SACRAMENTO, CA [BY MARTY OMOTO, CDCAN – LAST UPDATED 04/04/2016 09:35 AM] – Governor Brown, as expected, signed this morning in Los Angeles the landmark legislation that will raise the State’s minimum wage to $15 an hour by 2022 for businesses with 26 employees or more, and one year later for businesses with 25 employees or less. The legislation – SB 3 by Senator Mark Leno (Democrat – San Francisco) – also provides for a phase-in of three paid sick days for all In-Home Supportive Services (IHSS) workers beginning July 1, 2018.
Governor Brown signed the bill surrounded by Democratic legislative leaders, labor leaders and union members at the Ronald Reagan State Office Building in Los Angeles.
Governor Brown said that “work is part of living in a moral community…Economics is about dollars and justice. Justice is about giving people their due….It’s about economic justice. It’s about people…Its about putting a little tiny balance in a system that every day becomes more unbalanced…This is an important day! Its not the end of the struggle…”
“No one who works full time should live in poverty,” said Senate President Pro Tem Kevin De Leon (Democrat – Los Angeles), one of the co-authors of the legislation, at the signing ceremony, calling the Governor “the best governor in the nation,” thanking him for his leadership in signing the historic bill.
Assembly Speaker Anthony Rendon (Democrat – Los Angeles), spoke of the high poverty in eight of the nine cities he represents, and underscored that this increase is “not a social program” but about work, and underscored that a person working full time should not live in poverty.
Senator Leno said that it was his honor to author SB 3 with his primary co-author Senator Connie Leyva, and said that the increase will lift millions of Californians – the majority of them women – and thanked the Governor for framing the issue as “economic justice.”
The Assembly passed on March 31st, SB 3 on a largely party-line vote 48 to 26 with five members not voting or not present , following a floor debate of about two hours late this morning. Two Assembly Democrats voted no.
The State Senate passed SB 3, later in the afternoon on March 31st, after about two hours of floor debate, by a vote of 26 to 12, with all Democrats voting yes and all Republicans present voting no.
Under the plan contained in SB 3 announced March 28th by Governor Brown, Democratic legislative leaders and labor leaders, the State minimum wage will rise to $10.50 per hour on January 1, 2017 for businesses with 25 or more employees, and then rises each year until reaching $15 per hour in 2022. The contents of the agreement was amended into SB 3 on Monday (March 28th), and the legislation passed today without any further amendments or changes.
Governor Brown previously signed AB 10 by Assemblymember Luis Alejo (Democrat – Watsonville, 30th Assembly District) in September 2013 to raise California’s minimum wage 25%, from $8 to $10 per hour, effective January 1, 2016.
SCHEDULED WAGE INCREASES (IF NO INCREASES ARE PAUSED)
The following is the schedule of increases to the State minimum wage under SB 3, unless the increases are “paused”, referred in the legislation as the “off-ramp” provisions:
$10.50 PER HOUR:
26 Employees or More: January 1, 2017
25 Employees or Less: January 1, 2018
$11 PER HOUR:
26 Employees or More: January 1, 2018
25 Employees or Less: January 1, 2019
$12 PER HOUR:
26 Employees or More: January 1, 2019
25 Employees or Less: January 1, 2020
$13 PER HOUR:
26 Employees or More: January 1, 2020
25 Employees or Less: January 1, 2021
$14 PER HOUR:
26 Employees or More: January 1, 2021
25 Employees or Less: January 1, 2022
$15 PER HOUR:
26 Employees or More: January 1, 2022
25 Employees or Less: January 1, 2023
IHSS SICK DAYS
Under SB 3, implementation of one sick day for IHSS workers who works in California for 30 or more days within a year from the start of their employment, begins July 1, 2018. A second day added in the first July following $13/hour implementation for larger businesses (January 1, 2020), and a third day added following $15/hour implementation (July 1, 2022).
SB 3 would require that the California Department of Social Services, in consultation with stakeholders, to convene a workgroup to implement paid sick leave for IHSS providers and to issue guidance in that regard by December 1, 2017.
The following is the section in SB 3 that directly relates to the phase-in of paid sick for IHSS workers (other paragraphs or sections that are not new or had minor changes in numbering of section were not included below. For the full provisions regarding sick leave see SB 3, as amended March 28, 2016, in the link above:
“SEC. 2. Section 246 of the Labor Code is amended to read:
(2) On and after July 1, 2018, a provider of in-home supportive services under Section 14132.95, 14132.952, or 14132.956 of, or Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of, the Welfare and Institutions Code, who works in California for 30 or more days within a year from the commencement of employment is entitled to paid sick days as specified in subdivision (e) and subject to the rate of accrual in paragraph (1) of subdivision (b).
(e) For a provider of in-home supportive services under Section 14132.95, 14132.952, or 14132.956 of, or Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of, the Welfare and Institutions Code, the term “full amount of leave” is defined as follows:
(1) Eight hours or one day in each year of employment, calendar year, or 12-month period beginning July 1, 2018.
(2) Sixteen hours or two days in each year of employment, calendar year, or 12-month period beginning when the minimum wage, as set forth in paragraph (1) of subdivision (b) of Section 1182.12 and accounting for any years postponed under subparagraph (D) of paragraph of subdivision (d) of Section 1182.12, has reached $13.00 per hour.
(3) Twenty-four hours or three days in each year of employment, calendar year, or 12-month period beginning when the minimum wage, as set forth in paragraph (1) of subdivision (b) of Section 1182.12 and accounting for any years postponed under subparagraph (D) of paragraph (3) of subdivision (d) of Section 1182.12, has reached $15.00 per hour.
(o) The State Department of Social Services, in consultation with stakeholders, shall convene a workgroup to implement paid sick leave for in-home supportive services providers as specified in this section. This workgroup shall finish its implementation work by November 1, 2017, and the State Department of Social Services shall issue guidance such as an all-county letter or similar instructions by December 1, 2017.
(p) Notwithstanding the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code), the State Department of Social Services may implement, interpret, or make specific this section by means of an all-county letter, or similar instructions, without taking any regulatory action.”
The governor can choose to pause any scheduled increase for one year if either economy or budget conditions are met. However, the increase to $10.50/hour is not subject to off-ramps.
Initial determination of Governor by August 1 of each year prior to a January increase. The Governor makes the final determination by September 1.
1. Economy: Governor has the ability to pause an increase if seasonally adjusted statewide job growth for either the prior 3 or 6 months is negative and retail sales receipts for the prior 12 months is negative.
2. Budget: Governor has the ability to pause an increase if any year from the current budget year to two additional years is forecasted to be in deficit when including the next scheduled increase. Pursuant to Proposition 2, a multiyear forecast is adopted as part of the annual Budget Act. A deficit is if the operating reserve is projected to be negative by more than 1 percent of annual revenues, currently about $1.2 billion. The budget off-ramp can only be used twice.
INDEXING: The legislation will index annually for inflation (national CPI) beginning the first January 1 after small businesses are at $15/hour. Floor of 0 percent (no decreases) and a ceiling of 3.5 percent. Off-ramps do not apply once the state gets to $15/hour.
STATE BUDGET IMPACT
The initial impact of the increase in the State minimum wage in the 2016-2017 State Budget will likely be included in Governor Brown’s revisions to his proposed budget plan that he will release in mid-May – often referred to as the “May Revise” or “May Revision”.
On March 30th, the Governor’s Department of Finance told the Assembly Appropriations Committee that the impact for the 2016-2017 State Budget would likely be over $20 million in State general funds, and would grow each year as the minimum wage increases each January.
Under the agreement reached on March 28th, and as contained in SB 3 as amended March 28, 2016, and passed by the Legislature March 31st and signed by the Governor today (April 4th), the State minimum wage would increase January 1, 2017 by 50 cents to $10.50 for businesses with 26 employees or more, and a year later for businesses with 25 employees or less.
The 2016-2017 State Budget covers July 1, 2016 through June 30, 2017 and that increase would cover six months of that budget year.
The larger impacts will occur in following State budget years – 2017-2018 (July 1, 2017 to June 30, 2018), when the State minimum wage would increase by $1 on January 1, 2018 and in the 2018-2019 State budget year (July 1, 2018 to June 30, 2019) when IHSS paid sick leave begins.
There was no official statement or commitment regarding funding of the State minimum wage increase in 2017 impacting regional center funded community-based services and supports. Most of those regional center funded providers – though not all – received in 2014 and 2016 increases in funding to cover increases in the State minimum wages. Funding to cover increases in the State minimum wage for IHSS workers (providers) and Waiver Personal Care Services workers would be covered under State law.