California Governor Jerry Brown signed into law SB 3, which, over the next several years, will gradually increase California’s minimum wage from $10 per hour to $15 per hour for most employers. The bill was quickly enacted and signed into law after two initiatives increasing the minimum wage qualified for ballot in the upcoming elections in November.
For employers with 26 or more employees, the law requires annual wage increases as follows:
From $10 to $10.50 on January 1, 2017;
From $10.50 to $11 on January 1, 2018;
From $11 to $12 on January 1, 2019;
From $12 to $13 on January 1, 2020;
From $13 to $14 on January 1, 2021;
From $14 to $15 on January 1, 2022.
After 2022, annual increases in the minimum wage will be based on the annual increase, if any, in the Consumer Price Index, essentially tying annual wage increases with inflation.
Employers with 25 or fewer employees will have an extra year to comply with the minimum wage increases (i.e., the increases start in 2018).
The law also requires California’s Director of Finance to determine, on an annual basis, whether economic conditions can support a scheduled minimum wage increase and whether the General Fund would be in a deficit in the current fiscal year, or in either of the following 2 fiscal years. If economic conditions would not support a scheduled increase or the General Fund will be in deficit, the Governor may suspend the scheduled minimum wage increase for the upcoming year.
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