Effective January 1, 2025, the state’s minimum wage will increase to $16.50 per hour for all employers

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In the last election, Californians voted against Proposition 32, which would have raised the state minimum wage to $18 per hour in 2026. Despite that, workers will still see a wage increase.

Effective January 1, 2025, the state’s minimum wage will increase to $16.50 per hour for all employers, which is in line with annual increases tied to inflation and state law.

The vote on Proposition 32 was very close, and the measure was narrowly defeated after weeks of counting mail-in ballots. Had it passed, the proposition would have raised the minimum wage to $17 for large businesses immediately and to $18 in 2025 for all businesses. While supporters, including unions, highlighted the potential benefits for millions of workers, opponents argued that it could lead to job losses and higher costs for businesses. Despite the outcome, the state’s 2025 wage increase is still on track.

Minimum wage in California

California’s minimum wage policy has evolved significantly since 2016, when the state became the first to adopt a $15 per hour wage cap. Inflation-linked adjustments have allowed wages to exceed this cap. By 2025, the $16.50 rate reflects these automatic increases, which occur when inflation exceeds 7%.

However, state legislation is not the only factor driving minimum wage increases. Many local governments in California have implemented higher minimum wage requirements. As of January 1, 2025, at least 25 cities and counties will increase their local minimum wages, with rates ranging from $16.70 to more than $19 per hour. Employers in areas such as Los Angeles County, San Jose and Palo Alto must pay these higher local wages when they exceed the state minimum.

Employers with exempt employees must also evaluate their salary structures. In California, exempt workers must earn at least twice the state minimum wage for full-time work, which means the minimum salary threshold will also increase in 2025.

Industry-specific wage laws further complicate the picture. Fast food workers currently earn a minimum of $20 per hour under separate regulations, and healthcare workers are poised to reach a minimum of $25 per hour due to legislation enacted in 2024. Dental offices, however, are excluded from the minimum wage law specific to the healthcare sector.

California Fast Food Workers Hit With Layoffs Ahead of Law Raising Minimum Wage to $20 an Hour