The California minimum wage is set to increase on January 1st, 2022. For companies with over 26 or more employees, that wage will be $15.00 per hour. Businesses with fewer employees would have a base rate of $14.00 per hour. However, depending on your location, the minimum wage may be higher.
Municipalities set their wage standards
Staying compliant with employment laws can be a byzantine endeavor, as a business must contend with not only federal and state-level regulations but municipalities. And in some cases, such as the minimum wage, the municipal standards may be the most comprehensive. Several cities in California already have higher minimum wages than the planned increase. These include such cities as:
- San Francisco
- San Jose
- San Mateo
- Redwood City
- Mountain View
- Emeryville
The bottom line is, if you employ people in locations across the state, you may find yourself paying vastly different amounts for workers at the same level in your organization. New hires may start at higher pay than experienced personnel in some cases.
How does this affect businesses?
Many rely on lower labor costs to protect their prices and overhead. However, companies that do not rely on the minimum wage as a standard can see a higher minimum wage as a threat. There is a possibility that this will affect the morale of your current workforce. You may even feel pressure to raise wages.
However, many view a higher minimum wage as a good thing for businesses in general. With more disposable income, consumer-facing companies can see a vast increase in sales if the local population can afford their services.
Minimum wage is a fraught and challenging topic for employers, but compliance is a necessity and you would do well to understand your obligations before it becomes a problem.