Effective as of January 1, 2023, California employers will be required to meet new minimum wage requirements set forth at both state and local levels. These increases in the minimum wage rate will affect non-exempt employees, but also the minimum annual salary requirement for overtime exempt employees.
Increase and Consolidation of the CA Minimum Wage
The State of California employed a two-tiered minimum wage system, which required employers with 25 or more employees to pay a higher minimum wage than employers with fewer than 25 employees. As of January 1, 2023, all employers – regardless of size – must provide their employees with a minimum wage of no less than $15.50 per hour.
Minimum Annual Salary for Overtime-Exempt Employee Increases
Additionally, California law provides that overtime-exempt employees must receive a salary that is no less than two times the state minimum wage. In light of the new increase to the state minimum wage, effective January 1, 2023, the minimum annual salary for overtime-exempt employees will also increase to $64,480.
Select CA Cities Receive a Higher Minimum Wage
Several select California cities will raise the minimum wage for non-exempt employees working within city limits. Non-exempt employees working within one of these cities must be paid the local minimum wage when greater than the CA state minimum wage. However, overtime-exempt employees working in one of these cities need not be paid more than the CA state minimum annual salary of $64.480. The following list includes the local minimum wage rates, effective January 1, 2023, for non-exempt employees working in each of the CA cities listed below:
Minimum Wage Rate
East Palo Alto
Half Moon Bay
$16.34/hour (26 or more employees)
$15.50/hour (1-25 employees)
$16.32/hour (100 or more employees, including people employed outside the city)
$16.07/hour (26-99 employees)
$15.53/hour (1-25 employees)
South San Francisco
Current $15.00/hour rate expected to increase on 1/1/23, as it will be below the state minimum wage.
$17.00/hour (26 or more employees, including those working outside the city)
$16.00/hour (1-25 employees)
$17.50/hour (50 or more employees)
$17/hour (1-49 employees)