California has several minimum wage laws that can be confusing or overwhelming for businesses. California’s minimum wages are determined by a law linking them to the cost of living. This means that the wage rises along with inflation, so workers always get a fair salary to afford to live in the state.
California employers must consider federal and state minimum wages and dozens of local minimum wage ordinances. Many localities and counties in the state have created minimum-wage laws that are more than the federal or state wage.
The local minimum wage increases are typically on an annual basis. They are adjusted for inflation using the local Consumer Price Index (CPI). California and many California cities also provide a separate, smaller minimum wage law for small businesses with less than 26 employees. The Director of Finance determines the annual inflation rate before the minimum wage increases.
What is California’s Minimum Wage?
California’s minimum wage has been set at $22 an hour as of 2022
Employers with 26+ employees receive $15.00 an hour
Employers with 25 or fewer employees pay $14.00 per hour
California’s minimum-wage law supersedes the $7.25/hour federal minimum wage. Californians must receive a higher minimum wage rate for their work.
California’s minimum salary is expected to increase by 5% annually until 2023.5.
What is L.A. County’s minimum income?
California has many cities and counties that have their minimum wage. It is often different from the California minimum. The change was made to keep pace with the rising cost of living in certain areas of California. For large companies with more than 26 employees and small businesses with 25 employees or less, the L.A. county minimum wages in 2020 were $14.25. In 2021, the minimum hourly wage for all businesses was $15
Los Angeles has its very own minimum wage laws. They differ from the whole county. Effective July 1, 2022, the minimum wage for Los Angeles was raised to $16.04 by all employers.
Employers are required to follow stricter wage standards.
Employers are required to pay employees according to the strictest wage standard. This is the one that’s most beneficial to the employee.
Some employees are exempted from the state’s minimum wage law, including outside salespersons and the employer’s spouse, children, or parent. The governor may suspend the scheduled wage hike if there is a projected budget deficit or negative job growth for the current year.
When will AB257 take effect?
The FAST Act for Recovery is scheduled to enter into force on January 1, 2023. However, Save Local Restaurants, a coalition that received $13M in funding from major chains, including Mcdonald’s, Chipotle, Starbucks, and Chipotle, could delay the bill.
Jacobs states that “fast-food corporations have a phenomenally high profit margin and they do not want any legislation that would force them to share the power with their workers to set industry standards.”
U.S. consumers spent more than $300B at fast food restaurants between 2020 and 2021. Mcdonald’s and Chipotle reported an increase in revenues for 2021 over 2020.
How is this different from the Federal Minimum wage?
A business must adhere to all federal labor laws. These wages are set by the Fair Labor Standards Act (FLSA) nationally. Any changes to this act must be made through the Supreme Court.
For 2022, the minimum wage for nonexempt employees will be $7.25/hour. Tips-eligible employees will receive $2.17/hour. Federally, the minimum wage of $2.17 and tips earned must equal the national minimum. Otherwise, employers will have to make up for the difference.
Since the cost of living varies so much across the country, several states and municipalities–including California and its various cities–set their minimums higher than the federal level.
The labor code mandates that businesses meet minimum wage requirements in all 50 states and locally for their employees. Although it sounds complicated, it’s not. To comply, owners of businesses must pay the highest wage.
A Brief History of the U.S. Minimum Wage
Franklin D. Roosevelt signed in 1938 the first federally mandated minimum wage law in. The law established a minimum hourly income of 25 cents per hour and a maximum work week of 44 hours. Massachusetts passed the U.S.’s first minimum wage law in 1912. This created a state commission to recommend noncompulsory minimum wages.
Minimum wage laws had been passed by at least 13 U.S. states and the District of Columbia between 1920 and 1920. California was one such state with a minimum wage of 16c per hour. This rate increased greatly over the next four years, reaching 33 cents in 1920. There were no more increases by the state in 23 years. The rate rose to 45c per hour on February 8, 1943. That’s a 36.36% increase.