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Minimum Wage To Increase January 1, 2017

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Regardless of whether you agree with California’s decision to gradually increase its minimum wage to $15.00 per hour by 2022, it is here!  On January 1, 2017, the first phase of Senate Bill 3, which has been codified as Labor Code § 1182.12 et seq., will take effect by raising the state’s minimum wage to $10.50 per hour for workers that are employed by businesses having 26 or more employees.  Below is a chart detailing the wage increases:

26 Employees or More     25 Employees or Less

$10.50/hour             January 1, 2017                 January 1, 2018

$11/hour                   January 1, 2018                 January 1, 2019

$12/hour                   January 1, 2019                 January 1, 2020

$13/hour                   January 1, 2020                January 1, 2021

$14/hour                   January 1, 2021                 January 1, 2022

$15/hour                   January 1, 2022                 January 1, 2023

The above wage increases may be “paused” by the Governor if certain conditions are met.  These conditions are: 1) “whether economic conditions can support a scheduled minimum wage increase”, and 2) “whether the General Fund would be in a deficit in the current fiscal year, or in either of the following 2 fiscal years.” See SB-3.

The minimum wage increases do not stop at $15.00 per hour.  Labor Code § 1182.12(c)(1) states that “on or before August 1 of that year, and on or before each August 1 thereafter, the Director of Finance shall calculate an adjusted minimum wage. The calculation shall increase the minimum wage by the lesser of” 1) “3.5 percent and” 2) “the rate of change in the averages of the most recent July 1 to June 30, inclusive, period over the preceding July 1 to June 30, inclusive, period for the United States Bureau of Labor Statistics nonseasonally adjusted United States Consumer Price Index for Urban Wage Earners and Clerical Workers (U.S. CPI-W). The result shall be rounded to the nearest ten cents ($0.10). Each adjusted minimum wage increase calculated under this subdivision shall take effect on the following January 1.”

Labor Code § 1182.12(c)(2) ensures that the minimum wage will not be reduced.  It states that if the CPI-W is negative, the minimum wage will not be increased or reduced.

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