Expedited minimum wage increase

Time to update pay calculators and minimum salaries

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On July 27, 2022, the California Department of Finance determined that poor economic conditions necessitated expedited increases to the minimum wage. Based on changes to the consumer price index (CPI) from July 1, 2021 through June 30, 2022, the state’s minimum wage law bumped up minimum wage changes by one year. The minimum wage law requires the rate adjustment to be the lower of 3.5% or the rate of inflation – 7.9% during the relevant period – and 3.5% of $15 is 50 cents. So, the minimum wage will increase to $15.50 per hour for all employers on January 1, 2023, rather than to $15-per-hour minimum wage for employers of all sizes, as expected.

Of course, many cities already increased their specific minimum wages as of July 1. For example, the city of LA minimum increased from $15 to $16.04, and unincorporated areas of LA county to $15.96.

However, the state minimum wage increase means that employers must adjust a few calculations, even if they are already paying a higher wage, or subject to a higher local minimum wage. Specifically, your pay calculators need to be adjusted for employees exempt from overtime under the salesperson exemption, since one of the factors is that they earn at least 1.5 times the state minimum wage (this will now be $23.25/hour). Additionally, exempt managers’ salaries and minimum guarantees need to be adjusted once again - to least $64,480 per year ($1,240 per week or $5,374 per month) for employers of all sizes.