California Governor Edmund G. Brown Jr. signed landmark legislation on April 4 that makes California the first state in the nation to commit to raising the minimum wage to $15 per hour statewide. The bill signing follows an agreement between Governor Brown and state legislatures on March 28 to commit to raising the minimum wage to $15.
Under the legislation—S.B. 3 by Senator Mark Leno (D-San Francisco) —minimum wage will rise to $10.50 per hour on January 1, 2017 for businesses with 26 or more employees, and then rise each year until reaching $15 per hour in 2022. The bill also recognizes the contributions of small businesses—those with 25 or fewer employees—to California’s economy and allows additional time for these employers to phase in the increases.
The legislation increases the minimum wage over time, consistent with economic expansion, while providing safety valves – known as “off-ramps” – to pause wage hikes if negative economic or budgetary conditions emerge. The Governor can act by September 1 of each year to pause the next year’s wage increase for one year if there is a forecasted budget deficit (of more than one percent of annual revenue) or poor economic conditions (negative job growth and retail sales).
The minimum wage increases are scheduled as follows:
Large employers. For employers with 26 or more employees, the minimum wage increases would phased in as follows under S.B. 3: January 1, 2017, to $10.50; January 1, 2018, to $11; January 1, 2019, to $12; January 1, 2020, to $13; January 1, 2021, to $14; and January 1, 2022, to $15.
Small employers. Employers with 25 or fewer employees would be required to phase in the minimum wage increases as follows: January 1, 2018, to $10.50; January 1, 2019, to $11; January 1, 2020, to $12; January 1, 2021, to $13; January 1, 2022, to $14; January 1, 2023, to $15.
After January 1, 2023, once the minimum wage reaches $15 for all businesses, the minimum wage could then be increased each year up to 3.5 percent (rounded to the nearest 10 cents) for inflation, as measured by the national Consumer Price Index. The increase would be calculated on August 1 to take effect on January 1 of the following year.
In-home supportive services workers. The new law also phases in paid sick leave for in-home supportive services workers with eight hours or one day paid sick leave beginning on July 1, 2018. Thereafter, sick days would be increased as minimum wage increases are phased in for employers with 26 or more employees to 16 hours or two days when the minimum wage is $13; and to 24 hours or three days when the minimum wage $15. Paid sick days would be earned at the rate of one hour for every 30 hours worked. (State of California, Office of the Governor, Press Release, April 4, 2016, https://www.gov.ca.gov/news.php?id=19368; S.B. 3, L. 2016, http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB3.)
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