What goes up does not come down! The trend of increasing the minimum wage continues in 2023 as follows:
State:
On January 1, 2023, the California state minimum wage will increase to $15.50 per hour for employers of all sizes. The state minimum wage also governs the exempt employee threshold salary, which will increase accordingly. On January 1, 2023, the new minimum salary for employees who otherwise qualify to be exempt from overtime will be $64,480 annually for employers of all sizes.
Local:
Additionally, several California municipalities will raise their minimum wage rates on July 1, 2023. Employers should take care to note these changes because the pace of minimum wage increases in these locations will surpass increases required by the State of California in the race to reach the highest minimum wage.
For example, in the City of Los Angeles, the current minimum wage is $16.04 for all employers. In Malibu, Santa Monica and unincorporated Los Angeles County, the minimum wage is currently $15.96 for all employers. In Pasadena, the current minimum wage is $16.11 per hour for all employers. On July 1, 2023, in these locations, minimum wage will be adjusted based on the Consumer Price Index (CPI).
Notably, the City of West Hollywood enacted a number of hikes in minimum wage rates. Specifically, large businesses with 50 or more employees will be required to raise the minimum wage from the current $16.50 per hour to $17.50 per hour on January 1, 2023, with further increases scheduled for July 1, 2023 at $18.86. Smaller businesses with fewer than 50 employees will be required to raise the minimum wage from the current $16.00 per hour to $17.00 per hour on January 1, 2023, with a further increase scheduled for July 1, 2023 to $18.86.
Employers should also be aware of industry specific wages rates set by local ordinances. For example, hotels in West Hollywood are required to raise their minimum wage from the current $18.35 per hour to $18.86 per hour on July 1, 2023. For hotels with 60 or more rooms in the City of Los Angeles, the minimum wage of $17.64 per hour increased to $18.86 per hour on August 12, 2022. Currently, for hotels, and in 2023, for all other businesses, annual increases will be tied to the Consumer Price Index and announced by the city each year by no later than April 1st with changes to take place on July 1st.
In determining whether a given increase applies, employers should know that it is not where an employee lives, or where an employer is based, that determines the minimum wage that must be paid. Rather, it is where the employee works that determines the minimum wage requirement that will be applied. In many municipalities, if an employee works as few as two hours in the city in a week, that municipality’s minimum wage applies to the time worked there for that week.
Federal Contract Workers:
Covered contracts that are entered into on or after January 30, 2022, or that are renewed or extended (pursuant to an option or otherwise) on or after January 30, 2022, will be generally subject to a higher minimum wage, which is currently $15 per hour and will increase to $16.20 per hour on January 1, 2023, in accordance with President Biden’s Executive Order 14026.
Beginning January 1, 2023, tipped employees performing work on or in connection with such covered federal contracts generally must be paid a cash wage of at least $13.75 per hour.
The minimum wage rates for federal contracts entered into, renewed, or extended prior to January 30, 2022, will increase from $11.25 per hour to $12.15 per hour, effective January 1, 2023. The minimum wage for tipped workers under these contracts will increase from $7.90 per hour to $8.50 per hour on January 1, 2023.
The author would like to gratefully acknowledge the assistance of Joanne Warriner.
