California Minimum Wage and Overtime Update for 2023

Posted on Thursday January 12, 2023

It’s important to understand your rights to receive the minimum wage as an employee. The following information gives you the information you’ll need so you can further implement or understand your rights as an employer or employee.

Senate Bill (SB) 3 increased California’s minimum wage to $15.50 per hour on January 1, 2023, for all employers and people who are paid hourly. People who are paid hourly are defined as being non-exempt. 

While the law first stipulated that the wage would increase to $15.00 per hour, the extra 50 cents was added to adjust the wage for inflation. The inflation rate, 7%, is based on the Consumer Price Index (CPI). The new state minimum wage of $15.50 per hour overrides the established federal minimum wage of $7.25 per hour.

Smaller employers will find the new wage may be difficult to manage. Therefore, they need to be proactive about payment. Either they need to restructure their workforce from full to part-time work or lay off employees.

Local Minimum Wage Ordinances in California

Many locales in California also have set their own minimum wage ordinances – ordinances that require employers to pay a higher minimum wage for work performed within certain geographical boundaries. 

For example, some of the mandates require an employee to work a specific minimum number of hours. Also, some places with established ordinances require an employee to work a minimum number of hours, such as two hours each week, before the payment rule applies.

As a result, you have to learn more about local ordinances – checking the local minimum wages for remote non-exempt employees, including people working a hybrid schedule or those strictly working from home.

Depending on the country or city in California, the local minimum wage may increase each year. 

Minimum Wages Per Industry

Localities in California are also reviewing higher minimum wages for specific employee groups. For instance, some California cities are looking at paying a minimum wage of $25.00/hour for healthcare employees at privately owned medical facilities. Moreover, some cities are thinking about boosting the minimum wage for employees working at hotel properties.

A new state law in California, AB 257, was signed by the Governor on Labor Day 2022. caps the minimum wage for fast food workers at $22.00 per hour. However, the National Restaurant Association and International Franchise Association are protesting the new legislation. So, for now, the law is in limbo.

Minimum Salary Amounts for the Exempt Workforce

Minimum salary amounts for white collar exempt employees, or people who work in administrative, executive, or professional roles, is set at two times the amount of the state’s minimum wage. 

Therefore, the exemptions for this group are increasing to $64,480 per year in 2023. Employers who cannot meet this requirement were told to reclassify their exempt workforce to non-exempt personnel. 

This transition also includes a different process with respect to timekeeping, overtime, and rest or lunch breaks.

For exempt employees who fall under the category of a “computer professional,” the minimum salary requirement is increasing to $53.80 per hour for 2023. Licensed doctors or surgeons will receive a minimum salary increase of $97.99 in 2023.

Overtime Pay for People Who Earn a Minimum Wage

The overtime minimum wage for non-exempt workers is $23.25 per hour – one and one-half times the regular new wage of $15.50 per hour. The employment law in California requires that an employer pay overtime at 1 1/2 times the minimum wage for hours worked over eight hours, up to 12 hours during a workday. This applies to the first eight hours worked on the seventh straight day of work.

Contact a California Minimum Wage Lawyer Today

If you feel you’re not receiving a fair day’s pay or that your employer is not meeting their payroll obligations statutorily, you need to speak to an employment lawyer right away. Contact the Worker’s Law Firm in San Diego, the Mara Law Firm, at (619) 724-4058 to discuss your case immediately.