On April 4, the governors of New York and California signed measures that will culminate in a $15 minimum wage phased in over the next few years.
Champions of the minimum wage increases say they are important to providing workers a living wage, but foes in both states predict job losses and business failures.
New York and California became the first states to pass a $15 minimum wage, but several cities around the country already have laws putting them on the road to a $15 minimum. The federal minimum wage is $7.25 an hour.
Here’s a look at both states’ new laws.
Employers will see minimum wage increases implemented on a regional basis. The current minimum wage in New York is $9 an hour.
A statement from Governor Andrew Cuomo’s office says that under the new law, New York City employers with at least 11 employees will see the minimum wage go to $11 at the end of 2016. Then, $2 increases will go into effect in each of the next two years, with the minimum wage reaching $15 at the end of 2018. New York City employers with fewer than 11 employees will see the minimum wage go to $10.50 at the end of 2016 and rise another $1.50 each year for three years, reaching $15 at the end of 2019.
The New York City commuter counties of Nassau, Suffolk, and Westchester will see the minimum rise to $10 at the end of 2016. It will then go up $1 per year, reaching $15 at the end of 2021.
The rest of the state will see the minimum wage hit $9.70 at the end of 2016 and go up 70 cents per year until it reaches $12.50 at the end of 2020. The minimum will continue to increase to $15 on an indexed schedule.
The law contains a “safety valve” that will allow state officials beginning in 2019 to consider the effects of wage increases on regional economies before allowing scheduled increases to go into effect. The governor’s office says the minimum wage increases will affect 2.3 million people.
In addition to the minimum wage law, Cuomo signed a paid family leave law that will grant up to 12 weeks of paid family leave phased in through 2021. The law will allow workers to take paid leave to care for an infant or a family member with a serious health condition or to relieve family pressures when a family member is called to active military service, according to a statement from the governor’s office.
The statement explains that benefits will be phased in beginning in 2018 at 50% of an employee’s average weekly wage, capped at 50% of the statewide average weekly wage. When the law is fully implemented in 2021, workers will be able to collect 67% of their average weekly wages, capped at 67% of the statewide average weekly wage.
The program will be funded through payroll deductions from employees, according to the governor’s office. Employees will be eligible to participate after working for an employer for six months.
“There’s a lot of work that has to be done to make sure this is all done right,” Charles H. Kaplan, an attorney with Sills Cummis & Gross P.C. in New York City, said after the minimum wage and paid family leave bills were announced. For example, employers need to look at which counties employees work in to make sure they’re paid correctly. Also, employers should determine which size category they are in. New York City employers with at least 11 employees are considered large employers.
The minimum wage law also makes changes to the tipped minimum wage, so employers in the hospitality industry must make sure they’re in compliance with the new law.
Kaplan said once the new minimum wage and paid leave laws take effect, employers will need to make sure their payroll administrators are paying employees properly under the measures.
Kaplan said employers also need to consider whether the minimum wage law should prompt an overall review of their compensation practices. He reminds employers to examine their collective bargaining agreements to see how the laws may affect their contractual obligations. Plus, he urges employers to look at all their policies to make sure they appropriately reference the new paid family leave law.
Kaplan said like the minimum wage law in California, the New York minimum wage increase was pushed by labor interests—notably, Local 1199 of the Service Employees International Union. He also said New York’s recent action to phase in a $15 minimum wage for fast-food workers was a “harbinger” for the new minimum wage law.
Most California employers will see the state’s minimum wage hit $15 an hour by 2022. Employers with fewer than 25 employees will have an extra year to reach the $15 level. The current minimum wage in California is $10 an hour.
Under the new law, employers with 26 or more employees will see the minimum wage go to $10.50 on January 1, 2017, with annual increases through January 2022.
The California legislation includes an “off ramp” provision that allows the governor to delay a scheduled annual increase in the event of an economic downturn. The law also provides for automatic increases tied to inflation after the $15 level is reached.
Mark I. Schickman, an attorney with Freeland Cooper & Foreman LLP in San Francisco, said the governor’s ability to delay phased-in raises and the cost-of-living escalator make up a “huge feature” of the new law.
The law may prompt even more action on wages. After the legislative deal on the new minimum wage bill was announced, Schickman said he expects cities in California that have passed minimum wages higher than the state’s minimum to come under pressure to raise their minimum wages again. He also said employers can expect the new state minimum wage to drive up other wages.
The legislative deal producing the new law followed a union-backed effort to put a minimum wage increase on the ballot in November. A proposal to increase the minimum wage to $15 by 2021 qualified to be on the ballot, but the legislative action replaced that effort.