Living in California is notably costly, which has driven significant policy changes over the past decade, aiming to increase the California minimum wage for workers across the state. California has one of the highest minimum wages in the United States. However, there’s an active debate about whether this wage is sufficient for low-wage workers to maintain a reasonable standard of living. In response, some business owners report that they have had to increase consumer prices to cover these higher labor costs.
Anyone managing a business in California, from fast food joints to dry cleaning services, must be well-informed about the state’s minimum wage regulations. With rising costs and inflation, knowing the current minimum wage and understanding the most effective methods for compensating employees are essential. This article will clearly explain the state’s minimum wage regulations and the broader legal framework.
What Is the Minimum Wage in California in 2025?
Starting January 1, 2025, the minimum wage for all hourly employees in California will be $16.00 per hour, irrespective of the business size. The presence of local regulations complicates the labor laws further in California. Businesses operating in multiple locations may need to adhere to different minimum wage rates within the same day, and inaccuracies in wage calculations can lead to legal challenges regarding wages and hours.
While California’s statewide minimum wage is $16.00, certain cities and counties mandate a higher rate. For instance, the minimum wage in West Hollywood is currently $19.08 per hour. It’s essential to recognize that while the state minimum wage in California is $16.00 per hour, the federal minimum wage remains at $7.25 per hour.
History of Minimum Wage Rates in California
California’s minimum wage started at $0.16 per hour in 1916 and has been modified numerous times to keep up with economic and inflationary changes. Significant adjustments began in the 1960s to reflect the growing cost of living.
In 2016, Governor Jerry Brown signed a law to increase the minimum wage to $15 per hour by 2022 for larger businesses and by 2023 for smaller businesses to help combat income inequality and support lower-income workers. This law made California a front-runner in the push for higher minimum wages.
As of January 1, 2025, every hourly worker in California earns at least $16.00 per hour, a rate that adjusts with inflation and economic shifts to maintain pace with living costs.
Below is a table showing how the minimum wage has changed in recent years, depending on business size:
| Effective Date | Minimum Wage (Companies with more than 25 employees) | Minimum Wage (Companies with less than 25 employees) |
| 2024 | $16.00 | $16.00 |
| 2023 | $15.50 | $15.50 |
| 2022 | $15.00 | $14.00 |
| 2021 | $14.00 | $13.00 |
| 2020 | $13.00 | $12.00 |
| 2019 | $12.00 | $11.00 |
| 2018 | $11.00 | $10.50 |
| 2017 | $10.50 | $10.00 |
Local Minimum Wage Rate Variation
The minimum wage in California varies by county and city. For example, San Francisco’s minimum wage is $18.07 per hour. Local labor laws mandate that employers display an official minimum wage poster at their business locations, typically near the entrance or other easily visible areas for both customers and employees. Should the minimum wage increase, employers must update and display a new poster reflecting the change.
The minimum wage in Los Angeles is $16.78 per hour, while in Los Angeles County, it is slightly higher at $16.90 per hour. Since the wages differ between the city and the county, employers must stay informed through the LA County website, especially as wage adjustments and other labor law changes could impact their operations. An increase to the minimum wage in Los Angeles County will take effect on January 1, 2025.
San Diego has a set minimum wage of $16.85 per hour, which applies to all businesses. This means that whether a business has 28 employees or six, the wage rate remains the same at $16.85 per hour.
Here’s a city-wide minimum wage rate in California:
| Location | 2025 Standard Minimum Wage | 2025 Minimum Wage for Smaller Businesses |
| West Hollywood | $19.08 | Not Applicable |
| Mountain View | $18.75 | Not Applicable |
| Emeryville | $18.67 | Not Applicable |
| Sunnyvale | $18.55 | Not Applicable |
| Berkeley | $18.07 | Not Applicable |
| San Francisco | $18.07 | Not Applicable |
| El Cerrito | $17.92 | Not Applicable |
| Palo Alto | $17.80 | Not Applicable |
| Cupertino | $17.75 | Not Applicable |
| Los Altos | $17.75 | Not Applicable |
| Santa Clara | $17.75 | Not Applicable |
| Redwood City | $17.70 | Not Applicable |
| Sonoma | $17.60 (More than 25 employees) | $16.56 (Up to 25 employees) |
| San Jose | $17.55 | Not Applicable |
| Petaluma | $17.45 | Not Applicable |
| Santa Rosa | $17.45 | Not Applicable |
| Belmont | $17.35 | Not Applicable |
| San Mateo | $17.35 | Not Applicable |
| South San Francisco | $17.25 | Not Applicable |
| Milpitas | $17.20 | Not Applicable |
| East Palo Alto | $17.10 | Not Applicable |
| Burlingame | $17.03 | Not Applicable |
| Half Moon Bay | $17.01 | Not Applicable |
| Foster City | $17.00 | Not Applicable |
| Pasadena | $16.93 | $15.00 |
| Hayward | $16.90 | $16.00 |
| Malibu | $16.90 | Not Applicable |
| Santa Monica | $16.90 | Not Applicable |
| San Carlos | $16.87 | Not Applicable |
| Novato | $16.86 (More than 100 employees) | $16.60 (26 to 99 employees) |
| San Diego | $16.85 | Not Applicable |
| Fremont | $16.80 | Not Applicable |
| Los Angeles | $16.78 | Not Applicable |
| Menlo Park | $16.70 | Not Applicable |
| Daly City | $16.62 | Not Applicable |
| Alameda | $16.52 | Not Applicable |
| Richmond | $16.17 | Not Applicable |
| Oakland | $15.97 | Not Applicable |
| Los Angeles County | $15.96 | Not Applicable |
| San Leandro | $15.50 | Not Applicable |
Does California Have a Different Minimum Wage for Tipped Workers?
California maintains a single minimum wage rate for all employees, including those who earn tips. Every worker is entitled to earn at least the minimum wage the state sets, independent of the tips they might collect.
All employers, including restaurants, must adhere to this rule for their hourly employees, whether they are exempt or non-exempt from overtime rules. It’s important to note that exempt employees, who usually receive a salary, are not subject to minimum wage regulations.
What Is the Overtime Minimum Wage Law?
Employees who work more than 40 hours a week or exceed 8 hours a day are eligible for overtime pay. According to the Fair Labor Standards Act (FLSA), employers must pay overtime when an employee works more than 40 hours in a week.
In California, the overtime wage is $24.00 per hour, 1.5 times the state’s standard minimum wage of $16.00 per hour. The actual minimum wage can vary by city within the state.
Furthermore, California law defines a standard workday as 8 hours. Employees who exceed this daily limit or who work more than six consecutive days are entitled to enhanced pay rates.
Employees receive one and a half times their usual pay rate for hours worked over eight and up to 12 in a single day and for the first eight hours on the 7th consecutive day of work. They are paid double their regular rate for hours worked beyond 12 in a day or for any hours worked past eight on the 7th consecutive day.
California Minimum Wage: Compliance and Exemptions for Employers
Employers are required to pay the highest applicable wage rate, whether set by federal, state, or local standards. Employers must comply with local requirements in areas where the local minimum wage is higher than state or federal levels. Additionally, there are specific regulations for exempt employees, who must be paid at least twice the state minimum wage for full-time work, equating to a minimum annual salary of $66,560 in 2025.
There are also exemptions to the minimum wage requirements, including:
- Specific Exemptions: Certain job roles and direct family members of the employer are not subject to the minimum wage. This includes outside salespeople, apprentices registered with the State Division of Apprenticeship Standards, and the employer’s parents, spouse, or children.
- Learners: Employees who are new to a position and lack relevant experience may receive a salary of at least 85% of the minimum wage, rounded to the nearest five cents, for their initial 160 hours of work.
- Employees with Disabilities: Employees who are either mentally or physically disabled are exempt from the state minimum wage laws. Nonprofit organizations employing such individuals are also exempt until January 1, 2025.
- Employee Count Relevance: The requirement to pay minimum wage applies to all employers, regardless of company size, unless specific legal exemptions apply.
Preparing Business Owners for Minimum Wage Increases
As minimum wage rates increase, small business owners face new financial challenges but can also find opportunities for strategic planning. Here are some tips you can follow:
- Stay informed about impending changes in minimum wage laws. This allows businesses to proactively adjust their pricing and compensation strategies rather than react unexpectedly.
- Before a minimum wage hike, business owners must review their budgets and financial statements. Examining operational costs will clarify how the wage increase will impact the business. It’s essential to evaluate the wages of all employees, not just those who will directly benefit from the increased minimum wage. This review helps assess the potential effects on wage parity within the company, which may influence team dynamics and morale.
- In response to higher labor costs, business owners might need to make significant financial decisions. These could include reducing staff, increasing product prices, or modifying business hours. Each choice carries its own set of implications, and it’s vital to weigh these carefully.
- It is crucial to keep employees informed about how changes in wage policies affect their compensation and job status. Clear communication helps manage expectations and maintain a positive work environment. Additionally, discussing price adjustments with customers is important. Transparent communication ensures that customers are not surprised by changes, helping to maintain trust and understanding.
By taking these steps, small business owners can comply with new wage requirements and position their businesses to adapt successfully to financial shifts.
Conclusion
California’s minimum wage policies for 2025 reflect the state’s commitment to ensuring fair compensation for all workers amid rising living costs. With a minimum wage set at $16.00 per hour statewide, businesses must stay updated on local variations, such as West Hollywood’s $19.08 per hour rate. This broad spectrum of rates underscores the importance of compliance with both state and local laws.
Additionally, employers must be aware of specific exemptions and regulations for different employee categories, such as learners and those with disabilities. As the minimum wage increases, businesses must strategically plan to manage costs and maintain operational efficiency. This includes budgeting for higher wages, possibly adjusting prices, and ensuring clear communication with both employees and customers. Adapting to these changes thoughtfully can help businesses navigate financial challenges and sustain their operations effectively.
Frequently Asked Questions
What is the impact of city and county regulations on minimum wage in California?
In California, many cities and counties set their minimum wages higher than the state minimum due to differences in the cost of living. For instance, San Francisco’s minimum wage is $18.07 per hour in 2025. Employers must follow the highest applicable rate, whether set by the state, federal government, or local jurisdiction.
Are there any exceptions to the minimum wage laws in California?
In California, some workers do not qualify for the minimum wage. This exemption applies to outside salespersons and certain relatives of the employer, such as parents, spouses, children, and apprentices. Additionally, learners in the initial 160 hours of employment in a new occupation may earn at least 85% of the current minimum wage.
How does the minimum wage vary for different types of businesses in California in 2025?
In 2025, the general minimum wage in California is $16.00 per hour. Fast-food restaurant employees must be paid at least $20.00 per hour starting April 1, 2025. Depending on the facility type, healthcare facility employees have varying rates starting June 1, 2025.
What should an employee do without receiving the legally required minimum wage?
Employees not receiving the correct minimum wage can file a claim with the California Labor Commissioner’s office to recover back wages, damages, and penalties. They can also pursue legal action, as agreements to work for less than the minimum wage are unenforceable.
