note that passing this proposition means that you'll need to be prepared to immediately increase wages for any employees that are currently earning less than $17 per hour. Keep your eyes out for an update after election day from us on this!

BIG UPDATE: This initiative did NOT pass. We will keep this section of the lesson here for historical accuracy, but note that it does not have bearing on how you as an employer pay your employees. Stick with the numbers at the top of the lesson!

This Lesson's Sources:

[1] Minimum Wage Increase, Director of Finance Determination and Certification

[2] Proposition 32 Analysis