2022 Brings Final (?) Minimum Wage Hike

Because of the enactment of SB 3 (Leno) in 2016, California’s minimum wage is going up yet again, perhaps for the final time?

On January 1, 2022, the state’s minimum wage will be increased for all sizes of businesses, including “small employers,” who will see their fifth wage hike in recent years.

Under prior state law, the minimum wage for all industries increased to $10 per hour on January 1, 2016. Pursuant to SB 3, the minimum wage for all industries will be increased to $15 per hour by January 1, 2022 for businesses employing 26 or more employees and by January 1, 2023 for businesses employing 25 or fewer employees (referred to as “small employers”).

The following lists the scheduled minimum wage increases for any business that employs 25 or fewer employees:

• On January 1, 2022 to $14 per hour
• On January 1, 2023 to $15 per hour

These scheduled increases in the state’s minimum wage not only increase hourly employees’ wages, but also salaried employees’ compensation. In order for employees to qualify as “exempt” under any of the six exemptions in this state, they must meet the salary-basis test, which is two times the monthly minimum wage (as well as the duties test that is not impacted by the wage hike).

Due to SB 3, there has been an estimated increase of over $15,000 in wages per exempt employee in just a few short years. And, businesses will see their workers’ compensation premiums go up, as well as increased costs for uniform/tool reimbursements and overtime.