California Approves First Statewide $15.00 Minimum Wage in the Nation

APPLIES TO

All California Employers

EFFECTIVE

January 1, 2017 and Annually

QUESTIONS?

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(888) 378-2456

On April 4, 2016, Governor Brown signed into law an annual, statewide minimum wage increase, which will ultimately result in a $15.00 minimum wage by January 1, 2022. The first increase will occur on January 1, 2017. Thereafter, wage increases will occur on January 1 of each year according to the table below. Smaller businesses of 25 or fewer employees will have an additional year to phase in.

Date New Rate (26 or more employees) New Rate (25 or fewer employees)
January 1, 2017 $10.50  
January 1, 2018 $11.00 $10.50
January 1, 2019 $12.00 $11.00
January 1, 2020 $13.00 $12.00
January 1, 2021 $14.00 $13.00
January 1, 2022 $15.00 $14.00
January 1, 2023   $15.00

As a general rule, employers are required to provide the most generous benefit offered by applicable local, state or federal law. Employers must therefore check their local ordinances, which may offer a more generous minimum wage or similar wages increasing at a faster pace than the statewide phase-in. For example, if a specific region mandates a $13.00 minimum wage effective January 1, 2018, employers of that region must comply with that regulation, rather than the statewide mandate of $11.00.

This staggered plan for increasing minimum wage does have flexibility built in.  In the event of poor economic conditions, the Governor will have the capability to act by September 1 of each year to “pause” the next year’s wage increase for one year. This flexibility is also written for the possibility of future growth: after the $15.00 wage goes into effect for all employers, wages could be increased each year for inflation as measured by the Consumer Price Index, capping out at an additional 3.5%.

 

Action Items:

  1. Review your organization’s budget to plan for future labor expenses.
  2. Consult legal counsel to ensure that any compensation agreements, if used, are adjusted to comply with applicable minimum wage rates.
  3. Adjust wage rates, if necessary.
  4. Contact ManagEase at (888) 230-3231 for a California Fair Pay Act compensation audit to identify gender wage disparities. Adjusting wage rates in response to mandated increases is a good opportunity to assess wage compliance with other requirements.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.

© 2016 ManagEase, Incorporated.

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