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Your Guide to California’s Minimum Wage

Nothing in this article constitutes legal advice. Please consult a tax attorney or tax professional if you have questions about minimum wage compliance.
Square
Editorial Team

Small business owners in the Golden State know how important it is to stay up to date on minimum wage regulations. You want to make sure you’re complying, of course. But staying aware of upcoming changes also lets you better plan for the future of your business.

That’s why we put together this quick guide with what you need to know about the minimum wage in California.

What are the new California minimum wage changes that just took place?

On January 1, 2019, California’s minimum wage will increase to $11.00 for companies with 25 employees or fewer and $12.00 for companies with 26 employees or more.

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What’s happening with the minimum wage in California beyond 2019?

The minimum wage in California will continue increasing each year until reaching $15 per hour for all businesses in 2023.

Once the minimum wage reaches $15 per hour, wages could then be increased each year up to 3.5 percent for inflation.

Year 26 Employees or More 25 Employees and Fewer
2017 $10.50 $10
2018 $11 $10.50
2019 $12 $11
2020 $13 $12
2021 $14 $13
2022 $15 $14
2023 $15 $15

How should small business owners prepare for minimum wage increases?

Every business is different, so there isn’t one right way to prepare. Here are a few options you may want to consider:

  • Audit your expenses: Check your cash flow in detail and create a hiring plan you can afford. In some cases, you may find that hiring temporary workers or contract workers as needed is less expensive than taking on full-time staff.
  • Make sure you hire and keep the right employees: Replacing an employee costs a lot. You decrease the total cost associated with recruiting and training when you hire (and then retain) the right people. Look for candidates with good track records, who come recommended, and who fit in with the company culture. Once they’re onboarded, make sure you build a relationship and provide paths for growth; it makes it more likely that they will stay in their role.
  • Increase prices: This is a great way to increase cash flow. Customers are rarely happy with a price hike, but keep in mind that your competitors will be forced to do the same. Just make sure you keep track of trends, and don’t raise prices too high.
  • Update tech: Consider automating certain aspects of the work (like payroll), and find ways to reduce production costs.

The Square Editorial Team is dedicated to telling stories of business, for business owners. Our team comes from a variety of backgrounds and share a passion for providing information that helps businesses to start, run, and grow. The team is based in San Francisco, but has collaborators all over the country.