Key Changes Coming for State and Local Minimum Wage Laws

Proposition 32, appearing on California’s November 2024 ballot, aims to raise the state's minimum wage from the current $16 per hour. If passed, the wage will increase to $17 for the remainder of 2024 and $18 by January 2025 for employers with 26 or more employees. For smaller employers with 25 or fewer employees, the wage will rise to $17 on January 1, 2025, and $18 on January 1, 2026.

Since Proposition 32 does not specify an effective date, California state law provides that ballot initiatives take effect on the fifth day after the Secretary of State certifies the election results. The Secretary of State is currently scheduled to certify results on December 13, 2024, which means the measure could take effect around December 18, 2024. As a result, employers may need to implement the new, higher minimum wage rates for a brief period during the final weeks of 2024.

In San Diego, per San Diego Municipal Code §39.0107(b)(4), the city must automatically match any federal or state minimum wage that surpasses its own. Therefore, if Proposition 32 is approved, San Diego's minimum wage will increase to $17 for the rest of 2024 and $18 starting in 2025 for all employers within the city limits.

The state’s minimum wage is already linked to inflation: even if the measure doesn’t pass, the lowest-paid workers will receive a 50-cent increase to $16.50 per hour in January—equivalent to just over $34,000 annually for a full-time worker.

Budgeting Tips: 

• One key consideration is employee reclassification, especially with the new minimum salary threshold of $68,640, which may require some employees to change from exempt to non-exempt status.
  
• Businesses might need to consider adjusting their pricing strategies to offset rising labor costs.
  
• It’s also essential to assess the potential need for furloughs or layoffs to maintain financial stability while keeping employee morale high.

Taking Action: 2025 Wage Increase Preparation

• Get Your Payroll Ready: Update all systems for the January 1, 2025 wage increase
• Plan Your Finances: Adjust your budget to handle new labor costs
• Keep Everyone Informed: Update your team and post all required notices
• Stay Compliant: Double-check that all wage policies meet new standards

At Lucid HR Solutions, we recognize the importance of open communication with your workforce regarding these policy changes, including updates to timekeeping practices. We’re here to support you through these transitions, offering guidance and resources that foster a positive workplace culture and effective leadership.