California leads the nation in the call for higher minimum wages, emanating from the agricultural fields and reaching nearly every industry. Raising wages has been a major focus in the California Legislature – as well as in federal and state courts – and employers in the state will likely see a higher wage hike than expected next year. The minimum wage was supposed to reach $15 an hour for all employers in the Golden State by January 1, 2023, but Governor Gavin Newsom recently projected that the rate will rise to $15.50 due to record-high inflation. Combined with labor shortages and supply chain disruptions, the costs associated with a higher minimum wage will undeniably impact businesses in 2023. Increased wages mean higher employer-side payroll tax obligations and other related costs and will further strain businesses that are already reeling from the impact of the COVID-19 pandemic and the current economic environment. What are the five biggest takeaways for California employers given these critical developments?
California’s current minimum wage law, which was passed in 2016, aimed to raise the minimum wage in phases until it reached $15 an hour for all employers in 2023. The law specifies, however, that if inflation increases by more than 7% between fiscal years 2021 and 2022 (which ends on June 30), then the state’s minimum wage shall increase by 3.5%. The California Department of Finance has projected that inflation will...
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