What is the minimum wage in California?
As of January 1, 2021, the California minimum wage is $14 per hour if you have more than 26 employees. If you have 25 or fewer staff members, California’s minimum wage is $13 per hour. Legislators in California have outlined a schedule to incrementally raise the minimum wage to $15 per hour for both employers with 26 or more and 25 or fewer employees by January 1, 2023.
California minimum wage laws
The federal minimum wage was enacted under the Fair Labor Standards Act (FLSA) of 1938. Franklin D. Roosevelt introduced it to offer protection to people in the workforce and ensure everyone who worked received enough money to live at “more than a bare subsistence level.” The first federal minimum wage was 25 cents per hour, and it’s $7.25 per hour as of 2021. It has remained the same since 2009.
The first California minimum wage was established before the federal minimum wage, in 1920. California continues to offer a significantly higher minimum wage than required by federal law, and excluding Washington D.C., has the highest minimum wage in the United States. It’s important to note that federal minimum wage can’t be deferred to because “the employer must follow the stricter standard; that is, the one that is the most beneficial to the employee.”
The only time the above doesn’t apply is if your employees are exempt per California legislature. Practically all employees in California are entitled to minimum wage, with a few exceptions. These include direct family members, outside salespeople, apprentices, trainees and people with disabilities. However, for an employer to pay less than the minimum wage to a worker with a disability, they’ll need a license from the Division of Labor Standards Enforcement.
The California hourly wage has increased yearly since 2017 when it was $10 per hour for organizations with 25 or fewer employees and $10.50 for organizations with more than 26 staff members. It’s set to increase to $15 per hour for all employers by 2023.
In California, you aren’t permitted to pay less than the minimum wage by agreement for any reason. If you pay an employee less than the minimum wage in California, the worker can file a wage claim with the Division of Labor Standards Enforcement or file a lawsuit in court to recover underpaid wages.
California minimum wage for servers and other tipped employees
According to federal law, the term “tipped employees” includes anyone who regularly receives more than $30 monthly in tips. This includes waitstaff, bartenders, concierges, bellhops, dancers and delivery persons. In California, employers of tipped workers can’t take gratuities that employees earn, nor can they credit tips towards minimum wage obligations.
In many states and per federal law, the minimum wage for tipped employees is lower than the standard minimum wage. In some of these locations, employers may use tip credit, whereby an employee’s tips count towards minimum wage obligations. States that pay tipped employees the same or similar to standard minimum wage include California, Washington, Oregon, New York, Minnesota, Connecticut and Alaska.
There are strict laws governing tips and gratuities in California. Gratuities paid by credit card must not be paid to the recipient later than their next payday. What’s more, you as the employer must not deduct credit card processing fees and must pay each tipped employee the total amount paid by the patron.
That said, tip pooling is still permitted in California, provided none of the tips are used to compensate supervisors, managers or owners. Tip pooling is a practice whereby all gratuities earned in a shift are shared by “employees who customarily and regularly receive tips.” This includes people who are directly customer-facing, such as waitstaff, service bartenders, bussers and bellhops. It doesn’t include chefs, cooks, dishwashers and janitors.
California minimum wage overtime pay
Any employee over 18 and minors aged 16 or 17 who aren’t in education or prohibited to work must be paid time and a half for hours worked over 8 per day or 40 in a workweek. For hours worked in excess of 12 in a single workday or all hours worked “in excess of eight on the seventh consecutive day of work in a workweek,” employees must be paid double time. There are exceptions and exemptions to these rules for workers in specific roles and industries.
