Sacramento County Superior Court Judge Patrick Marlette denied the administration's request for a temporary restraining order that would have forced the controller to pay the federal minimum wage immediately to about 200,000 state workers.
He ruled that it would cause too much harm to employees.
Deputy Controller Hallye Jordan said the decision means state workers will continue to receive their full wages in July and August.
"We were very pleased that the judge took into consideration our arguments and the impact it would have on hundreds of thousands of state employees who have worked for their checks and expect the full amount," Jordan said after the ruling.
The judge did say he will allow the administration's lawsuit to proceed so the courts can sort out whether the controller must pay minimum wage in the future. The next hearing will be July 26.
A spokeswoman for Schwarzenegger's Department of Personnel Administration said the administration is confident it will ultimately prevail in the courts.
"And we also hope that the Legislature is going to pass a budget in the meantime so we aren't forced to pay our employees minimum wage," spokeswoman Lynelle Jolley said.
Earlier this month, a state appeals court in Sacramento ruled in favor of Schwarzenegger. It said the Republican governor has the authority to order minimum wage for civil service workers because the state has not passed a budget for the current fiscal year, which started July 1.
Schwarzenegger's order would cover about 200,000 of the state's work force of 237,000, who would be paid the federal minimum of $7.25 if the courts ultimately find in his favor. Salaried managers who are not paid on an hourly basis would see their pay cut to $455 a week.
If wages are cut in the future, employees would be reimbursed once a budget is passed and signed.
The Schwarzenegger administration filed its original lawsuit in Superior Court two years ago after the governor first attempted to impose the minimum wage during a previous budget deadlock. The controller, who cuts state paychecks, has refused to comply.
State Controller John Chiang has filed a counter lawsuit in the long-running political feud, arguing he cannot make the changes. He said California's decades-old computerized payroll system is incapable of handling the pay reduction.
The system was designed more than 60 years ago and was last revamped in 1970.
Chiang, a Democrat who has received $190,000 in union campaign contributions this year, also warned that paying the minimum wage would violate the Federal Fair Labor Standards Act. That could lead to costly fines for the state.
