California employers, prepare for another state-wide minimum wage hike. Starting January 1, 2024, all California employers, regardless of size, must pay a minimum wage of at least $16 per hour. 

The increase came as a result of the state’s Department of Finance issuing a letter declaring that due to inflation, the minimum wage needed to increase by 3.5 percent. This is after a state-wide increase for all employers to $15.50, effective just nine months ago, on January 1, 2023. 

The increase has a ripple effect that extends beyond non-exempt, hourly, and minimum wage workers. Exempt salaried workers may also see a pay increase. Employees covered by the executive, administrative, and professional exemptions must be paid a salary that is at least two times the state minimum wage. Currently, that threshold is $64,480 per year, and on January 1, 2024, it will go up to $66,560.

The minimum wage increase also impacts employees covered by the inside sales exemption. To qualify for that exemption, an employee’s total compensation must be at least one and one-half times the state minimum wage (and more than half of the compensation must be in the form of commissions). Therefore, effective January 1, 2024, the threshold for inside sales employees will increase from $48,360 to $49,920. 

Now is the time for employers to perform a pay audit and ensure that these increases make it into next year’s budget, and don’t forget that there might be city or industry minimum wage requirements higher than $16 per hour that must also be considered. Indeed, just last month, many local ordinances went into effect in California, increasing the minimum wage for workers in those areas beyond what is required state-wide.