Differences Between Federal and State Minimum Wage Requirements

As January rolls around each year there is talk of minimum wage increases across the country. There are differences between federal and state minimum wage requirements. Recently, cities have started enacting minimum wage requirements as well. Knowing what applies to you as a business owner will help you make sure you are paying your employees correctly and help you stay out of trouble and keep your employees happy.

 1. What Minimum Wage Laws Apply To You?

All the laws apply to you as a business owner but the law that you need to abide by is the strictest standard (the general rule of thumb is to follow the law that is most beneficial for the employee). For example, California’s minimum wage is higher than the federal minimum wage, so you have to abide by the California minimum wage rate. If a city in California, like San Francisco for example, decides to make their minimum wage $15 per, then employers in the city limits of San Francisco would have to pay their employees $15 per hour.

 2. What Minimum Wage Do You Pay?

In January of 2016, the minimum wage in California went up to $10.00 per hour. The Federal minimum wage has stayed at $7.25 per hour since July of 2009. However, there are multiple cities in California that have even higher minimum wage rates.

Passed in 2012

San Francisco, CA $12.25

San Jose, CA $10.30


Passed in 2014

Mountain View, CA $10.30

Sunnyvale, CA $10.30

San Diego, CA $11.50 (by 2017)*

Oakland, CA $12.25

Berkeley, CA $12.53 (by 2016)

Richmond, CA $13.00 (by 2018)

San Francisco, CA $15.00 (by 2018)

*San Diego increase awaits review by votes in 2016

Passed in 2015

Emeryville, CA $15.00 (by 2018)

Los Angeles, CA $15.00 (by 2020)

Palo Alto, CA $11.00 (by 2016)

Los Angeles County, CA $15.00 (by 2020-21)

Mountain View, CA $15.00 (by 2018)

Sacramento, CA $12.50 (by 2020)


Current Proposals and Proposed Rate

Davis, CA $15.00

Sacramento, CA $15.00

Pasadena, CA $15.00

Palo Alto, CA $15.00 (by 2018)

Long Beach, CA $16.00

Sunnyvale, CA $15.00 (by 2018)

3. Are There Exceptions To The Minimum Wage Law?

A common question employers ask is, “Can I pay my employee less than minimum wage if they are okay with it?” The answer is no. You cannot legally pay any of your employees less than the strictest minimum wage requirement associated with your city, state and federal regulations. Make sure you know whether or not your city has a higher minimum wage than the state or federal requirement. It’s not common but is becoming more common, especially in larger cities in California.

There are some exceptions to the minimum wage law for non-profits, learners, family working for immediate family and disabled persons. To see a full description of these exceptions go here: http://www.dir.ca.gov/dlse/faq_minimumwage.htm

It’s important for your business to act legally and professionally. Do the research to find out what your city, state and federal minimum wage requirements are and adhere to the strictest one.

Find out what you need to do when hiring your first employee with our Employer’s Guide to Hiring Your First Employee.