Some issues are left to the federal government to regulate. Some are in the hands of the states, while still others are determined on a city-by-city basis. When it comes to minimum wage, however, all three levels of government can set a minimum wage, and a California employee is entitled to the highest one that applies. The good news for employees is that state and municipal minimum wages are high and heading up.
Federal and State Minimum Wage Laws
Minimum wage laws set an hourly wage that employers must pay to most employees. The U.S. Congress sets a minimum wage in the Fair Labor Standards Act (FLSA) that applies to employees across the nation. It is currently $7.25 an hour and has been in effect since July 24, 2009.
Under the terms of the FLSA, states can also set a minimum wage, either higher or lower than the federal minimum wage. If a state opts to do this, an employee in that state is entitled to whichever minimum wage is higher. California's current minimum wage is $12.00 per hour, much higher than the federal minimum wage, so employees in the state are entitled to at least $12.00 per hour.
Read More: What is the Federal Minimum Wage?
Municipal Minimum Wages in California
California law allows individual cities to set their own minimum wages, higher or lower than the state minimum wage. As with the federal/state minimum wages, the employee is entitled to the highest applicable minimum wage. If a city's minimum wage is higher than California's minimum wage, the employees in that city get the city minimum wage.
Many cities in California have enacted minimum wages that are higher than California's minimum wage. As of 2019, the city of Emeryville, California has the highest minimum wage, currently set at $16.30 per hour.
Many cities have minimum wages greater than $15.00 an hour including Mountain View and Sunnyvale at $15.65 and San Francisco at $15.59. The Los Angeles minimum wage is $14.25 for employers having 26 or more employees. Cities with a minimum wage of $15.00 include:
- San Jose.
- El Cerrito.
- Los Alto.
- Palo Alto.
- San Mateo.
- Santa Clara.
Restrictions on Minimum Wage Application
Both the state of California's minimum wage and some municipal minimum wages set two minimum wages, one for bigger and one for smaller employers. Employers with fewer workers are generally less robust financially than employers with more workers. That's why the state and some cities offer smaller employers the chance to pay a somewhat lower minimum wage.
The state of California's current minimum wage of $12 an hour only applies to employers with 26 or more employees. Employers with 25 or fewer workers must pay their workers $11 an hour.
Some cities also have a higher minimum wage for larger companies and a lower one for smaller employers. The Los Angeles minimum wage for employers having 26 or more employees is $14.25, but that drops to $13.25 for smaller employers. The city offering the highest minimum wage, Emeryville, used to have two tiers for large and smaller employers, but that was removed in 2019.
California Minimum Wages on the Rise
The good news for California employees is that the applicable minimum wages are not only higher than the federal minimum wage but they are also on the rise. The state minimum wage is set to rise by $1 a year through 2022, when it will top out at $15.00. These increases will be delayed by one year for employers with 25 or less employees, but will hit $15.00 in 2023.
Many cities have also announced plans to increase their minimum wages over the next few years. For example, as of 2019, the minimum wage rate for employees in San Francisco will increase every July 1 based on increases in the Consumer Price Index.
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.