California’s Minimum Wage Certified to Be $15.50 on January 1

Based upon a written certification issued by the California Department of Finance (DOF) on July 27, the state’s minimum wage will be increased on January 1, 2023 for all employees, regardless of the size of the business. The DOF letter states, in part, “Finance has determined that minimum wage shall increase by 3.5 percent to $15.50 per hour and shall be implemented for all employers on January 1, 2023.”

While Senate Bill 3 (Leno) that was enacted April 4, 2016 as Chapter 4 made a distinction between small employers and all other employers, due to the DOF certification pursuant to Section 1182.12 of the Labor Code, that distinction is no longer application. In addition, the minimum wage of $15.50 applies to both private and public sector employers.

Under existing law, there has been a yearly increase in the minimum wage which was scheduled to end at $15 for all employers by January 1, 2023 (the $15 minimum wage took effect for employers with 26 or more employees this past January 1). However, for employers of 25 or fewer employees, the $15 minimum wage had been scheduled to take effect on January 1, 2023.

Going to $15.50 on January 1, 2023

Due to other provisions contained in SB 3, all employees will see the minimum wage increased to $15.50 on January 1, 2023, regardless of the size of the employer. The DOF is required by existing law to annually make a determination and certify whether an adjustment for inflation to be applied to the minimum wage.

Labor Section 1182.12 subdivisions (c)(3)(A) and (c)(3)(B) provide that, because the US CPI-W has exceeded the 7% threshold, the annual indexing must be implemented immediately and be effective on the following January 1 (which, of course, is January 1, 2023). Basically, inflation has grown so dramatically that this increase to $15.50 is required by the 2016 law.

In addition, because that threshold was met, there is no longer a distinction based upon employer size (…for employers with 25 or fewer employees the minimum wage shall be set equal to the minimum wage for employers with 26 or more employees, effective on the following January 1….).

Therefore, California’s minimum wage is increasing to $15.50 per hour for every employee effective January 1, 2023.