California Announces Minimum Wage Rate Increase for 2025

Effective Jan. 1, 2025, California’s minimum wage rate increases to $16.50 per hour for all employers.  

How was the 2025 California Minimum Wage Calculated?

Since the state minimum wage reached $15.50 for all employers on January 1, 2023, California’s labor code now requires the Director of Finance to announce an adjusted state-level minimum wage on or before Aug. 1 to take effect each January thereafter.  

Right on schedule, Director of Finance Joe Stephenshaw published the annual Minimum Wage Increase letter on Aug. 1 indicating that, “This year, the Department of Finance calculates the average U.S. CPI-W for the 12-month period from July 1, 2023 to June 30, 2024 increased by 3.18 percent compared to the 12-month period from July 1, 2022 to June 30, 2023.” The calculated adjustment was confirmed to be less than the 3.5% rate of change cap and then rounded to the nearest 10 cents, per the minimum wage law.  

Based on the adjustments for inflation, California’s Department of Finance thus certified that the state-level minimum wage will update to $16.50 per hour on Jan. 1, 2025.  

View All 2024 State Minimum Wage Rates

Look Out for More California Minimum Wage Updates

It should be no surprise to employers that California’s minimum wage landscape will continue to shift, specifically when it comes to industry and local minimum wage changes.  

California health care employers are patiently waiting for the state to announce the effective date of the new health care minimum wages, which has already been delayed … twice. Nevertheless, California’s new fast food worker wage rate did take effect earlier this year, which was increased to $20 on April 1, 2024. In addition to the minimum wage increase, a new “Fast-Food Council” meets monthly to develop standards and future minimum wage increases for the fast-food industry.  

Employers must also display a new fast food minimum wage supplement and updated wage orders, specifically Wage Orders 5 and/or 7, at the workplace. GovDocs Standard Update Program customers should have received these updated posters at their impacted locations in the Sunshine State.  

In addition to the new industry-related wage updates, employers should be prepared for a significant amount of local minimum wage updates taking effect throughout the year. Over 30 jurisdictions will update their city or county minimum wage on January 1, 2025, and several local jurisdictions, including the City of Los Angeles and unincorporated Los Angeles County, update their minimum wage rates on July 1 of each year.