March 31, 2016

After a vote today by the Legislature and pending the Governor’s signature, by 2022, workers in California will be eligible for a $15/hour minimum wage and IHSS workers will be provided with three paid sick leave days per year.

Big changes are coming to minimum wage laws in California. Governor Brown and labor groups reached an agreement that would gradually increase the minimum wage to $15/hour by 2022, and the language of the deal was placed into already-existing Senate Bill 3 by Senator Mark Leno.

The agreement comes as one ballot initiative to increase the minimum wage recently qualified for the November election, and another similar measure is making headway while circulating for signatures. The proponents of those ballot measures have until June 30 to pull their measures from the ballot and their removal is expected once the Governor signs SB 3.

The proposal also includes paid sick days for IHSS workers, gradually working up from one day per year beginning July 2018, and topping out at three days per year four years later.

The hourly minimum wage would be indexed annually for inflation (national CPI) starting January 1, 2024. However, SB 3 provides the Governor with several options to hit pause on this increase: for economic reasons, if the seasonally adjusted statewide job growth for either the prior three or six months is negative or if retail sales receipts for the prior 12 months is negative, and for budget reasons, if any year from the current budget year to the next two years are forecasted to be in deficit when including the next scheduled minimum wage increase.

The Governor would make that determination, based on information from the Department of Finance and the Board of Equalization, by August 1 of each year prior to a January increase with a final determination required by September 1.

SB 3 removes the exemption of In-Home Supportive Services (IHSS) workers − who work in California for 30 or more days within a year of beginning employment − under the Healthy Workplaces, Healthy Families Act of 2014, which provides three days of paid sick leave to all California employees. The specifics of this provision are as follow:

Accrual of sick leave = one hour for every 30 hours worked.

SB 3 requires the California Department of Social Services to convene a stakeholder group to implement the IHSS paid sick leave provisions; counties should expect to receive an all-county letter with guidance on the issue by January 1, 2017.

Of particular note to counties: according to Welfare & Institutions Code §12306.15, the county IHSS Maintenance of Effort (MOE), negotiated in 2012, is increased for locally negotiated wage and health benefit increases only, and is not increased for state changes to the minimum wage or sick leave benefits.

As it was with the costs associated with the latest increase to the state minimum wage effective January 1, 2016, CSAC expects that costs associated with the changes proposed by SB 3 would be borne by the state. We will, per usual, remain vigilant in ensuring the existing MOE remains in place and additional county costs are limited to locally negotiated wage or benefit increases.

Both houses of the Legislature passed the bill today and it is expected the Governor will sign SB 3 post haste. For the Office of the Governor’s fact sheet on SB 3, click here. Should you have additional questions, please contact Faith Conley at (916) 650-8117.