What is California’s Minimum Wage?

As of January 1, 2020, California’s minimum wage is $12.00 per hour for companies with 25 employees or less and $13.00 per hour for companies with 26 employees or more.

In 2016, the State of California enacted changes that would increase the state’s minimum wage annually by gradual amounts until it reached a minimum wage of $15.00 per hour. Increases take place on January 1st of every year. Below is a schedule of California’s Minimum Wage over the next few years.

California's Minimum Wage

Who does this impact?

All nonexempt employees working for an employer operating in California. Certain counties and municipalities may also have a minimum wage; in locations where there may be multiple minimum wages, as a general rule a thumb, employers should comply with the highest (most restrictive) rate. For example, if your company that employs less than 25 individuals but is based in Los Angeles, than your employee minimum wage is $13.25 per hour versus the state minimum of $12.00 per hour.

There are a number of cities that have enacted their own minimum wage. It is imperative for employers to consult their tax attorney or tax professional to ensure their compensation policies are inline with the legislation of the geography in which they operate in.

Are there any exceptions?

There are exceptions to the minimum wage for certain types of employees. Two of the more common exceptions are learner employees and exempt employees.

Learners – a learner employee is an individual who has no previous similar or related experience in their occupation. Employers can pay learner employees no less than 85% of the minimum wage for the first 160 hours of the learner’s employment. An employee can be considered a learner employee regardless of age.

Exempt Employee (“white-collar”) – an employee is considered an exempt employee if they meet the following requirements:

  1. 50% of their worktime is devoted to executive, administrative, and or professional duties
  2. Exercise discretion and independent judgement at work and
  3. Earn a salary that is a minimum of twice the state minimum wage for fulltime work.

It is important to note that just because an employee’s salary is twice the state minimum wage, this does not make them an exempt employee. All three requirements must be met to be considered an exempt employee. Unlike non-exempt employees, exempt employees are not entitled to overtime pay.

Other exceptions include mentally or physically handicapped employees working for not-for-profit or rehabilitation facilities, outside sales people, and independent contractors. Note that employers and employees cannot enter into an agreement that waives an employee the right to minimum wage. Employees who receive tips as part of their compensation are also not exempt from California minimum wage. Tips are considered separate to wages and therefore employers must still pay employees the minimum wage.

Minimum Wage is key California cities

Below are certain municipalities who have enacted minimum wages greater than the state minimum wage. These are all effective as for January 1, 2020.

Cities Minimum Wage

Key Take-Aways Employers

  • California minimum wage is set to increase on January 1 of every year through 2023.
  • When counties and municipalities have a minimum wage enacted that is different from the state minimum wage, employers must pay employees the higher of the amount.
  • Employees and employers cannot engage an agreement that waives an employee of their minimum wage.

It is recommended that employers consult their tax attorney and or tax professional regularly to ensure their HR and compensation policies are inline with best practices. Compensation is a key part of the employee-employer relationship; proactive and thoughtful reviews of compensation policies will help build trust with employees while minimizing the risk of legal action.

Recommended Resources:
 

Uncover your strengths and weaknesses with our complimentary assessment. Boost your effectiveness at work and with your team.

Free Resource Library: Access our extensive collection of valuable resources for instant support in your personal and professional growth.

Explore Our Course Library:

Enhance your leadership skills with our diverse selection of courses. Take your abilities to the next level and become a more effective leader and team player.

Testimonials

Our Clients Love the Professional Leadership Institute

Your team will, too! Check out some reviews from our students.
The PLI program was invaluable to our network.
The range of topics delivered, the open dialogue, experience, and examples that PLI brought to each session were outstanding and provided a path for our Franchisees and Managers to look at leadership, coaching, and connecting with their teams in a new light. Many have implemented these strategies in their bakeries and have seen immediate results.
Michelle C.
COBS Bread
Highly recommend to help your team move forward
We have locations around BC and Alberta, so getting people on the same page can be very difficult... Until now. Our entire management team and location managers take the same great courses and then meet monthly online with our coach to apply it to our situation. People are engaged, the courses are excellent, we love our coach, and we are all learning together!
Jason Fawcett
President, Kelson Group
The result has been a transformation of our culture. 
We decided to implement PLI's strategies across the country in over 150 locations and over 3500 employees.  The result has been a transformation of our culture.  People's lives have been positively impacted - professionally and personally.  Morale is high and sales and profits are up as a result.
Daryl Verbeek
Daryl Verbeek
We’ve learned how to fix ongoing personnel issues once and for all
The roadmap laid out set our business up to quintuple in sales.  We've learned how to fix ongoing personnel issues once and for all, attract top talent, and spend our time focused on results, not internal staffing problems.  I highly recommend PLI to you - it's worked for us!
John DeJong
Satisfied Client
I had no idea that running a business could be this fun!
In less than 18 months of working with Trevor, he has transformed my business from being average to exceptional, where mediocrity is not acceptable, where being great is standard.  Working with PLI has allowed me to realize my dream of not simply owning a job, but owning a business.
Justin Bontkes
Principal, Caliber Projects
Our culture has taken major steps forward this year
Our culture has taken major steps forward this year with Trevor’s help.  He is funny, relatable, and his tools are very very practical and have helped us focus and upgrade our teams throughout our retail network. Trevor recently spoke to an employee group, and one person remarked, “I could listen to Trevor all day.”   We would highly recommend Trevor.
Stan Pridham
Founder, KMS Tools
The results have been remarkable
At first, we resisted, “This just won’t work with a law firm.” But we persisted and the results have been remarkable: our client base and profits have steadily improved, and staff engagement and morale is the healthiest its ever been.
Doug Lester
Partner, RDM Lawyers
Helped our fast-growing business become what it is today
I've experienced PLI's approach first hand and it's been crucial to sustaining our growth.  I can't imagine a business that wouldn't benefit greatly from his help.
Brian Antenbring
Founder, TEEMA
Provided practical ways to make positive changes
Trevor was incredibly well-received by the entire organization. He was able to articulate people issues that many of our franchisees were experiencing and provided them with practical ways to make positive changes. We have implemented the Star Chart tool across the organization and see it as vital to building happy, effective teams.
Aaron Gillespie
President, COBS Bread
Scroll to Top

Start Learning Today

For Individuals

Unlock your potential and accelerate your career with sought-after management and leadership skills.

 

Transform Your Organization

For Teams

Book a consultation to discuss your challenges and discover how we can help you build a winning team.

 

Sign Up For Weekly Tips!

Get Weekly Coaching Tips Straight To Your Inbox Every Monday.