California Governor Jerry Brown announced that a deal had been reached with the California legislature to gradually raise the state’s minimum wage to $15 an hour by 2022. This would give California the highest state-wide minimum wage in the country.
Under the new law, the state minimum wage will increase from the current $10 an hour to $10.50 an hour effective January 1, 2017. Thereafter, the state minimum wage will increase to $11 an hour on January 1, 2018, with successive $1 an hour increases on January 1st of each successive year until reaching $15 an hour on January 1, 2022. The law allows for annual cost-of-living increases thereafter so that the state minimum wage keeps up with inflation.
Businesses with 25 or fewer employees will have one additional year to comply with each minimum wage reset mandated by the new law.
It is important to remember that many municipalities in California already mandate a minimum wage that is higher than the state minimum wage. This new law will not impact these local laws that require a higher minimum wage. If your business operates within a municipality with its own minimum wage law, you will have to pay the higher of either the municipality’s minimum wage or the new state minimum wage.
In states that do not have their own minimum wage law, then the federal minimum wage law still applies. The federal minimum wage is currently $7.25 an hour and has not been changed since 2009.