California $15 Minimum Wage Bill Awaits Governor’s Signature
Author: Christopher W. Olmsted (San Diego)
Published Date: April 1, 2016
On March 31, 2016, the California legislature approved the nation’s highest statewide minimum wage. SB-3, approved in both the State Senate and Assembly, will increase the state’s minimum wage to $15.00 per hour by 2022. Governor Jerry Brown has already signaled that he intends to sign the bill into law on Monday, April 4, 2016.
The new law will increase the minimum wage for large and small businesses according to two schedules. It will also have the effect of increasing the minimum exempt salary requirement for exempt California employees.
Minimum Wage Schedule for Large Businesses
Businesses employing 26 or more employees must increase their minimum wage rates as follows:
January 1, 2017: $10.50
January 1, 2018: $11.00
January 1, 2019: $12.00
January 1, 2020: $13.00
January 1, 2021: $14.00
January 1, 2022: $15.00
Minimum Wage Schedule for Small Businesses
The minimum wage increases will be delayed by one year for small businesses, i.e. those employing 25 or fewer employees. Such businesses must increase the minimum wage as follows:
January 1, 2018: $10.50
January 1, 2019: $11.00
January 1, 2020: $12.00
January 1, 2021: $13.00
January 1, 2022: $14.00
January 1, 2023: $15.00
After the state minimum wage reaches $15.00 per hour, automatic cost-of-living increases will be required every year, effective on January 1. However, the governor will have the discretion to temporarily suspend annual increases where certain economic factors signify an economic downturn.
Significant Impact on Exempt Salary Requirement
The minimum wage increase will also significantly affect the minimum salary requirement for exempt employees in California. This is because the minimum salary level requires exempt employees to earn at least twice the state’s minimum wage.
Employers may be forced to make significant changes in the way mid- and low-level supervisors and managers are paid. The current minimum salary required for an exempt employee is $41,600 annually. Here is what the annual minimum salary requirement for exempt employees will be in the future:
Christopher Olmsted is a shareholder in the firm's San Diego office. Mr. Olmsted helps businesses avoid employment-related legal claims by providing California employment law compliance advice. He also defends employers in a variety of litigation matters. Mr. Olmsted's employment law compliance and litigation experience includes: California FEHA and Title VII discrimination, harassment and retaliation claims; wrongful termination claims; wage and hour compliance and defense of claims and labor...