California Minimum Wage Laws
California’s current minimum wage is:
- $13.00 for employers with 26 or more employees
- $12.00 for employers with 25 or fewer employees
California’s minimum wage will increase over the next several years as follows:
- January 1, 2021 – $14.00
- January 1, 2022 – $15.00
Employers with 25 or fewer employees:
- January 1, 2021 – $13.00
- January 1, 2022 – $14.00
- January 1, 2023 – $15.00
Beginning on January 1, 2023, for employers with 26 or more employees and January 1, 2024, for employers with 25 or fewer employees, California will increase its minimum wage by the lesser of:
- 3.5 percent and
- the rate of change in the averages of the most recent July 1 to June 30, inclusive, period over the preceding July 1 to June 30, inclusive, period for the United States Bureau of Labor Statistics nonseasonally adjusted United States Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W) rounded to the nearest ten cents ($0.10).
The California Director of Finance is responsible for determining the change in minimum wage based on the calculations discussed above by August 1 of the year before the change will take place. Additional rules apply that may affect California’s minimum wage calculation.
California employers must also comply with federal minimum wage laws, which currently sets the federal minimum wage at $7.25. See FLSA: Minimum Wage.
If an employer chooses to pay employees minimum wage, the employer must pay those employees in accordance with the minimum wage law, either federal or state, that results in the employees being paid the higher wage. In most instances in California, the California minimum wage will apply as it generally guarantees a higher wage rate for employees than federal law.
Tip minimum wage
California does not have a reduced minimum wage rate for tipped employees. Employers must pay tipped employees the standard minimum wage for all hours worked. Labor Code, Section 351; Henning v. IWC, 762 P.2d 442 (CA Sup. Ct. 1988).
All gratuities or tips received by an employee are considered to be the sole property of the employee. Employers may not make any deduction from them, including credit card processing fees. Employers must give employees gratuities paid by credit card no later than the payday following the date the customer paid the gratuities. Labor Code, Section 351
The term “gratuity” includes any gratuity, tip, or money that a customer leaves for an employee that is over and above the actual amount owed for services rendered or goods sold. Labor Code, Section 350(e)
Tip pooling and sharing
California law permits employers to require employees to pool tips. Avidor v. Sutter’s Place, 212 Cal.App.4th 1439 (2013); Leighton v. Old Heidelberg, Ltd., 219 Cal. App. 3d 1062 (1990); Budrow v. Dave & Buster’s of California, 171 Cal.App.4th 875 (2009). Tip pooling consists of collecting all or part of tips (gratuities) received by individual employees into a single pool which is then redistributed to employees based on a predetermined set of factors or criteria. Employers may lawfully include employees who both directly and indirectly serve customers in tip pools, e.g. servers, bartenders, bussers, etc. Budrow v. Dave & Buster’s of California, 171 Cal.App.4th 875 (2009). Owners, managers, and supervisors may not participate in tip pools. Budrow v. Dave & Buster’s of California, 171 Cal.App.4th 875 (2009).
Employees with disabilities
California minimum wage laws permit employers to pay employees with disabilities a wage rate that is lower than the standard minimum wage if the employer has obtained licenses to do so from the California Division of Labor Standards Enforcement. CA Labor Code § 1191 The Division of Labor Standards Enforcement may issue a special license to nonprofit organizations such as sheltered workshops and rehabilitation facilities which permit them to employ individuals with disabilities at subminimum wage rates without having a specific license for each individual. The special license for nonprofit organizations must be renewed at least once per year. CA Labor Code § 1191.5
California minimum wage laws permit employers to pay trainees (referred to as learners) a subminimum wage rate that is no less than 85% of the standard minimum wage for the first 160 hours of employment. To qualify, the trainees (learners) must have no previous or related experience in the occupation for which they are hired. CA Labor Code § 1192; IWC Orders 1-16: Section 4
California minimum wage laws authorize the Industrial Welfare Commission to establish a subminimum wage rate that may be paid apprentices. CA Labor Code § 1192
California minimum wage laws do not allow employers to pay non-trainee learners less than the standard minimum wage. Employers must pay trainees the standard minimum wage rate, unless otherwise exempt.
California minimum wage laws do not allow employers to pay student learners less than the standard minimum wage. Employers must pay trainees the standard minimum wage rate, unless otherwise exempt.
California minimum wage laws do not allow employers to pay student workers less than the standard minimum wage. Employers must pay trainees the standard minimum wage rate, unless otherwise exempt.