Anyway, Governor Brown says he will sign SB 3 (here,) which is the bill you've heard of that "raises California's minimum wage" to $15.00 per hour. Well, it may do so by 2022 (or a year later for employers with fewer than 25 employees). And it definitely will do so eventually. But there is lots of fine print.
"Good" News
First, it's a staged increase. Second, the timing of the increase will depend on the business size. Because California can't just pass a simple law. See, e.g., the paid sick leave law, which looks like a tax code.
Here is the implementation schedule as it currently exists.
(1) For any employer who employs 26 or more employees, the minimum wage shall be as follows:
(A) From January 1, 2017, to December 31, 2017, inclusive,—ten dollars and fifty cents ($10.50) per hour.
(B) From January 1, 2018, to December 31, 2018, inclusive,—eleven dollars ($11) per hour.
(C) From January 1, 2019, to December 31, 2019, inclusive,—twelve dollars ($12) per hour.
(D) From January 1, 2020, to December 31, 2020, inclusive,—thirteen dollars ($13) per hour.
(E) From January 1, 2021, to December 31, 2021, inclusive,—fourteen dollars ($14) per hour.
(F) From January 1, 2022, and until adjusted by subdivision (c)—fifteen dollars ($15) per hour.
(2) For any employer who employs 25 or fewer employees, the minimum wage shall be as follows:
(A) From January 1, 2018, to December 31, 2018, inclusive,—ten dollars and fifty cents ($10.50) per hour.
(B) From January 1, 2019, to December 31, 2019, inclusive,—eleven dollars ($11) per hour.
(C) From January 1, 2020, to December 31, 2020, inclusive,—twelve dollars ($12) per hour.
(D) From January 1, 2021, to December 31, 2021, inclusive,—thirteen dollars ($13) per hour.
(E) From January 1, 2022, to December 31, 2022, inclusive,—fourteen dollars ($14) per hour.
(F) From January 1, 2023, and until adjusted by subdivision (c)—fifteen dollars ($15) per hour.After the rate goes up to $15 per hour, the minimum wage will be set according to price indexes as set forth in the statute. Economists with advanced degrees and Sominex will figure out the amount of the increase and publish annually.
Effect of Minimum Wage Increases
Don't forget, the minimum wage increase will effect things like:
- Minimum salaries for exempt managers (which have to be at least 2X the minimum wage.
- Meal period premiums (penalties).
- Overtime premiums.
- Split shift pay (one hour at minimum wage).
- The minimum compensation to qualify for exempt inside sales (1.5 X minimum wage).
- Sick pay, vacation pay, and other paid leave costs.
- Employers' payroll tax
- Public sector salaries / wages - and your personal taxes pay for those.
And there will be posters.
Also, this is the state minimum wage and does not preclude local minimum wage increases. What will the San Francisco minimum wage be in 2022? It's currently going to $13.00 on 7/1/16.
***
OK, that's it for the positive part of this post. The rest may be snarky. But fair.
Small Employers: Look Out
As shown above, smaller employers can pay a lower wage. If they are actually smaller employers under the law. I know you're thinking it's easy to figure out if you're an employer of 25 or less employees because here's the handy definition:
(3) For purposes of this subdivision, “employer” means any person who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person. For purposes of this subdivision, “employer” includes the state, political subdivisions of the state, and municipalities.
(4) Employees who are treated as employed by a single qualified taxpayer under subdivision (h) of Section 23626 of the Revenue and Taxation Code, as it read on the effective date of this section, shall be considered employees of that taxpayer for purposes of this subdivision.
Unfortunately, your thinking is incorrect, maybe because you are not cynical and paranoid like I am. It is unclear who is a small "employer" under this standard because of the "indirectly" and "agent" language.
There may be litigation over whether "joint employers" (like temp agencies or contractor-subcontractor relationships) will count when the employer is assessing the small employer provision. Plaintiff attorneys won't be shy, because they can bring class actions and seek one-way attorney's fees. And there's PAGA too!
As we have covered, the government agencies and courts are expanding "joint employer" liability. Paying below minimum wage is a very costly endeavor and can result in double pay and other penalties, personal liability, and more. So, small employers may have to get a legislative fix for this provision, or pay the higher rate to avoid potential lawsuits. That won't break a lot of hearts in the legislature.
Now here's another twist. During the period when the minimum wage is increasing to $15.00, each year in July, the state Director of Finance will examine "economic conditions" according to certain listed criteria. The purpose of the review is "to ensure that economic conditions can support a minimum wage increase . . . "
Huh. Why would that be necessary? I thought minimum wage increases were economically super duper!!! Well, just in case the data come in not-super-duper, the Governor may suspend the minimum wage increase set for the following year. If he does so, that will delay the above schedule for a year.
The governor has the right to make that determination and suspend implementation twice. So the $15.00 wage could be delayed a couple of years longer than the above schedule in case of an economic downturn.
Conclusion
Please prepare for minimum wage increases to begin 1/1/17 and to adjust other wage rates accordingly.
Please contact your Chamber of Commerce, legislator, or the Governor's office to express your concern if you have one, particularly about the potential mushy small employer definition.
And consider researching ETFs or mutual funds that focus on moving companies and Texas real estate. I kid again! ::cough:::
