California Becomes the First State in the Nation to Approve a Statewide $15 Minimum Wage
California Governor Jerry Brown signed a new minimum-wage bill Monday, April 4, 2016 after it passed the Legislature the previous week. The minimum wage plan, added to SB 3 as amended, was passed by the Assembly Appropriations Committee on Wednesday, March 30 and the full Assembly on Thursday, March 31.
Governor Brown previously negotiated the deal with labor unions to head off competing November ballot initiatives that would have imposed swifter increases without some of the safeguards included in the legislation. Brown now feels California's fast-growing economy can absorb the raises without the state experiencing problems predicted by opponents.
Currently, California's $10-an-hour minimum wage is tied with Massachusetts for the highest among states. Only Washington, D.C., at $10.50 per hour is higher.
Although the scope of this minimum wage increase is unprecedented, the increase to $15.00 will not happen immediately. The measure will raise the state's minimum wage to $10.50 in January and to $11 in January 2018. It will then increase by an additional $1 per hour every year until it reaches $15 in 2022.
Governor Brown remarked about his plan by stating, “This plan raises the minimum wage in a careful and responsible way and provides some flexibility if economic and budgetary conditions change” by increasing the minimum wage over time that would be consistent with anticipated economic expansion. In his public address, the Governor also made clear that this legislation (which was more conservative than alternatives pushed by organized labor), was necessary to achieve “social justice.”
The minimum wage bill comes with notable exceptions. First, should the state experience an economic downturn or budget crisis, the Governor may choose to slow the implementation. It permits the Governor “to act by September 1 of each year to pause the next year's wage increase for one year if there is a forecasted budget deficit (of more than one percent of annual revenue) or poor economic conditions (negative job growth and retail sales).” Second, the bill also gives small businesses, those with 25 or fewer employees, an extra year to implement the increases.
Lastly, California's plan for increasing the minimum wage may replace a current public initiative called the California “Fair Wage Act of 2016” $15 Minimum Wage Initiative (2016). This initiative, currently scheduled to appear on the November 2016 ballot, is designed to increase the minimum hourly wage to $15 per hour by 2021.
About 2.2 million Californians now earn the minimum wage. The University of California, Berkeley, Center for Labor Research and Education projected that pay would rise for 5.6 million Californians by an average of 24 percent.
This bill does not affect higher local minimum “living” wage ordinances. Los Angeles has already agreed to increase the minimum wage to $15 per hour by 2020, making it the largest city in the nation to do so. San Francisco plans to reach a $15 minimum by 2018, while other major California cities, including San Diego and Oakland, have raised their minimum wages as well.
California Employment Law
With pending changes in minimum wage laws, employers in California should act quickly to ensure compensation plans are compliant with local, state and federal laws. Employees in California should keep abreast of wage laws to ensure they are compensated appropriately under California law. Should you have questions about California's employment laws, don't hesitate to contact leading California employment lawyers at Kingsley & Kingsley. Call and speak to an experienced California lawyer toll-free at (888) 500-8469 or click here to contact us via email.