For the past several years, California has been increasing its minimum wage annually, on January 1. This year, minimum wage for the state grew to $16.50. Many municipalities, such as Oakland and San Diego, also hike their minimum wages effective the start of the year. However, many other cities, including the City of Los Angeles, increase their minimum wage effective July 1, and this year will be no exception. Most of these cities have laws that raise the minimum wage rate annually based on the increased cost of living. This is usually calculated and set by the relevant local Consumer Price Index (“CPI”) as published by the U.S. Department of Labor, Bureau of Labor Statistics. Municipalities rely on the CPI to determine and adjust minimum wage ordinances in California to reflect the cost of living and to keep pace with inflation. However, some cities consider additional factors. For example, Malibu has chosen not to raise its minimum wage at all this year. Although Pasadena, another fire adjacent area, is raising its rate above $18 this summer.
A non-exhaustive list of California increases for July 1 is below:
- Berkeley: $19.18/hr (up from $18.67/hr)
- City of Los Angeles: $17.87/hr (up from $17.28)
- Emeryville: $19.90/hr (up from $19.36/hr)
- Fremont: $17.75/hr (up from $17.30/hr)
- Los Angeles County (unincorporated areas only): $17.81/hr (up from $17.27/hr)
- Milpitas: $18.20/hr (up from $17.70/hr)
- Pasadena: $18.04/hr (up from $17.50/hr)
- San Francisco: $19.18/hr (up from $18.67/hr)
- Santa Monica: $17.81/hr (up from $17.27/hr)
In addition, some cities have industry-specific minimum wage laws. The City of Los Angeles City Council just voted to approve a proposal to require a $22.50 minimum wage for hotel workers (and businesses on hotel properties) effective July 1, 2025, going to $30 before the Olympics in 2028. Similarly, hotel workers in West Hollywood will see an increased rate to $20.22/hr as of July 1, 2025 (up from $19.61/hr). And some healthcare workers will also increase to $24.
A couple of key points to remember. First, KNOW WHERE YOUR EMPLOYEES ARE LOCATED! These minimum wage rates, and most in employment laws in general, are determined by where the work is performed. Your corporate office may be in Glendale, where the minimum wage tracks the state minimum wage. However, if you have locations or even remote employees performing work in the city of Los Angeles, that new minimum wage of $17.87 will govern. On my short commute from my home in Laurel Canyon to my office in Century City, I drive through four different minimum wage changes: I start out in the city of Los Angeles ($17.87), pass through West Hollywood ($19.65), then hit Beverly Hills (which tracks the state minimum wage at $16.50), and then go back to the City of Los Angeles – all in a span of four miles.
Next reminder – the minimum wage rate for the UNINCORPORATED areas of Los Angeles County only apply to those very small portions of the county which are unincorporated. The County has 88 cities within its boundaries, the City of Los Angeles being the largest. Chances are, if you employ workers in Los Angeles County, they work within one of these 88 cities and NOT in the unincorporated sections. But, again, you need to know your jurisdiction. For example, Hollywood is an area within the larger CITY of Los Angeles. So are Encino, Tarzana, and Woodland Hills. They are not their own cities, rather, they are part of the City of Los Angeles. Compare that to Burbank, Glendale, and Calabasas, which are all separate cities within Los Angeles County. Some of those cities, like Santa Monica and Pasadena, also have their own minimum wage laws, like Los Angeles. Most do NOT. If they do not, the minimum wage defaults to the California minimum wage, currently at $16.50. There are some fringe areas of unincorporated LA County around Marina Del Rey, Agoura Hills, Valencia, and some other spots. The boundaries around these areas are very fuzzy. I get confused calls and emails every year about this issue, and that is because it is confusing!
Next, the salary test for exempt workers tracks the STATE minimum wage, not your local one. It generally rises in January when the California minimum wage increases. Also note that if you are lucky enough to be governed by the fast-food rate of $20 an hour, your salary test IS governed by this higher minimum wage because this is a statewide, industry specific wage.
Further, audit your paystubs. Every year I hear of employers failing to timely and accurately implement these minimum wage changes, usually due to tech or bookkeeping errors. No matter what system you use, CHECK IT! This is a good time and reason to conduct an internal payroll audit.
Also remember to change your Wage Theft Protection Notices (the state required Labor Code Sec 2810.5 forms) that are required for all non-exempt new hires.
Finally, January 1 and July 1 are excellent times to implement compliance changes you may have been considering. It’s also a good time to make those changes to your tip pools, as many of your employees will be receiving a raise come July 1. I’ve been meeting with several of you to conduct those PAGA audits and uncovering tweaks we need to make. For those of you still procrastinating, let’s get that audit set sooner than later. For all the reasons.
