California’s unfriendly business environment took another unprecedented step this week, with Governor Jerry Brown raising the minimum wage to $15.00 per hour by 2022. Governor Brown signed SB 3 into law on April 4, 2016.
The new law annually increases the state minimum wage starting January 2017. California’s minimum wage currently is $10.00 per hour. California employers opposed the bill arguing the minimum wage increases will make it even more difficult for in-state producers to compete with out-of-state employers; employer advocacy groups also argued the bill will result in more employers leaving the state.
Under the new law, the minimum wage for employers with 26 or more employees will increase as follows:
$10.50 per hour as of January 1, 2017
$11.00 per hour as of January 1, 2018
$12.00 per hour as of January 1, 2019
$13.00 per hour as of January 1, 2020
$14.00 per hour as of January 1, 2021
$15.00 per hour as of January 1, 2022
The increase to $15.00 per hour is more gradual for employers with 25 or fewer employees; minimum wage increases for the smaller employers will begin a year later, starting January 1, 2018. The law permits the Governor to temporarily suspend the minimum wage increase no more than two times based on the health of California’s general economy or state budget. Once the minimum wage reaches $15.00 per hour, the minimum wage rate will be adjusted annually.
The new law also threw in paid sick leave to in-home supportive services employees beginning July, 1 2018. The sick leave entitlement will provide up to one day of leave per year, and increase over time to three days per year.
Employers should review their pay practices to ensure compliance with this law, as well as ensure exempt employees meet the increased salary requirement.