California HR

A $15 California Minimum Wage?

Most California employers will see the state’s minimum wage reach $15 an hour by 2022 if reports of a deal in the state legislature materialize as expected. Some businesses and industries may be impacted more than others—how will the proposed wage increases affect your company?

Reports published in the Los Angeles Times and The Sacramento Bee on March 27 tell of a tentative deal between state lawmakers and union leaders that would phase in the wage hike. Currently, the state’s minimum wage stands at $10 an hour. (The federal minimum wage is $7.25 an hour.) The newspapers reported that businesses with fewer than 25 employees would have an extra year to reach the $15 level.

Mark I. Schickman, an attorney with Freeland Cooper & Foreman LLP in San Francisco, said the deal is extremely likely to pass the legislature and has Brown’s support. The deal was announced by the Governor on March 28. Brown joined “a number of other leaders” the same day to discuss the “landmark deal,” and the Times reported that lawmakers could vote on the proposal within a couple of weeks.

The Bee reported that under the proposal, a sitting governor could temporarily stop the phased-in increases in case of recession. Also, after the $15 level is reached, future increases would be linked to inflation.

Schickman said the governor’s ability to delay one of the phased-in raises is a key part of the bill, and having a cost-of-living escalator built in to the bill is a “huge feature,” since once the $15 level is reached, the minimum wage could rise on the basis of inflation without requiring additional legislation.

If the deal materializes, it could replace efforts to put a minimum wage hike on the November ballot. One proposal that would raise the wage to $15 an hour by 2021 has qualified to be included on the ballot. “The word is that the proponents are going to take that off the ballot if this passes,” Schickman said, adding that he expects Brown to support the bill even though the governor has been “a bit more centrist than the legislature” lately, vetoing some employment bills in the past session.

Schickman said he expects that the California cities that have passed their own minimum wages that are higher than the state’s will come under pressure to raise their thresholds again in response to the state action.

Schickman said employers can expect a new state minimum to drive up other wages as well, since employers paying entry-level workers $15 an hour will want to pay more to employees with more than entry-level experience and skills.

Schickman said some employers also see the higher minimum wage as a necessity, because some places in the state, such as the Bay Area, are too expensive for anyone making minimum wage to live within an hour of the city.