California May Accelerate Minimum Wage Increases

UPDATE: In an email to XpertHR dated June 1, 2022, the California Department of Industrial Relations said:

Section 1182.12(c)(3)(A)-(B) [of the California labor code] provides for an increase in the [minimum wage] if during the period between 7/1/21 and 6/30/22 the CPI-W increase is greater than 7%. Section 1182.12(c)(3)(B) requires that the minimum wage for employers with 25 or fewer employees be set equal to the minimum wage for larger employees under these conditions. The [California Director of Finance] has the ministerial duty of recognizing that the trigger has been met. Inflation in recent months has been at a rate in excess of 7% and when the July '21-June '22 figures are in they will likely be in excess of 7% as well. However, until such time as the annual CPI-W numbers are issued by the USDOL this summer, an official notice cannot be issued.

Author: Michael Cardman, XpertHR Legal Editor

May 17, 2022

The minimum wage in California - already among the highest in the nation - could rise even higher than expected next year.

Under a law passed in 2016, the state minimum wage for small employers has been scheduled to increase to $15.00 in 2023, matching the $15.00 minimum wage that's already in effect for large employers. Starting in 2024, the minimum wage for all employers would be adjusted annually to account for inflation.

However, a little-noticed clause requires the annual inflation adjustment to kick in early if the rate of inflation (as measured by the federal Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from July of the previous year through June of the current year) tops 7 percent. Because the rate of inflation during the period spanning July 2021 through June 2022 is on a pace to top 7.6 percent, the minimum wage for both small and large employers is now projected to increase to $15.50 effective January 1, 2023, Gov. Gavin Newsom recently announced.

It's not yet clear when the change will be made official. It probably will be no earlier than mid-July, when the June 2022 CPI-W numbers are expected to be released. The California Department of Industrial Relations had not returned a request for comment as of the time of publication.

$18 Minimum Wage on the November Ballot?

California's minimum wage would rise even higher under a ballot initiative that could come before voters this fall.

The campaign behind the initiative recently announced that it had gathered more than 1 million signatures in support of the measure, a key hurdle in the process of getting it on the ballot in November.

If approved, the minimum wage would increase according to the following schedule:

Year Minimum wage for large employers (26 or more employees) Minimum wage for large employers (25 or fewer employees)
2023 $16.00 $15.00*
2024 $17.00 $16.00
2025 $18.00 $17.00
2026 $18.00 $18.00
2027 and every year thereafter Adjusted for inflation
*The ballot initiative schedules a $15.00 minimum wage effective January 1, 2023, but it appears that would be increased to $15.50 due to the rate of inflation in 2022, as described above.