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Taking the Minimum to the Max: California to Increase Minimum Wage to $15.00

California's current minimum wage of $10.00 per hour is the highest in the country. It now seems very likely that our state (along with New York, apparently) will keep that distinction for the foreseeable future. A few weeks ago, Governor Brown signed a bill that would raise California's minimum wage to $15.00 per hour.

Under the new California law, the minimum wage will increase for employers with 26 or more employees as follows:

  • January 1, 2017 -- $10.50 per hour
  • January 1, 2018 -- $11.00 per hour
  • January 1, 2019 -- $12.00 per hour
  • January 1, 2020 -- $13.00 per hour
  • January 1, 2021 -- $14.00 per hour
  • January 1, 2022 -- $15.00 per hour

For employers with less than 26 employees, the minimum wage increases will occur one year later:

  • January 1, 2018 -- $10.50 per hour
  • January 1, 2019 -- $11.00 per hour
  • January 1, 2020 -- $12.00 per hour
  • January 1, 2021 -- $13.00 per hour
  • January 1, 2022 -- $14.00 per hour
  • January 1, 2023 -- $15.00 per hour

There is a very sharp divide between those in favor of the increase, and those against it. Those in favor argue that the increase will give minimum wage employees a chance to earn a living wage and escape a life of poverty. Opponents argue that the increase will cause companies to leave the state, and that increased wages will raise prices elsewhere from the cost of a movie ticket to a Big Mac at McDonald's. The State Department of Finance estimates that a $15 minimum wage will cost California about $4 billion a year.

The minimum wage increase has some interesting consequences as well, especially in the realm of overtime compensation. To be exempt from overtime as a manager/supervisor, administrator, or professional employee, an employee must earn a salary at least twice the minimum wage. That means that once the minimum wage reaches $15.00, a salaried employee earning the equivalent of $29.00 per hour, a salary of roughly $60,000, would be entitled to overtime since they would not be earning a salary twice the minimum wage.

The $15.00 minimum wage isn't coming next week or next year. But it is coming. At this point it's not clear if other states will follow California (and New York) and enact similar laws. California has always been a tough place to be an employer. It just got tougher.

This article is for education and information purposes only; it should not be construed as legal advice. If you have an employment law question for inclusion in a future article, contact Brett T. Abbott at Gubler & Abbott LLP (bta@thecalifornialawyers.com). For specific employment law advice or other legal assistance, contact Gubler & Abbott LLP, (559) 625-9600, 1110 N. Chinowith St., Visalia, CA 93291 (www.thecalifornialawyers.com). Read Mr. Abbott's blog on employment law issues at http://work-law.blogspot.com.

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