California Minimum Wage Starting 2017

As recently reported through new channels, the State of California legislature just passed Senate Bill SB 3 which will incrementally increase minimum wage in California over a 6 year period of time. Following this increase period, the minimum wage will continue to increase annually based on a set formula roughly based on the Consumer Price Index (CPI).The first increase will go into effect on 1/1/2017 for employers with 26 or more employees, taking the minimum wage for these employers to 10.50 per hour. Employers with 25 or less employees will begin to see the increase as of 1/1/2018. The increases are shown on the table below:

Effective Date of Increase
Applies to Employers
with 26+ or More Employees
Applies to Employers
With 25 or Fewer Employees
  January 1, 2017 10.50 Remains at 10.00
  January 1, 2018 11.00 10.50
  January 1, 2019 12.00 11.00
  January 1, 2020 13.00 12.00
  January 1, 2021 14.00 13.00
  January 1, 2022 15.00 14.00
  January 1, 2023 Remains at 15.00 15.00

 

In years where the Governor determines that there is an economic reason to do so, twice during the increase period, the Governor may delay the increase.

Starting as of 8/1/2022, the California Director of Finance is responsible for calculating the additional amount of increase in minimum wage based on the set formula for the upcoming year.

It is important for employers to carefully monitor how the increase in minimum wage affects the minimum compensation an employee must be paid to quality as an exempt employee, as this will change with each increase of minimum wage. Of course, each exempt employee must still meet all of the existing duties tests to qualify for the exemption as well, as has always been the case.

Another couple of items were included with this new bill. The first item involves provisions of AB 1522, the Healthy Workplaces, Healthy Families Act passed and effective as of 7/1/2015. The change provides for Paid Sick Leave for In-Home Supportive employees, which were previously excluded under AB 1522.

The bill also outlines that for the purposes of Paid Sick Leave, any employee who is classified as an exempt employee is deemed to be working 40 hours a week.

To read the actual text of SB 3 click here

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