Your Guide to California’s Minimum Wage

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.

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.

As always, to make sure your business is prepared and stays in compliance, we recommend that you discuss these upcoming changes to the California minimum wage with your accountant and lawyer.

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