California Raises Minimum Wage to $15.00 by 2022

On Monday April 4, 2016, Governor Jerry Brown signed into law Senate Bill 3, raising California’s minimum wage to $15.00 per hour by 2022 (“SB 3”).  California’s current minimum wage of $10.00 tied Massachusetts for the highest minimum wage for any state, and behind only Washington D.C.’s $10.50 minimum wage.

Increases to the minimum wage will begin January 1, 2017, at which time the minimum wage will be raised to $10.50 per hour.  The minimum wage would then increase by 50 cents on January 1, 2018, and $1.00 each of the following years until 2022.  Businesses with 25 or fewer employees will get an extra year to comply with each increase.  Beginning in 2024, the minimum wage increase will be tied to inflation.

This law follows protracted negotiations between the Governor’s office and labor unions.  Governor Brown was wary of such an increase due to the approximately $4 billion per year it will likely add to the State budget, not to mention the higher costs to private employers.  Once it became clear that Californians supported the wage increase and the unions affirmed their plan to pursue a voter referendum if the State did not agree to the wage increase, the Governor chose to move forward with SB 3.  According to the Governor’s office, SB 3 gives the State more control over the minimum wage increases which it may not have had if the increase had been passed through voter referendum.  In an effort to assuage the Governor and employers, SB 3 permits the Governor to block increases during periods of slow growth or budget deficits.

Several California municipalities (for example:  Berkeley, El Cerrito, Emeryville, Los Angeles, Mountain View, Oakland, Pasadena, Richmond, San Francisco, San Jose, Santa Clara, Santa Monica, and Sunnyvale) and Los Angeles County have already passed laws increasing their minimum wages in their respective jurisdictions.  The State’s decision to raise the minimum wage does not preempt local or municipal increases to the minimum wage.  Rather, the State’s minimum wage will serve as a floor that local governments may choose to exceed.

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