All California Employers
January 1, 2017 and Annually
Contact HR On-Call
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%.
- Review your organization’s budget to plan for future labor expenses.
- Consult legal counsel to ensure that any compensation agreements, if used, are adjusted to comply with applicable minimum wage rates.
- Adjust wage rates, if necessary.
- 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.