Minimum wage refers to the minimum hourly rate of pay that employees must be paid for their work.
Both U.S. federal and state-level employment law requires that employers pay their workers according to standards established for their industry and job type.
Employers who fail to meet these minimum standards for pay are committing a crime — this is called wage theft, and California employees who experience it are entitled to legal compensation.
We’ll walk you through the basics of California’s minimum wage laws, explain some of the exceptions to these regulations, and describe what to do if you think your employer is committing wage theft.
What is the California Minimum Wage?
Changes to the minimum wage are controlled by Congress, who must pass a bill that the president signs into law to increase the national minimum wage.
However, federal law also allows states and cities to set a minimum wage that is higher than the federal rate.
This is good news for workers in California, where state law sets a higher minimum wage than the federal rate. Employers in California are required to pay the higher wage established by state law — unless an even higher rate has been established by the city or county in which they operate (as in some examples outlined below).
Since January 1, 2017, the state’s minimum wage was scheduled to increase over time, gradually bringing all employees to a statewide baseline wage of $15 per hour. From there, no future increases to the minimum wage are planned, but they are still possible.
From 2023 onward, California’s minimum wage will be adjusted based on the national consumer price index (CPI), which measures variation in the cost of living over time.
For that reason, in 2022, when the U.S. Bureau of Labor of Statistics found that inflation had increased by 7.9%, California law required an increase in the minimum wage by 3.5% for the following year. As a result, in 2023, all California employers, regardless of size, were required to increase minimum pay to a rate of $15.50 per hour.
Importantly, California law says that although the minimum wage can still potentially increase, it can’t be lowered — even if there’s a drop in inflation and the CPI. The minimum also can’t legally be raised any more than 3.5% in one year.
Local California Minimum Wage Rates
Some cities and counties within California have established higher minimum wages than the state’s level.
per hour as of July 2023
|Adjusted annually based on CPI
|Increases tied to CPI-W for San Francisco-Oakland-San Jose
|Increases tied to CPI-W for San Francisco-Oakland-San Jose
|Increases tied to CPI-W for Los Angeles
|Increases tied to CPI
|Increases tied to CPI
The University of California at Berkeley has compiled and maintains local city and county level minimum wage rates here.
Who Must be Paid California Minimum Wage?
California law is very clear. Employers — “any person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person” — are legally required to pay the minimum wage to employees in “all industries.”
As 2011 case Sullivan v. Oracle Corp. established, even employees who don’t live in California, but still work in the state, must be paid California’s minimum wage.
California employees also can’t waive their right to receive minimum wage. This means that even if an employee agreed to work for less than minimum wage, that agreement would be considered unlawful by a court and would not be enforced, according to California Civil Code. This is the case even if the agreement is a collective bargaining agreement.
When Doesn’t California Minimum Wage Apply?
Most, but not all, of California employees have a right to minimum wage. Here are some situations in California where the minimum wage does not apply or where employees may be paid less than minimum wage.
Executives, Administrative Staff, and Professionals
Executives, Administrative Staff, And Professionals
California’s minimum wage laws do not apply to workers who are classified as executive, administrative or professional. This isn’t laid out explicitly in California law, but the exemption of these types of positions from minimum wage law is basically moot.
Why? Because to meet the legal definition of executive, administrative or professional, an employee must be paid a monthly salary that’s at least twice the state minimum wage, assuming they are working 40 hours per week.
So, if the applicable minimum wage is $15.50 per hour, the monthly salary required to qualify as an executive, administrative staff or professional would be $5,373 (two times $15.50 per hour times 40 hours per week times 52 weeks per year, divided by twelve months per year).
Learners Or Trainees
Learners are employees of any age who are working in a position in which they have no previous related experience. In these cases, California law allows employers to pay workers less than minimum wage during their “learning and training period,” the first 160 hours of work.
However, learners must receive no less than 85% of the minimum wage (rounded to the nearest nickel) during this time. And after that training period is up, they’re entitled to receive 100% of the minimum wage.
Another similar exemption applies to apprentices, individuals who are enrolled in a formal program for receiving on-the-job technical instruction in an industry such as manufacturing, construction, public administration, or transportation.
Apprentices who are regularly “indentured” and undergoing training in accordance with the California Division of Apprenticeship Standards are subject to their own wage regulations and exempted from state minimum pay law.
An outside salesperson is an adult worker (18 years or older) who “customarily and regularly works more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.”
The “employer’s place of business” doesn’t have to be an office owned by the salesperson’s company, just any fixed location.
It can even include the salesperson’s own home, if that’s where they otherwise fulfill their other responsibilities — e.g. preparing orders, talking to customers on the phone, mailing products or advertisements.
Outside salespersons of this type — who spend their time going door-to-door, or visiting customers’ businesses — can be exempt from minimum wage laws, provided certain requirements are met.
For the outside salesperson exemption to apply, not only must more than half the employee’s time be spent away from the place of business, but they must also be conducting sales-related tasks during that time.
Sales tasks could include meeting with customers outside of the office, soliciting potential advertisers, or conducting promotional work outside of their place of business.
According to California Labor Code, counselors and student employees of an “organized camp” may be paid at 85% of the hourly California minimum wage rate.
An “organized camp” means an outdoor site with programs established to provide an outdoor group living experience “with social, spiritual, educational, or recreational objectives” for at least five days during a season. Trailer parks, resorts, motels, hunting camps, and penal or correctional camps do not count as “organized camps.”
The Division of Labor Standards and Enforcement of the State of California (DLSE) may issue to certain employers licenses that authorize them to employ persons whose “earning capacity is impaired by physical disability or mental deficiency at less than the minimum wage.”
Nonprofit organizations, such as sheltered workshops or rehabilitation facilities, may also receive such licenses. The minimum wage rate that must be paid in these circumstances is set by the Labor Commission.
The employers and the employee, or the employee’s representative, must jointly apply for this license, which expires and must be renewed each calendar year.
However, as of January 1, 2022, the DLSE will no longer be issuing new licenses and plans to phase out the exemption of disabled individuals from state minimum wage laws by 2025.
Generally, courts in California are quite strict when it comes to employee exemptions from California’s minimum wage laws. The burden is on employers to make a strong and compelling case that an individual meets one of these exemptions.
Do Independent Contractors Get Paid Minimum Wage?
Independent contractors are not required to be paid minimum wage. This is because, by definition in state law, independent contractors are not considered employees.
That said, there are many factors that go into determining whether or not a worker is legitimately classified as an employee or an independent contractor. It’s not enough for an employer to simply claim that an individual is an independent contractor.
Instead, as the court in the 2007 case of Estrada v. FedEx clarified, core of the question of whether someone is working as an independent contractor or an employee lies in the degree of control exercised over the worker in the “actual conduct” of the person or entity hiring the worker.
So even if the employer and the worker enter into an agreement that explicitly states that the worker is an independent contractor, a court will still look at the amount of direction and control that the contracting entity exercises over the worker’s responsibilities.
Some Special Cases
Not all employees are paid by the hour. Some employees are compensated on a commission basis, while others are paid by the task, the job, or the number of pieces they produce.
How does California minimum wage law apply in those cases? At base, California law says that in these types of situations, an employer is required to compensate such employees “not less than” the California minimum wage for all hours worked in the payroll period — even if they’re not strictly paid by the hour.
Many workers, especially in the garment industry, are paid by the piece. Here’s how this might work. Suppose an employer pays $.25 per piece and a worker finishes 40 pieces in an hour, then the total earned at the piece rate would be $10. The employer, however, must still pay at least the minimum wage.
So, if this work is happening in San Diego, where the minimum wage is currently $16.30 per hour, the employee must still be paid $16.30 for that hour of work.
Now suppose the same worker, over the course of a 40-hour week, completes 2,700 pieces, resulting in a total piece rate for the week of $675. If we’re still in San Diego, a 40-hour workweek at minimum wage would result in weekly payments of $652.
In this case, then, even though the worker may have earned less than $16.30 per hour during some of his or her 40 hours of work, overall the amount earned would seem to meet minimum wage requirements.
In California, however, it might not.
This is called “pay averaging.” The legality of pay averaging varies depending on the jurisdiction. Some federal courts have found pay averaging to be an acceptable practice under the Fair Labor Standards Act. See, for example, the 2004 case of Medrano v. D’Arrigo Brothers Co.
Under California law, however, pay averaging for piece work is not permitted. Instead, California employers must compensate their employees the minimum wage for each hour an employee must be at work, even if the piece-rate work for some of those hours results in pay that is higher than minimum wage for those hours.
Furthermore, employers must pay workers for any time the worker is required either to wait around or to perform tasks other than the piecework tasks for which they are receiving piece-rate pay.
As with piece-rate work, employees who are paid on a commission basis must be paid at least the minimum wage for all hours worked. For commission sales, however, the relevant time frame over which California minimum wage must be paid is the entire pay period, rather than each hour.
The timing of when commissions are earned and paid is usually covered by an employment agreement, but there are times when the commissions paid for a pay period will not meet minimum wage requirements.
In those situations, the employer must make up the difference between how much has been paid for earned commissions and what the California minimum wage law would otherwise require as minimum pay during the period.
As with the pay averaging issue described above for piece-rate work done per hour, commissions paid in one pay period can’t be carried over and counted as meeting the California minimum wage requirements in later pay periods.
A “split shift” refers to a work schedule in which the work period is interrupted by non-paid, non-work periods (other than bona fide rest and meal breaks) established by the employer.
When a minimum wage employee is required to work a split shift, the employer must pay a “split shift premium” in the form of one extra hour of pay. Thus, if an employee works a total of eight hours in a split shift at minimum wage, the employee must be paid for a total of nine hours.
If an employee earns more than the minimum wage for a split shift, the employee is still entitled to the split shift premium whenever the number of hours worked plus one hour paid at minimum wage would exceed the pay earned by the actual hours they worked at their regular rate of pay.
When is it Legal to Make Deductions From the Minimum Wage in California?
Payment of minimum wages refers to employees’ gross pay, which means the amount the employee receives before taxes and other legitimate deductions are withheld.
Wherever these kinds of deductions are authorized by law, they are not treated as reducing the employee’s California minimum wage.
Meals And Lodging
Meals and lodging may only be credited against California minimum wage with the employee’s written agreement.
There are limits to the value of meals and lodging that may be credited toward minimum wage obligations, depending on whether the meal is breakfast, lunch, or dinner, and depending on whether the lodging is a room occupied alone, a room shared, or an apartment.
Meals must be “adequate,” appropriate for the employee’s work shift and consist of a “well-balanced serving of a variety of wholesome, nutritious foods,” according to state labor code.
Furthermore, the lodging must be available for full-time occupancy and be deemed “adequate, decent and sanitary according to the usual and customary standards.” Employees may not be required to share a bed.
If meals are not actually taken or lodging is not actually used, the employer may not take any credit for them against the minimum wage otherwise due.
The maximum credits that may be claimed by employers who furnish lodging or meals, as of January 1, 2023, are as follows:
|All employers regardless of number of employees
|$60.16 / week
|$72.88 / week
|Apartment occupied by 1 person – two thirds (2/3) of the ordinary rental value, but no more than:
|$875.33 / month
|Apartment occupied by a couple where both are employed by the employer – two thirds (2/3) of the ordinary rental value but no more than:
|$1,294.83 / month
Under California law, unlike the federal Fair Labor Standards Act, an employer can’t count an employee’s tips toward meeting the minimum wage.
Tipped employees are entitled to receive the full minimum wage before tips in California. California labor law considers tips the property of the employee(s) who earned them. This means they can’t be treated as wages and don’t count as part of a worker’s regular rate of pay.
“Tip pooling,” where employees are required to pool and then share tips, is allowed. But it’s illegal for any share of that pool to go to the employer or their agent — i.e. “every person other than the employer having the authority to hire or discharge any employee or supervise, direct, or control the acts of employees.”
How is the California Minimum Wage Enforced?
Filing A Complaint Or Lawsuit
Employers who refuse or fail to pay the California minimum wage are violating the law and committing wage theft. If this happens to you, there are a couple of ways that you can hold them legally accountable and recover your lost wages — and potentially some additional damages.
For one, you can file a wage claim with the California Labor Commissioner’s Office. Any California worker, regardless of immigration status, can file a formal complaint about wage theft.
This can be done online, by email, postal mail, or in person at a local office. (Workers employed in the garment manufacturing industry can file a claim here.)
The Labor Commissioner’s Office will investigate your complaint. In many cases, they’ll hold a conference where you and your employer can try to resolve the issue of any unpaid wages.
You can also file a lawsuit against your employer in civil court. Under California law, employees who’ve suffered wage theft are entitled to recover the full amount of the unpaid balance owed, including interest, as well as reasonable attorney’s fees and costs.
Time Limits For Acting
Be aware: There are limitations on how long a California minimum wage violation claim may be filed after it has occurred.
For violations of California’s minimum wage law, claims must be filed within three years of the reported incident. The time limit is extended to four years in cases where the violation is based on a written agreement.
No Retaliation Allowed
It’s within your rights as a worker to report your employer’s unlawful activity, especially when it involves a direct loss of your legally entitled wages or benefits.
Employers may not discriminate, retaliate, or take any adverse actions against employees who exercise their rights under the California Labor Code by filing a wage claim or a lawsuit.
This is true whether you simply bring an issue to your employer’s attention or whether you officially register a complaint with a state or federal agency.
Contact a California Employment Lawyer for Assistance
Challenging your employer can be intimidating, but sometimes it’s necessary. Having the support and expertise of an employment attorney familiar with California law can help you prepare a strong case for recovering the money you’re owed.
Ottinger Employment Lawyers has over 20 years of employment law experience in California. Our California employment attorneys have the knowledge, skill, and passion required to fight for your right to just compensation.