The California Department of Finance recently notified the state's governor and legislative leaders that current economic conditions require an increase of the state's minimum wage from $15.50 per hour to $16 per hour for all employees on January 1, 2024.

The change is the result of Labor Code section 1182.12, which requires the Director of Finance to determine on or before August 1 of each year whether adjustments to the minimum wage for inflation are to be made. Based upon recent federal data showing a consumer price index increase of 6.16 percent, the Department of Finance determined that a 3.5 percent increase to the minimum wage is required.

As a result of the statewide minimum wage increase, employers must ensure that any California employees classified as exempt under the executive, professional, or administrative exemptions make at least $66,560 as of January 1, 2024. This is because the Labor Code defines the salary threshold for these employees as a multiple of the state minimum wage; when the minimum wage increases, so too does the salary threshold amount.

California employers should also be aware that a ballot initiative to increase the minimum wage to $18 per hour has qualified for a November 2024 vote (the Living Wage Act, Initiative 21-0043).

As always, DWT will continue to monitor these initiatives and issues and provide updates as needed. In the meantime, if you have any questions about your company's compliance, please contact a member of DWT employment services team.