Be Prepared for July 1st Minimum Wage Increases & Inflation

California employers in several cities and counties must be prepared for July 1, 2022 minimum wage increases. While most California localities previously imposed a different minimum wage for employers with more or less than 26 employees, all municipalities listed below, except West Hollywood, will now impose the same minimum wage regardless of size. Here is a quick list of localities where the minimum wage will climb effective July 1st:
  • Alameda: $15.75/hour
  • Berkeley: $16.99/hour
  • Emeryville: $17.68/hour
  • Fremont: $16.00/hour
  • Los Angeles City: $16.04/hour
  • Los Angeles County: $15.96/hour
  • Malibu: $15.96/hour
  • Milpitas: $16.40/hour
  • Pasadena: $16.22/hour
  • San Francisco: $16.99/hour
  • Santa Monica: $15.96/hour
  • West Hollywood (49 or fewer employees): $16.00/hour
  • West Hollywood (50+ employees): $16.50/hour
California employers must also be mindful of the likelihood that the statewide minimum wage may climb faster than expected due to rising inflation. In 2017, California initiated an annual planned increase of the statewide minimum wage, with all employers, regardless of size, scheduled to reach $15.00 per hour effective January 1, 2023.
However, the minimum wage ordinance included an exception triggering an accelerated increase if the U.S. Consumer Price Index (CPI-W) exceeds 7 percent over a specified period of time. Based on current projections, the CPI-W will have risen by 7.6 percent in the period ending in July. On May 12, 2022, when Governor Gavin Newsom announced his proposal for a state inflation relief package, he also announced that California’s minimum wage is now projected to increase to $15.50 per hour, rather than $15.00 per hour, on January 1, 2023, for all businesses regardless of size. Of course, a business operating in any of the listed municipalities must ensure compliance with the higher local minimum wage.
Employers with exempt employees must remember that certain exempt employees must receive a salary of at least twice the state minimum wage (the “Salary Threshold”), in addition to meeting the general duties and other requirements. Whenever the state minimum wage increases, this impacts the Salary Threshold and may cause exempt employees to suddenly become improperly classified. To be clear, the Salary Threshold is tied to the California state minimum wage, not any city or county minimum wage ordinance.

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