California Minimum Wage Increases on July 1: What Employers Need to Know Now
If your business employs hourly workers in California, mark July 1, 2025, on your calendar. That’s when several cities and counties across the state will raise their local minimum wages—again.
These changes are especially important for employers of lower-wage, hourly workers in sectors like retail, hospitality, food service, janitorial services, security, logistics, and manufacturing. A failure to comply with the new wage rates—even by mistake—can expose your company to lawsuits, penalties, or audits.
Here’s what you need to know to stay compliant, control costs, and keep your business protected.
The Basics: California Has Multiple Minimum Wages
While California’s statewide minimum wage is currently $16.50 per hour for all employers, that’s not the full picture. Many cities and counties have adopted their own, higher local minimum wage ordinances. These local laws often adjust their wage rates every July 1 based on inflation or policy goals.
This means if you operate in multiple locations—or if your employees move between cities—your payroll team needs to apply the highest applicable wage for each worker.
Who’s Raising Wages on July 1?
Here are just a few of the jurisdictions increasing their minimum wages on July 1, 2025:
- San Francisco: $19.18/hour
- Emeryville: $19.90/hour
- Berkeley: $19.18/hour
- City of Los Angeles: $17.87/hour
- Pasadena: $18.04/hour
- Santa Monica: $17.81/hour
- Fremont: $17.75/hour
- Alameda: $17.46/hour
- Milpitas: $18.20/hour
- Unincorporated LA County: $17.81/hour
Special industry rates also apply in some cities. For example:
- West Hollywood: $20.22/hour for hotel workers
- Long Beach: $25/hour for hotel workers
- Los Angeles (Hospitality Ordinance): Up to $30.15/hour for some hotel and airport workers
Why These Changes Matter to Employers of Low-Wage Workers
For employers with large workforces of lower-wage, hourly employees, even a small wage increase can significantly impact labor costs. Here’s why these local increases matter:
- Cost Pressures: A 50-cent or $1 per hour increase across hundreds of employees adds up fast.
- Wage Compression: As minimum wages rise, other wages may need to follow to maintain pay differentials.
- Compliance Risk: If you miss a change—even for just a few workers—you’re open to lawsuits, wage claims, and fines.
- Payroll Complexity: Running payroll for multiple locations now requires local wage tracking.
What Happens If You Don’t Comply?
Under California law, paying less than the required minimum wage can trigger:
- Backpay, plus interest
- Liquidated damages (essentially doubling the amount owed)
- Waiting time penalties (up to 30 days of wages)
- Class actions or Private Attorneys General Act (PAGA) claims
- Investigations by the Labor Commissioner
In short: getting this wrong can be expensive—even if it was unintentional.
Your July 1 Compliance Checklist
Here are 7 action items every employer should consider right now:
1. Check the Minimum Wage in Each Location
Don’t assume the state rate applies. Review where your employees physically perform work and check that city or county’s current minimum wage.
2. Update Payroll Rates Before the First July Pay Period
Make sure any payroll changes are entered into and processed before the first pay period that includes July 1, 2025.
3. Revise Wage Notices
Under Labor Code section 2810.5, California requires employers to give written notice to each employee of their pay rate. You’ll need to update and redistribute this if the employee’s wage is changing.
4. Post the New Wage Rates
Many local ordinances require you to post updated wage information where employees can see it (e.g., breakrooms, time clocks). Some cities offer posters on their websites.
5. Review of Remote and Mobile Work Locations
If employees work remotely or across city lines (e.g., delivery drivers, in-home caregivers), determine which jurisdiction’s wage applies and ensure compliance with the highest rate.
6. Account for Special Industry Wages
If you operate a hotel, airport-related business, restaurant, or healthcare facility, double-check whether local ordinances impose higher or sector-specific minimums.
7. Plan for Wage Compression
Supervisors or experienced staff may expect raises when entry-level pay increases. Evaluate whether compression is creating morale or retention problems.
A Note on Exempt Employees
Remember: these minimum wage increases only apply to non-exempt, hourly employees.
However, there’s an indirect effect on exempt employees too. In California, the minimum salary for most exempt employees must be at least 2x the state minimum wage—currently $66,000/year. If the state minimum increases again in 2026 (as expected), this number will likely rise again in January.
Tips for Multi-Location Employers
Employers with multiple locations often struggle to keep up with the patchwork of city and county rules. Here’s how to get ahead of it:
- Build a wage map of all jurisdictions where you operate
- Use payroll software or legal alerts to flag rate changes
- Assign HR or legal staff to monitor local ordinances
- Audit pay practices each June and December, ahead of major change dates
Looking Ahead
Many of these local ordinances are tied to inflation and adjust annually on July 1. Others adjust on January 1, alongside state changes. In 2026, we can expect another round of increases—possibly higher if inflation continues.
There are also ballot measures and legislation that may raise sector-specific wages (particularly in healthcare and hospitality), so keep an eye on local politics.
Final Thoughts: Don’t Wait
If you’re an employer of hourly workers in California, July 1 is not just a date—it’s a legal and operational deadline.
Get ahead of wage increases now by confirming locations, adjusting pay systems, and training managers. A few hours of preparation now can save tens of thousands of dollars—and protect your business from unnecessary risk.
If you need help reviewing your wage compliance, revising employee notices, or understanding local ordinances, now is the time to speak our team of employment lawyers.
