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Minimum Wage, Maximum Confusion: New York and California Set the Stage for Minimum Wage Changes on Both Coasts

Published by on April 12, 2016

California and New York have both enacted new laws that take complex, burdensome multi-year paths to reach a statewide minimum wage of $15 per hour. Employers need to start preparing now.

Two of the nation’s bellwether states have reached legislative deals that will mandate statewide minimum wage increases intended to have a dramatic impact over the coming years.

On March 26, 2016, the California legislature set in motion a process intended to bypass a citizen referendum in favor of direct legislation that will ultimately raise the state’s minimum wage from $10.00 per hour to $15.00 per hour.

Then, on April 4, 2016 Governor Jerry Brown signed Senate Bill 3, which turned this strategy into law. Significantly, California begins this journey having already established one of the nation’s highest minimum wages at $10.00 an hour. It is tied with Massachusetts and exceeded only by the District of Columbia (which is at $10.50 per hour).

The new California law mandates annual increases in the state’s minimum wage, beginning on January 1, 2017 and ending on January 1, 2023. For employers with 26 or more employees, the law achieves its progressive increases to reach $15 per hour one year earlier than it does for employers with 25 or fewer employees (and yes, that means that the minimum wage will actually be different for companies with varying numbers of personnel on the payroll at the same time in a given year).

New York reached a similar point in a similar timeframe when its legislature announced on March 31, 2016 that the state’s latest budget would raise the minimum wage to $15.00 — but do it much faster in certain areas, including New York City, where the $15.00 per hour level would be mandated to go into effect by the end of 2018.

The three-tier model adopted by New York sets one strategy for the City of New York; one for the counties of Westchester, Nassau and Suffolk; and one for the rest of the state (i.e., all areas geographically north of Westchester County).

In addition, the jurisdictions north of Westchester County will see their minimum wage reach a maximum of $12.50 under the law, while the City and the three named counties to its north and on Long Island will reach $15.00 per hour over a series of phases.

Whereas in California, employers with different numbers of employees may be subject to different minimum wages at the same time, in New York the variation is geographic (which means that you may be obligated to pay different minimum wages to employees in different locations of your business at the same time. 

Welter Insight

Employers in both California and New York need to consider not only the overall end-point objective of the new minimum wage laws, but also the complexities of phased implementations which will result in new minimum wage changes taking place annually, with additional differences base upon city and county lines as well. This layering of complexity is just as dangerous to overall compliance is is underpaying employees as the minimum wage continues to rise.

Image Credit: California Governor’s Office of Business & Economic Development
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