On May 19, 2015, the Los Angeles City Council voted, 14-to-1, to raise the minimum wage to $15.00 per hour in increments over the next five years. As a result, the city council will draft a proposal to raise the wage rate from $9.00 per hour to $15.00 per hour by 2020. For businesses with 25 or fewer employees, the increases will not begin until July 1, 2017, and will go to $15.00 per hour on July 1, 2021. Significantly, beginning on July 1, 2022, the Los Angeles minimum wage will automatically increase in step with the Consumer Price Index for Urban Wage Earners and Clerical Workers. The plan will go to a vote in June of 2015 and Mayor Eric Garcetti has said he will sign it into law. The wage rate increase comes after Mayor Garcetti publicly stated his intention to increase the Los Angeles minimum wage to $13.25 in the fall of 2014.
With this minimum wage hike, Los Angeles joins other major metropolitan areas including San Francisco, Chicago, Seattle, and Oakland, each of which has already approved wage hikes. Most recently, Emeryville, a small city in the East Bay of the San Francisco Bay Area, voted 5-to-0 to increase the minimum wage to $16.00 per hour depending on the size of the business. The Emeryville City Council is still considering the measure and will likely take further action in June. If enacted, the new Emeryville minimum wages will start at $14.44 per hour for business with more than 55 workers and will incrementally increase to $16.00 per hour by 2019.
An associate in the San Francisco office of Ogletree Deakins, commented: “We see this as part of a new trend. The Emeryville City Council was clear that it did not want Emeryville to be left behind as its neighbors in Berkeley, Oakland, and San Francisco, as well as other larger California and West Coast municipalities, like Los Angeles and Seattle, enact minimum wage rates that are higher than the statewide minimum of $7.25 per hour. At multiple meetings, the city council referenced the movements elsewhere.”
“Now, rather than solely focusing on compliance with federal and state regulations, employers must also ensure compliance with a flurry of new municipal ordinances—each with its own unique requirements. This is yet another added administrative burden, particularly for employers with locations in multiple jurisdictions within California, each with a unique set of laws.”
Betsy Johnson, the Managing Shareholder of the Los Angeles office of Ogletree Deakins, commented: “It is estimated that over 50 percent of Los Angeles workers will be affected by the minimum wage increases and this will have a significant impact on labor costs for employers. While larger employers may be able to absorb these increased costs and/or pass them on to consumers, small and entrepreneurial businesses may decide that it is too expensive to operate in the city of Los Angeles and move or set up shop elsewhere. The unintended consequences of such significant increases to the minimum wage may be that low-wage earners who live in and near the city of Los Angeles will see their standard of living fall as living expenses, rent, and unemployment in Los Angeles continue to rise.“