California sets a state minimum wage, but several cities across LA County set their own higher rates. The rule that trips up most business owners is simple. The minimum wage applies based on where the employee performs the work, not where your business is registered or where payroll is processed.

Pasadena, City of Los Angeles, Santa Monica, West Hollywood, Malibu, and unincorporated LA County all have their own minimum wage ordinances. Each city updates its rate annually, and most of these increases hit on July 1 rather than January 1. West Hollywood has historically set the highest rate in the county. Rates between cities can differ by two or three dollars per hour, which adds up fast across a full payroll.

If you have employees who work in multiple cities during a pay period, you have to track hours by work location and apply the correct rate to each block of hours. A landscaping crew that services properties in Pasadena on Monday and in Santa Monica on Tuesday is subject to two different minimum wages that week. A contractor whose office is in Glendale but whose job site is in West Hollywood owes the West Hollywood rate for hours worked on that site. The employee’s home address and your business address don’t matter for this purpose.

Payroll systems can handle this, but they have to be configured for it. Most modern payroll platforms like Gusto, QuickBooks Payroll, and ADP let you set up multiple work locations and assign hours per location during each pay period. Without that setup, the system will apply one default rate to all hours, which is how businesses end up paying employees below the required minimum and accumulating wage claim liability. For mobile crews, tracking by location requires either time tracking software that captures job site data or a disciplined timecard process that notes where hours were worked each day.

The risk of getting this wrong is real. California wage and hour enforcement is aggressive, and cities like Los Angeles and Pasadena have their own enforcement arms beyond the state. Penalties include back wages, interest, liquidated damages, and attorney fees. A single misclassified work location over a few years can produce a five or six figure liability when a former employee files a claim. Most of our bookkeeping clients in Pasadena with mobile workforces learned this the hard way before they got their systems dialed in.

Practical steps look like this. Map every city where your employees regularly work and pull the current minimum wage ordinance for each. Set up work locations in your payroll system for each city. Put a time tracking process in place that captures hours by location. Update your system every July when most cities raise their rates, and again in January when the state rate typically changes. If you run payroll yourself, calendar the annual updates so nothing slips. If you outsource, make sure whoever handles your payroll understands multi-jurisdiction wage compliance and is tracking the rate changes for you.

The businesses that struggle with this are usually the ones that grew from a single-location operation into a multi-city service area without updating their payroll setup. If that sounds like your situation, it’s worth auditing the last year of payroll records to see whether every hour was paid at the correct city’s rate.