California employers of all sizes will soon be required to follow a new statewide minimum wage, which had previously been capped at $15 as long as inflation stayed in check.

The trigger for a statewide wage increase was set at 7 percent inflation. The California Department of Finance projects that at the end of the state’s fiscal year, or June 30, the rate of inflation will be 7.6 percent higher than the previous fiscal year.

That means wage increases will be required for California employers of all sizes, including dental practices. Most companies will give employees a 50-cent raise beginning January 1, 2023. Employers already paying above the current minimum wage will not be impacted.

Currently, the minimum wage is $15 per hour for workplaces with 25 or more employees. It’s a dollar less at smaller companies. So, the January 1, 2023 minimum wage increase will be slightly more for employees at businesses with fewer than 24 employees.

Since 2017, the state’s minimum wage has increased in gradual steps depending on company size. The increases were written into law in Senate Bill 3, which was signed by then-Governor Jerry Brown. The law, however, capped the minimum wage at $15 unless inflation broke the 7 percent threshold.

In various cities, changes are already taking place with some businesses having already transitioned into the higher wage level in cities where the living wages outpace the state minimum wage compared to others areas. Employers in about 30 cities already pay more than $17 to keep up with the economic pace. Additionally, some Bay Area cities will see their local wage rise on July 1.

Dental offices should refer to local government wage guidelines or ordinances to remain current with wage requirements, as outlined in the 2016 wage legislation. It’s important for employers to keep in mind that the stricter wage standard, or the wage that is most beneficial to the employee, must be followed.

Some employees, however, are exempt from California’s wage laws. To learn more about the California Minimum Wage notice for 2023, and to read frequently asked questions about workplace wages, go here.

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