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.
California minimum wage FAQs
What states have a $15 an hour minimum wage?
There is currently only one state that pays at least $15 per hour to workers: Washington. While The California minimum wage isn’t yet $15 per hour, it’s scheduled to reach that level for all workers by 2023. In California, many local municipalities have a minimum wage set at $15 per hour or higher.
President Joe Biden has signed an executive order that will increase the minimum wage to $15 per hour for federal contractors, which has prompted a significant amount of research into the pros and cons of increasing the minimum wage on a national scale.
What is the minimum wage for a 16-year-old in California?
The minimum wage for a 16-year-old in California who isn’t in school or otherwise exempt is the same as for adults, at $13 per hour for organizations with fewer than 25 staff and $14 per hour for those that employ 26 or more staff members.
Some employers of full-time college or high school students can pay a minimum wage of $11.05 per hour, or 85% of the state minimum wage. Learners may also be paid 85% of the minimum for the first consecutive 160 days of employment in occupations where they have no previous experience.
What is a livable salary in California?
The livable salary in California is $57,000 per year, which is equivalent to $27.40 an hour for someone working a 40 hour week. The living wage accounts for the cost of living in a particular area, considering factors such as housing, health care, food and other essential needs. States with a high living wage tend to have suburban areas where the cost of living is significantly lower.
What is the minimum a salaried employee can make?
The minimum salary for a company in California with 25 or fewer employees is $24,960 per year, while the minimum salary for companies with 26 or more employees is $26,880.
What is the federal minimum wage?
The California minimum wage is significantly higher than the federal minimum wage, at $7.25 since 2009. There is currently a push from Congress to almost double the minimum wage to $15 an hour, which is similar in theory to the schedule currently in place in California that sets out a timeline to increase the state minimum wage to $15 per hour by 2023.
