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Minimum Wage In California Will Increase On January 1, 2018

Posted by Leslie Ruhland on Dec 12, 2017 10:12:46 AM
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When it comes to minimum wage, California ranks as one of the highest in the nation. And there are cities in California with an even higher minimum wage.


California minimum wage is currently at $10.50 per hour for employers with 26 or more workers. For those businesses employing 25 or less, the minimum wage in California is set at $10.00 for 2017.

Beginning on January 1, 2018 those hourly wage amounts will increase to $11.00 and $10.50 consecutively. For a small business owner with 20 full-time minimum wage employees, for example, this represents an annual increase of $20,800 in actual payroll costs. This does not include the increase in employment taxes, etc. 

Throughout California, primarily in the Bay Area and in the greater Los Angeles region, there are about 30 city and county minimum wage increases that will also take place in 2018. These wage levels are above that mandated by the state.

The minimum wage in San Francisco, for example, is currently $14.00 per hour and will increase to $15.00 an hour on July 1, 2018. 

Exceptions to the Minimum Wage Law

Typically, most employers in California are subject to both the federal and state minimum wage laws. In addition, local entities such as cities and counties, can set their own minimum wage rates. As we noted here, several cities in California have recently enacted ordinances which establish a higher minimum wage rate for employees working within their boundaries.

What this means, in effect, is that employers may find themselves subject to different government requirements. According to the California Department of Industrial Relations (DIR),

"...when there are conflicting requirements in the laws, the employer must follow the stricter standard; that is, the one that is the most beneficial to the employee."

New call-to-action In addition, there are specific exceptions to both the federal and state minimum wage requirements. For example, according to the California Minimum Wage Order MW-2017: 

There is an exception for learners, regardless of age, who may be paid not less than 85 percent of the minimum wage rounded to the nearest nickel during their first 160 hours of employment in occupations in which they have no previous similar or related experience.

Also, there are exceptions for employees who are certified to be "mentally or physically disabled, or both, and for nonprofit organizations such as sheltered workshops or rehabilitation facilities that employ disabled workers."

The California Labor Code (Sections 1191 and 1191.5) stipulate that these workers and organizations may be issued a special license by the Division of Labor Standards Enforcement that authorizes employment at a wage below the legal minimum wage.

⟶ Have Additional Questions About Minimum Wage? Check Out Our California  Minimum Wage Guide

There are also some types of employees that are exempt from the minimum wage law in California. This includes outside salespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularly indentured under the State Division of Apprenticeship Standards. 

In addition, California allows exceptions for the following workers:


California minimum wage laws authorize the Industrial Welfare Commission to establish a sub-minimum wage rate that may be paid apprentices.

Trainees or Learners

California minimum wage laws permit employers to pay trainees (often referred to as learners) a sub-minimum 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. 

everything you need to know about california minimum wage

Unlike the federal requirements, the state of California does not allow employers to pay sub-minimum wages to Non-Trainee Learners, Student Learners or Student Workers. California employers must pay these employees the standard minimum wage rate, unless otherwise exempt.

Note that under the federal rules, tipped employees can also be paid a much lower minimum wage. However, California is one of seven states that pays tipped employees the state minimum wage and this is the rate California employers must abide by.

Compliance With Minimum Wage Laws

New regulations, such as minimum wage requirements, often increase both the costs and the risks for employers, requiring new workplace postings or changes to existing workplace policies. Because of this, it is recommended that all employers consult with experienced employment counsel to ensure payroll complianceIf you have any additional questions about minimum wage, check out our California Minimum Wage page for everything you need to know.

In addition, new management and compliance practices are required for every HR and every payroll professional. All of this can become burdensome and time consuming. But there are options.

Accuchex, a reputable payroll and workforce management services provider, can not only relieve you of the burden of your ongoing payroll process demands, but can potentially provide other cost-effective solutions, as well.

Call Accuchex Payroll and Workforce Management Services at 877-422-2824 to get your free Payroll Outsourcing Guideor click the button below and let us help you learn more about your labor law compliance needs.

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Topics: minimum wage law, minimum wage San Francisco, california labor law, california minimum wage, employee classification

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