Navigating California’s New $15 Minimum Wage

October 4, 2016
By

Category: Management, Time

Navigating state law changes can be tricky and often results in employers not being in compliance with new regulations. Small businesses can unknowingly be out of compliance if they fail to understand all aspects of newly enacted laws. This could be the case with California’s Senate Bill (“SB”) 3. Signed by Governor Brown on April 4, 2016, SB 3 increases the minimum wage in California to $15 an hour, the highest in the country.   

Private sector employers with 26 or more employees will see the minimum wage increase each year, starting on January 1, 2017, until it reaches $15 an hour by the year 2022. Employers with 25 or fewer employees have until 2023 to reach this newly established rate. Below outlines the schedule for the increase to California’s minimum wage.

Effective Date 26 or More Employees 25 or Fewer Employees
January 1, 2017 $10.50 per hour $10.00 per hour (current rate)
January 1, 2018 $11.00 per hour $10.50 per hour
January 1, 2019 $12.00 per hour $11.00 per hour
January 1, 2020 $13,00 per hour $12.00 per hour
January 1, 2021 $14.00 per hour $13,00 per hour
January 1, 2022 $15.00 per hour $14.00 per hour
January 1, 2023 $15.00 per hour $15.00 per hour

 

The statue also has a built-in “pause” button which allows for the increases to be suspended for a year, if the state has a serious budget crisis or goes into a recession. Each year, on or before July 28, the state Director of Finance is required to determine if economic conditions can support the scheduled minimum wage increase.  

Unlike other states, California’s SB 3 does not limit cities and counties from increasing their minimum wage above the state’s minimum wage of $15 per hour.

So, what are some approaches employers can take to be prepared? Employers should;

  • Plan in advance for these changes
  • Assess their current compensation program and make adjustments as required under the new law
  • Update minimum wage posters
  • Notify employees when the new minimum wage goes into effect   
  • Train Payroll, HR and managerial employees on new regulations
  • Conduct a wage and hour audit of your workforce; consider engaging with a consultant or legal counsel for assistance if needed

Employers who educate themselves on the upcoming changes and plan in advance should be successful in navigating the new California minimum wage changes.

 

Related reading and sources:

    

About

After working in the field of psychology research for years, Bella loves sharing what she's learned in a more directly impactful context. She's interested in the intersection of people and business, and wants to promote conversations about HR. She's an amateur ceramicist, pro dog walker, and produces podcasts on the side.

Category: Benefits, Featured


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