Dear Clients and Friends,
On July 1, 2025, numerous minimum wage increases will take effect across California, impacting hourly wages, exempt employee thresholds, and overall payroll compliance. Employers with operations in affected cities or counties should act now to ensure their pay practices meet the latest requirements.
KEY HIGHLIGHTS
- Southern California Minimum Wage Increases (Effective July 1, 2025):
- Los Angeles County (Unincorporated Areas): $17.81/hour
- City of Los Angeles: $17.87/hour (up from $17.28/hour)
- Pasadena: $18.04/hour (up from $17.50/hour)
- Santa Monica: $17.81/hour (up from $17.27/hour)
- West Hollywood:
- Hotel Workers: $20.22/hour
- Non-Hotel Employees: $19.65/hour (through December 31, 2025)
- City of San Diego: $17.25/hour (already in effect since January 1)
- Local Ordinance Updates: Over 40 cities and counties have new minimum wage rates. Employers must ensure compliance based on the location where each employee performs their work.
- Exempt Employee Salary Thresholds: Exempt employees must earn at least two times the state minimum wage for full-time work to maintain exempt status under California law. Local minimum wage increases do not impact this threshold, but employers may choose to adjust salaries for competitive or equity reasons.
STEPS TO PREPARE AND ENSURE COMPLIANCE
- Review Employee Compensation – Conduct an audit of all hourly and salaried employees to ensure wages meet applicable state and local minimum wage requirements.
- Confirm Exempt Status – Recalculate the salary threshold for exempt employees working in cities with wage increases. Ensure employees classified as exempt still meet the legal minimum.
- Post Updated Notices – Confirm that current wage orders and posters are displayed in accordance with state and local posting requirements.
- Update Payroll Systems – Adjust payroll, timekeeping, and HRIS systems to reflect new rates and ensure accurate pay beginning July 1.
- Budget for Wage Changes – Reforecast budgets and labor cost projections to incorporate higher wages and any necessary salary adjustments.
- Train Managers and HR Staff – Ensure supervisors understand the changes and are prepared to address employee questions about pay updates or exempt status.
Need assistance implementing these changes? Our team can help assess your current pay structure, ensure full compliance, and avoid costly penalties. Please do not hesitate to reach out to your DK team for support.
Sincerely,
DUFFY KRUSPODIN, LLP