Employment Law Update

June 2, 2006

Highlight Article

The Legislature Passed Bills to Raise the Minimum Wage in California

By Kyle Kring and Monica Sanchez

The Senate on June 1, 2006 and the Assembly on May 31, 2006 passed minimum wage bills to increase California’s minimum wage.  Under the minimum wage bills, AB 1835 by Assemblywomen Sally Lieber (D-Mountain View) and Senate Bill 1162 by Senator Gil Cedillo (D-Los Angeles), the state’s minimum wage of $6.75 would increase by 50 cents to $7.25 in July 2007 and an additional 50 cents to $7.75 in July 2008.  In addition, the bills provide that the minimum wage will be adjusted automatically every year thereafter, starting in 2009.  This would be calculated by multiplying the minimum wage by the previous year’s rate of inflation.     

Governor Arnold Schwarzenegger vetoed a similar bill last year. 

Last month, on May 18, 2006, the Governor petitioned the Industrial Welfare Commission (IWC) to increase the state’s minimum wage pursuant to Labor Code § 1176.1 to amend Minimum Wage Order 2001 (Cal. Code Reg. Chapter 5, §11000), and minimum wage provisions of other orders as necessary, to establish a new minimum wage for California workers to supply them the “cost of a proper living” within the meaning of Labor Code §§ 1178 and 1178.5.

The Governor’s letter to the commission explains that California economic recovery allows for the first increase of the minimum wage since 2001.  In his January State of the State Address the Governor called for a $1 increase to the state minimum wage.  Earlier this year, the legislature failed to act on SB 1167 by Senator Abel Maldonado (R-Santa Cruz) that contained the Governor's minimum wage proposal.  In a press release issued by the Office of the Governor, Schwarzenegger’s proposal to the IWC was the Governor’s next step to fulfilling his commitment to getting California's working families a deserved pay hike.  “California has not had an increase in the minimum wage for five years," said Governor Schwarzenegger. "The economy is strengthening and we must take this important step to helping working families keep up.”  The Governor’s request would raise California’s current minimum wage of $6.75 to $7.75, in two phases of 50 cent increases over the course of a nine-month period.  The wage increase is estimated to provide workers throughout the state with more than $2 billion in increased monthly income annually.  Within 120 days of receipt of the Governor’s petition, the IWC will set the matter for consideration and either convene the wage board for a public hearing or deny the Governor’s petition. 

The votes for these bills were among hundreds cast in the last two days to meet the legislative deadline.  The Legislature ignored Governor Schwarzenegger warning against allowing an automatic increase in California’s minimum wage.  California employers must wait and see what, if any, increases to minimum wage will occur in California.

Kring & Chung, LLP will keep you posted of any new developments regarding the increase of California’s minimum wage.  For more information you can contact www.leginfo.ca.gov or visit www.governor.ca.gov.

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This article was prepared by Kyle Kring and Monica Sanchez. Mr. Kring is the managing partner of Kring & Chung, LLP. Ms. Sanchez is an associate at Kring & Chung, LLP’s Irvine and San Diego office. You can contact Mr. Kring and Ms. Sanchez at (949) 261-7700.

** The information contained herein is for informational purposes only and should not be relied upon in reaching a conclusion in a particular area. The legal principles discussed herein were accurate at the time this article was authored but are subject to change with time. Applicability of these same legal principles may differ substantially in individual situations. Please consult an attorney before making a decision in a particular area using only the information provided in this article.