Minimum Wage Increase in California and its Implications 2025

The minimum wage is the lowest amount of pay that workers can legally earn from their employers. In 2023, there are still 1.1% of employees who were compensated hourly rates at or below the official minimum wage in the United States.

According to the Department of Industrial Relations, it is under the legal obligation of a company to provide pay in accordance with the state minimum wage, and it cannot be renounced by negotiations like collective bargaining agreements.

Effective January 1, 2025, California with twenty other US states have implemented minimum wage hikes. In the middle of the year, it is expected that other states' minimum wage will increase as well.

To give you more insights into the higher minimum wage rate in California (2025, here is the breakdown of the wage hike in its localities, industries, as well as its implications and some frequently asked questions.

What is the minimum wage in California 2025?

Minimum wage in California (2025) is $16.50 per hour. This has increased compared to its 2024 minimum wage, $16. This hike is due to the state law requiring wages to be raised alongside inflation to aid the cost of living.

One of the tools that gives quick insights into minimum wages across the United States is Salary.com’s Market Data. It has HR-reported salary surveys to provide minimum wage information, forecast market changes, and find data specific to your company.

Minimum wage increase in localities

The minimum wage in California (2025) varies from one locality to another. This is because cities and counties in the United States have different local legislations, economic status, state laws, and costs of living.

Among the city or county minimum wage increases in California, West Hollywood has the highest with $19.65 per hour while Novato has the lowest with $16.42 per hour for companies with 25 or fewer employees.

City/county	Applicable to	Minimum wage per hour
Alameda	All employees	$17.00
Belmont	All employees	$18.30
Berkeley	All employees	$18.67
Burlingame	All employees	$17.43
Cupertino	All employees	$18.20
Daly City	All employees	$17.07
East Palo Alto	All employees	$17.45
El Cerrito	All employees	$18.34
Emeryville	All employees	$19.36
Foster City	All employees	$17.39
Fremont	All employees	$17.30
Half Moon Bay	All employees	$17.47
Hayward	Companies with 26 or more employees	$17.36
	Companies with 25 or fewer employees	$16.50
Los Altos	All employees	$18.20
City of Los Angeles	All employees	$17.28
Los Angeles – Unincorporated County	All employees	$17.27
Malibu	All employees	$17.27
Menlo Park	All employees	$17.10
Milpitas	All employees	$17.70
Mountain View	All employees	$19.20
Novato	25 or fewer employees	$16.42
	26 to 99 employees	$17.00
	100 or more employees	$17.53
Oakland	Non-hotel employees	$16.89
Palo Alto	All employees	$18.20
Pasadena	All employees	$17.50
Petaluma	All employees	$17.97
Redwood City	All employees	$18.20
Richmond	All employees	$17.77
San Carlos	All employees	$17.32
San Diego	All employees	$17.25
San Francisco	All employees	$18.67
San Jose	All employees	$17.95
San Mateo	All employees	$17.95
San Mateo – Unincorporated County	All employees	$17.46
Santa Clara	All employees	$18.20
Santa Monica	All employees	$17.27
Santa Rosa	All employees	$17.87
City of Sonoma	Companies with 26 or more employees	$18.02
	Companies with 25 or fewer employees	$16.96
South San Francisco	All employees	$17.70
Sunnyvale	All employees	$19.00
West Hollywood	Non-hotel employees	$19.65

Minimum wage rates in industries

Prior to the release of minimum wage in California (2025), two sectors have already increased their wages in April and October 2024. These are the fast-food restaurants and the healthcare facilities.

Getting a wide array of data like wage hikes in industries all on your own is a taxing job. To come up with robust information, you need to have large market data points, encompassing massive areas and factors.

Good thing Salary.com’s Compensation Software already has all of that. With accuracy and smart reporting, you can use this pricing platform to break free from tedious spreadsheets and match price jobs based on industry, company size, and geographic location.

Fast food minimum wage

On April 1, 2024, all fast-food restaurant employers should give employees $20 per hour as minimum wage. According to DIR, under the new law of California, there are things to be considered when it comes to “fast-food restaurants” and those that do not meet the criteria are exempt from the law.

Here are some requirements to be considered a fast-food restaurant:

• It is a limited-service restaurant in California, where customers pay for food and beverage items before consumption.

• It is part of a nationwide restaurant chain of at least 60 establishments.

• It mainly sells food and beverage items for immediate consumption.

Here are some food restaurants that are not covered by the law:

• It operates as a bakery from September 15, 2023, with bread as a standalone food item.

• It is situated within a grocery establishment.

• It operates with an airport, hotel, event center, theme park, museum, or gambling establishment.

• It is on public land like a public beach or park.

Healthcare minimum wage

On October 16, 2024, legislation ordered healthcare facility employers to increase the minimum wage of their workers. To avail of the higher minimum wage, employees must belong to a healthcare facility under the new law and provide or support healthcare services.

These are some healthcare facilities that must give higher minimum wage under the law:

• A facility that is part of an integrated healthcare delivery system

• Care in residential settings

• Outpatient clinics

• Community, rural health, or non-profit clinics

• County mental health facilities

• County correctional facilities with healthcare services

Implications of higher minimum wage in California

A study confirmed that the $20 minimum wage for fast-food workers in California showed significant employee benefits. It also found that even with the wage hike, there was no employee reduction in the fast-food sector. Here are the key points of the study:

• Improved pay. Ninety percent (90%) of non-managerial workers experienced a wage increase of 18%. This means that previously underpaid employees are now better compensated.

• Steady employment. Although there were concerns that the wage increase might lead to job cuts, employment across the fast-food industry has continued to be stable.

• Moderate price increase. There is only an increase of 3.7% in the prices of menu items, which means that for a 4-dollar burger, there is an added 15 cents.

The industry is always changing and evolving so it is easy to lose track of the current data market. With Benchmark Pay Data, your company will have access to a living database as it is backed with multiple data points to make way for streamlined research and accurate compensation data.

FAQs

Here are some frequently asked questions about the minimum wage increase in California:

What is the minimum pay for exempt employees in 2025?

As of January 1, 2025, the minimum salary for exempt employees in the United States is $1,128 per week or $58,656 per year. Exempt employees are those who are not paid an hourly minimum wage, rather fixed minimum salary requirements regardless of their hours of work.

Which states have increased minimum wage in 2025?

These are the 21 states that increased their minimum wage in 2025: Alaska, Arizona, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Michigan, Minnesota, Missouri, Montana, Nebraska, New Jersey, New York, Ohio, Rhode Island, South Dakota, Vermont, and Washington.

What is California’s minimum wage 2024?

In 2024, the state minimum wage in California is $16 per hour for all employers.

How does state minimum wage increase to be determined after the minimum wage reaches $15 an hour?

When the hourly minimum wage reaches $15, the rate is adjusted yearly for inflation, which is based on the national consumer price index. This is to make sure that the cost of living and the purchasing power of employees coincide.