Earlier in the year I mentioned that the minimum wage was going up. While this is true, it is not as simple as it sounds. Senate Bill 3 (passed April 4, 2016) creates a two-tier system for California’s minimum wage, depending on the number of employees in the company.
For Employers who employ 26 or more employees, the minimum wage has already increased to $10.50 per hour. Those same Employers will see increases as follows:
- January 1, 2018 – December 31, 2018 = $11.00 per hour;
- January 1, 2019 – December 31, 2019 = $12.00 per hour;
- January 1, 2020 – December 31, 2020 = $13.00 per hour;
- January 1, 2021 – December 31, 2021 = $14.00 per hour;
- January 1, 2022 until adjusted = $15.00 per hour.
For Employers with 25 or fewer employees, the minimum wage has not increased yet, but will do so based on the following schedule:
- January 1, 2018 – December 31, 2018 = $10.50 per hour;
- January 1, 2019 – December 31, 2019 = $11.00 per hour;
- January 1, 2020 – December 31, 2020 = $12.00 per hour;
- January 1, 2021 – December 31, 2021 = $13.00 per hour;
- January 1, 2022 – December 31, 2022 = $14.00 per hour;
- January 1, 2023 until adjusted = $15.00 per hour.
Even after the increases above, the minimum wage in California will continue to escalate each year. Under the new law, the Director of Finance is required to calculate an “adjusted” minimum wage annually. Thereafter, the minimum wage will be increased by the lesser of 3.5% or the rate of change in the average Consumer Price Index for Urban Wage Earners and Clerical Workers annually between July and June. The results shall be rounded to the nearest ten cents ($0.10) per hour and shall take effect the following January.
While this seems innocent enough, for a company paying $15.00 per hour, an automatic increase of 3.5% can be as much as $0.525 cents per hour. While that is the maximum, it will rapidly inflate the minimum wage to much higher than imagined by most businesses.
For further information regarding these requirements and/or assistance in drafting, please contact Dave Cohen at Cohen Durrett/The Employers’ Council (916) 927-8797. Power Inn Alliance members receive a complimentary initial consultation.
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