Raising the Floor: California Increases its Minimum Wage

by Littler

For the first time since 2006, California's Legislature passed legislation increasing the state's current minimum wage of $8 per hour. Governor Brown signed the bill on September 25, 2013.

The new law, Assembly Bill (AB) 10, amends California Labor Code section 1182.12 to require that, beginning on July 1, 2014, the state's minimum wage becomes $9 per hour.  Eighteen months later, on January 1, 2016, the minimum wage in California will increase to $10 per hour.

The bill was introduced by Assembly member Luis A. Alejo (D-Salinas), with final week co-authorship from Speaker of the Assembly John A. Pérez (D-Los Angeles) and Senate President Pro Tem Darrell Steinberg (D-Sacramento).

Unless other states raise their minimum wages in the interim, AB 10 will make California's the highest state minimum wage in the United States.1

How Did This Happen?

In 2011 and 2012, bills were introduced to raise the minimum wage, but those bills did not make it through the legislative process. 

A proposal to increase California's minimum wage usually consists of three components: 

  • the new wage rates,
  • the effective date (or dates) of the increases, and
  • whether the rates will be automatically increased with reference to an economic index.

In 2005, the Legislature passed a minimum wage increase that contained an automatic increase provision. That proposal was vetoed by Governor Schwarzenegger.  In his veto message, Schwarzenegger specifically objected to the "autopilot" aspect of the bill permitting increases in the minimum wage without legislative action.  The following year, the Legislature produced a bill, which Governor Schwarzenegger signed, that had a 75-cent per hour increase the year after the bill was passed, and a 50-cent increase a year later.

As introduced in the Assembly in December 2012, AB 10 provided for step increases in the minimum wage to a maximum of $9.25 per hour by 2016, with automatic annual increases based on an established economic index thereafter. 

The Senate amended the bill twice.  In June, the Senate amended AB 10 to delete the automatic indexing feature, and to increase the minimum wage in additional steps to $10 per hour by 2018.  Then, in the last week of the legislative session, the Senate in September again amended AB 10 to decrease the number of step increases to two from four, and shortened the period for the imposition of the minimum $10 rate to 2016 from 2018.  The September Senate amendment also extended the initial date of the increase six months, from January 1, 2014 to July 1, 2014.

AB 10 passed the legislature in its final form on a straight party-line vote, in keeping with most legislative voting in the California Legislature these days.  In fact, of the 222 votes cast either for or against this bill on substantive matters by individual legislators, only two legislators, on one occasion each, voted with the opposite party. 

AB 10 was opposed by the business community, including the California Chamber of Commerce, which referred to the proposal as a "job killer."  Opponents of AB 10 said that small businesses cannot afford hourly wage increases, and will have to raise prices, cut working hours, or lay off employees.  The bill was supported early on by the California Labor Federation and the California Federation of Teachers.    

As of now, California has the eighth highest minimum wage in the United States. States or other governmental units having higher minimum wages are Nevada, Connecticut, the District of Columbia and Illinois ($8.25 per hour), Vermont ($8.60), Oregon ($8.95) and Washington state ($9.19).  At this writing, 19 states plus the District of Columbia have minimum wages above the federal minimum wage of $7.25 per hour.

The Consequences of Raising the Minimum Wage

The bill will affect approximately three million California employees now earning the minimum wage in both full-time and part-time employment in the private and public sectors.

The most obvious immediate effect of the increase in the minimum wage will be wage compression for those employees currently earning between $8 and $10 per hour.  Employers will have to decide whether those individuals, who may have achieved wage increases in that range due to merit, seniority, or some other combination of circumstances, should be awarded a pay increase that takes their pay above the new minimum wage.

The Choices for Employers

Businesses using minimum wage workers will have choices to make, including any or all of the following: raising prices, taking less profit, cutting hours of employees earning the minimum wage, or cutting the number of minimum wage employees. 

It is possible that California's increase of the minimum wage may cause the cities of San Francisco and San Jose to increase theirs, although to do so would require either legislative action or a vote of residents.  Both ordinances have automatic increase features.  San Jose's current minimum wage is $10 per hour and San Francisco's is $10.55 per hour.  Those cities' minimum wages will not be superseded by the state's action.

Any statutes, regulations, or ordinances based on the current state minimum wage will, of course, be affected by its increase. 

What Employers Should Do

  1. Employers who have employees earning the minimum wage will need to budget for the July 1, 2014 wage increase.
  2. Employers paying part of their work force the minimum wage should consider what response to give those employees now earning over $8, but less than $10, per hour, if they ask what will happen to their wages in light of the minimum wage increase.
  3. If specific rates of pay are referenced in memos to or for employees, or in employee handbooks, check to see whether these documents need to be amended or updated to reflect the rising rates of pay.

1 Keep in mind that more than two dozen California counties, cities, or portions of cities, have their own minimum wages, or "living wages," which can be higher than California's minimum wage.  See, for example, Christopher Cobey and Karin Cogbill, Increased Minimum Wage Is on Its Way: The City of San Jose's New Minimum Wage Ordinance Takes Effect on March 11, Littler ASAP (March 7, 2013).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Littler | Attorney Advertising

Written by:


Littler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.