Minimum Wage

I. Introduction

Since 2009, the federal minimum wage has been $7.25 per hour [1]. This means that employees in every state (including California) must be paid at least $7.25 for each hour worked. However, each state is entitled to set their own minimum wage. If a state sets its own minimum wage, then employers in that state must comply with the state’s minimum wage if it is higher than the federal minimum wage. In California, the general minimum wage as of January 1, 2025, is $16.50 for employers of any size. [2] Since California’s minimum wage rate exceeds the federal rate, California employers must comply with California’s minimum wage rate. Some employees in California may be entitled to an even higher minimum wage based on their locality or industry. This article provides an in-depth look at minimum wage in California.

II. An Overview of California Minimum Wage

The minimum wage in California is set by statute. It has increased gradually since March 1, 1997, when it was $5.00 per hour for all industries. [3] From 2017 to 2023, the statute provided a different minimum wage rate for small employers (25 or fewer employees) and large employers (26 or more employees). The California minimum wage statute provides that:

• As of March 1, 1997, the minimum wage was $5.00 per hour. [4]
• As of March 1, 1998, the minimum wage was $5.75 per hour. [5]
• As of June 1, 2014, the minimum wage was $9.00 per hour. [6]
• As of January 1, 2016, the minimum wage was $10.00 per hour. [7]
• From January 1, 2017, to December 31, 2017, the minimum wage was $10.50 per hour for any employer who employs 26 or more employees. [8]
• From January 1, 2018, to December 31, 2018, the minimum wage was $11.00 per hour for any employer who employs 26 or more employees [9]; and from January 1, 2018, to December 31, 2018, the minimum wage was $10.50 per hour for any employer who employs 25 or fewer employees. [10]
• From January 1, 2019, to December 31, 2019, the minimum wage was $12.00 per hour for any employer who employs 26 or more employees [11]; and from January 1, 2019, to December 31, 2019, the minimum wage was $11.00 per hour for any employer who employs 25 or fewer employees. [12]
• From January 1, 2020, to December 31, 2020, the minimum wage was $13.00 per hour for any employer who employs 26 or more employees [13]; and from January 1, 2020, to December 31, 2020, the minimum wage was $12.00 per hour for any employer who employs 25 or fewer employees. [14]
• From January 1, 2021, to December 31, 2021, the minimum wage was $14.00 per hour for any employer who employs 26 or more employees [15];and from January 1, 2021, to December 31, 2021, the minimum wage was $13.00 per hour for any employer who employs 25 or fewer employees. [16]
• From January 1, 2022, to December 31, 2022, the minimum wage was $15.00 per hour for any employer who employs 26 or more employees [17]; and from January 1, 2022, to December 31, 2022, the minimum wage was $14.00 per hour for any employer who employs 25 or fewer employees. [18]
• From January 1, 2023, to December 31, 2023, the minimum wage was $15.50 for all employers. [19]
• From January 1, 2024 to December 31, 2024, the minimum wage was $16.00 for all employers. [20]

On January 1, 2025, the state minimum wage increased to $16.50 per hour. [21]

In November 2024, voters narrowly rejected Proposition 32, [22] which would have raised the minimum wage rate to $18.00/hour for employers with 26 or more employees and $17.00/hour for employers with 25 or fewer employees in 2025, and then to $18.00 per hour for all employers in 2026. [23] Proposition 32 did not pass; with 49.3% of voters voting for the minimum wage increase and 50.7% of voters voting against it. [24]

It is important to note that California’s minimum wage rates do not apply to outside salespersons. [25]

It is also important to note that the minimum wage may be higher in certain parts of California (as described below) and for employees working in certain industries (such as fast-food employees and certain healthcare workers, as described below).

III. Local Minimum Wage in California by Locality

Several California cities and counties have enacted minimum wage laws that exceed California’s minimum wage rate. Employers and employees subject to a local minimum wage ordinance should familiarize themselves with these requirements.

A. Application of Local Minimum Wage Ordinance

Some local ordinances specifically apply to all employers; others include thresholds or exemptions. For example, many ordinances started out with different minimum wages for smaller (usually 25 or fewer employees) and larger (usually 26 or more employees) employers and, over recent years, have phased in a single minimum wage rate for all employers. But some localities continue to maintain two or more minimum wage rates based on employer size. Common exemptions from the local minimum wage include government employers including schools, nonprofit organizations, and youth programs. Some local ordinances include a “learner wage” exemption—a temporary onboarding wage (for example, 85% of minimum wage) of limited duration (usually the first 160 hours of employment).

B. Waiving Local Minimum Wage Ordinance Through a Collective Bargaining Agreement (i.e., a Union)

A few local ordinances specifically state that the minimum wage may be waived through a collective bargaining agreement (i.e., a union agreement) meeting certain requirements. For example, El Cerrito, [26] San Francisco, [27] and West Hollywood [28] allow employees to waive the local minimum wage rate through a collective bargaining agreement. San Mateo County also allows employees to waive the minimum wage requirement through a collective bargaining agreement but excludes employees in the property services industry. [29] Union members should review the local ordinances to determine whether any city or county regulations allow for a waiver.

IV. Minimum Wage by Locality Table

The following table shows all the California cities and counties with their own minimum wage ordinances. Many of these ordinances include increases based on the consumer price index or CPI, and some provide that the minimum wage will not decrease even if the CPI decreases. Also, some ordinances maintain a cap on the percentage increase per year. Some ordinances contain specific minimum wage rates for specified employers—mainly hotels of a designated size. These localities include Long Beach, Los Angeles City, Oakland, Santa Monica, and West Hollywood. The San Francisco ordinance specifies a lower minimum wage for “Government Supported Employees” (that still exceeds the state minimum wage rate) and the San Diego ordinance specifies a higher minimum wage for traffic control workers. The following table includes this information.

V. Specific Industries with Their Own Minimum Wage

A. Fast-Food Employees

As of April 1, 2024, employees of national fast-food chain restaurants—as defined by statute [73] —are entitled to a minimum wage of $20.00/hour. [74] However, the Labor Code includes several exceptions to this minimum wage rate. Two of the major exceptions are restaurants that qualify as bread bakeries [75] and restaurants located within grocery stores. [76] Additional exceptions are restaurants:

• Located in an airport (but not military bases or federally operated facilities).
• Connected to or operated in conjunction with a hotel.
• Connected to or operated in conjunction with an event center.
• Connected to or operated in conjunction with a theme park.
• Connected to or operated in conjunction with a public or private museum.
• Connected to or operated in conjunction with a gambling establishment.
• Located in and operated in conjunction with an office location primarily or exclusively used by a single, for-profit corporation that primarily or exclusively serves the employees rather than the general public under a concession or food service contract covering the office location.
• Located on government-owned land that is part of a port district or land managed by a port authority or port commission, a public beach, public pier, state park, municipal or regional park, or historic district, and operated under a concession agreement or food service contract. [77]

B. Healthcare Workers

For most covered healthcare workers employed by covered healthcare facilities, the minimum wage increases in phases, beginning October 16, 2024. [78] Allowances for delayed implementation and waivers (discussed below) may affect the effective date for some covered healthcare workers.

1. Covered Health Care Employees

The definition of “covered health care employee” is significant for two reasons. First, it includes both employees who provide patient care and health care services as well as employees who provide services supporting the provision of health care. This includes, for example, gift shop workers, janitors, food-service workers, and medical billing and coding workers. [79] Second, contract and subcontract employees may be covered by the minimum wage law when certain conditions are met. [80]

The law specifically excludes outside salespersons; public employees not engaged in patient care, health care services, or supporting services for at least half the work week; and delivery workers, waste collection workers, and medical transport workers who are “not an employee of any person that owns, controls, or operates a covered health care facility.” [81]

2. Covered Health Care Facility Employers

Healthcare facility employers are required to pay covered healthcare employees the healthcare minimum wage rate. The definition of “covered health care facilities” is broad, and includes hospitals, clinics, physician groups, patient homes, and more—the statute provides detailed descriptions and limitation on what is considered to be “covered health care facilities.” [82] The law defines “employer” as “a person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person. ‘Employer’ includes political subdivisions of the state, health care districts, the University of California, and municipalities.” [83]

The two exceptions to “covered health care facility” are health care facilities owned, controlled or operated by the state (which includes California State University and California Community College but not University of California) and certain tribal clinics recognized under state or federal law. [84]

Of note, a licensed skilled nursing facility is only a covered health care facility if it is covered under California Labor Code § 1182.14 because it is “owned, operated, or controlled by a hospital or integrated health care delivery system or health care system.” [85] A skilled nursing home under California Labor Code § 1182.15 is not covered. While there is a minimum wage phase-in plan for these workers, it is not yet effective. [86]

3. Hourly Minimum Wage Phase-In Schedule Based on Facility

4. Delayed Implementation and Waivers

County-run covered healthcare facilities are subject to a delayed implementation schedule based on the county’s size as of January 1, 2023.

A covered healthcare facility employer that is a clinic (a term defined by the statute) may apply to the Department of Industrial Relations for a 12-month delay to the healthcare minimum wage implementation schedule. [92] If the waiver is granted, the employer must, within 10 days, post a copy of the waiver and the applicable minimum wage where employees will see it and provide each covered healthcare employee with a written notice about the one-year waiver of the minimum wage increase as well as the applicable minimum wage. [93] The employer may apply for consecutive waivers, but every covered healthcare facility must pay the adjusted wage beginning July 1, 2033. [94]

VI. Can Tips Count Toward Minimum Wage?

Most states allow employers to credit an employee’s tips against the minimum wage obligation. California does not. California law requires employers to pay employees the full minimum wage without taking any credit for their tips. [95] This means that no matter how much an employee receives in tips, the employer must pay the full state or local minimum wage. In California, tips belong to the employee and not the employer. [96]

VII. California Employers Must Post Minimum Wage Notice

California employees have the right to know the minimum wage they are entitled to and other important protections under the labor code. California law requires employers to display the current minimum wage by printed notice in an easy-to-find place at the workplace. [97]

VIII. State Minimum Wage Cannot Be Waived

California law recognizes that the right to minimum wage cannot be waived. [98] This means an employee’s agreement to work for less than the minimum wage does not remove the employer’s obligation. “Notwithstanding any agreement to work for a lower wage, any employee receiving less than the legal minimum wage or the legal overtime compensation applicable to the employee is entitled to recover in a civil action the unpaid balance of the full amount of this minimum wage or overtime compensation, including interest thereon, reasonable attorney's fees, and costs of suit.” [99]

IX. Consequences for Failing to Pay California Minimum Wage

It is unlawful for an employer to pay a nonexempt employee less than the minimum wage mandated by the state or local law—even if the employee agrees to it. [100] Employers who fail to pay their employees the required minimum wage face strict consequences, including liability for “civil penalty, restitution of wages, liquidated damages payable to the employee, and any applicable [waiting-time] penalties imposed pursuant to Section 203.” [101] An employee can choose to file a wage claim against the employer with the Labor Commission or file a civil lawsuit against the employer for unpaid wages plus interest. [102]

If the employer’s violation of the minimum wage law affects multiple employees, the employer could be subject to a class action lawsuit in civil court or a Private Attorneys General Action (PAGA) under the California Labor Code. [103]

X. Conclusion

California nonexempt workers enjoy some of the highest minimum wage rates in the nation. With specific minimum wage rates for certain fast food workers and healthcare workers, local minimum wage rates that exceed the state’s rate, and ongoing minimum wage increases, it is important for California employees and employers to be up to date with the correct minimum wage rate.