The California Department of Finance has announced the new minimum wage will increase to $15.50 per hour for all employees effective January 1, 2023.

The Details:

Under California law, once the minimum wage reached $15.00 per hour, the Director of Finance on or before August 1 each year, must determine and certify to the Governor and the Legislature whether an adjustment for inflation will be applied to minimum wage beginning the following January 1 st. The minimum wage of $15.00 per hour became effective as of January 1, 2022 for employers who employ 26 or more employees and is scheduled for January 1, 2023 for employers who employ 25 or fewer employees.

California law also requires that when the rate of increase in inflation exceeds 7% in the first year in which the minimum wage for employers with 26 or more employees is $15.00 per hour, the minimum wage for employers with 25 or fewer employees must be set to the same amount as for employers with 26 or more employees.

Consequently, it has been determined that the minimum wage for employees, regardless of whether they are employed by employers with 26 or more or 25 or less employees will be $15.50 per hour effective January 1, 2023.

Note: California does not allow the use of a tip credit when paying tipped employees so tipped employees will be entitled to at least the minimum wage of $15.50 per hour in addition to tips.

Next Steps:

Effective January 1, 2023, employers regardless of their number of employees, must pay all employees at least $15.50 per hour.