As of this week’s vote, the small California city of Emeryville, which is located in San Francisco’s Bay Area, is slated to have one of the highest minimum wage rates in the country. As expected, on June 2, 2015, the Emeryville City Council voted unanimously in favor of a minimum wage ordinance that will raise Emeryville’s minimum wage rate to over $16.00 per hour by 2020.

The “Minimum Wage, Paid Sick Leave, and Other Employment Standards” ordinance includes differing wage rates and escalation schedules depending on what the ordinance defines as small and large businesses. A “small business,” according to the ordinance, is one that has 55 or fewer “employees”—defined as someone who works at least two hours per calendar week within the city limits of Emeryville, including full-time, part-time, and temporary employees.

Small Businesses

For small businesses the wage rates will start at $12.25 per hour as of July 2, 2015 and will adjust annually every July 1 as follows:

  • July 2, 2015: $12.25
  • July 1, 2016: $13.00
  • July 1, 2017: $14.00
  • July 1, 2018: $15.00

Large Businesses

On July 2, 2015, large businesses—those with over 55 employees—will be required to pay workers $14.44 per hour. Subsequently, every July 1, the minimum wage rate will be adjusted annually for inflation based on the annual increase in the local consumer price index (CPI).

  • July 2, 2015: $14.44
  • July 1, 2016: $14.82 (estimated)
  • July 1, 2017: $15.20 (estimated)
  • July 1, 2018: $15.60 (estimated)

Post-2019 Rates

As of July 1, 2019 and every year thereafter, all employers, regardless of size, will be subject to the same minimum wage rate requirements.

  • July 1, 2019: $16.00 (estimated)
  • July 1, 2020: $16.42 (estimated)

Tip Credits

The approved ordinance also specifies that employers many not designate tips or employer-paid health care benefits as a credit toward the minimum wage rate. Additionally, under the ordinance, “service charges” collected from customers must now be distributed to those workers performing the service and the amount collected and distributed must be reported to employees each pay period.

Exemptions

The ordinance includes exemptions to the minimum wage requirements for employees subject to a ratified collective bargaining agreement and expressly waives the provisions of the ordinance for “learners,” as defined by the California Industrial Welfare Commission, who may be paid no less than 85 percent of the minimum wage for the first 160 hours of employment.

Impact on Employers

Emeryville Mayor Ruth Atkin, who voted yes on the measure, stated, “With income inequality out of control, we need to lift the floor for low-wage workers so if you work full-time, you don’t need public assistance . . . This is a policy for the common good.” This new trend for municipalities to enter the employment law arena with unique requirements and red tape is concerning for businesses. In addition to monitoring changes at the state and federal levels, employers must quickly react to the regulatory whims of every small city and town across the state.