STATE MINIMUM WAGE SET TO INCREASE FROM $10 PER HOUR TO $10.50 FOR EMPLOYERS WITH 26 OR MORE EMPLOYEES EFFECTIVE JANUARY 1, 2017
Department of Developmental Services Sends Out Letter Dated December 22 to All Regional Center Executive Directors on Rate Adjustments for Eligible Community Based Providers to Cover Increase For Employees Who Make Less Than $10.50 Per Hour – CA Department of Social Services Previously Sent out September 21 All County Letter On Steps Counties Need to Take To Implement State Minimum Wage Increase for IHSS Workers Who Currently Make Less Than $10.50 Per Hour
SACRAMENTO, CA [BY MARTY OMOTO, CDCAN LAST UPDATED 12/23/2016 12:26 PM] – California’s minimum wage of $10 per hour, currently tied with Massachusetts as the highest minimum wage in the nation (except for the District of Columbia), is set to increase that hourly wage to $10.50 per hour, effective January 1st, for employers with 26 employees or more. For California employers with 25 employees or less, that increase goes into effect on January 1, 2018.
The current federal minimum wage is $7.25 per hour, which went into effect July 24, 2009.
The increase to $10.50 per hour is a requirement under SB 3, the landmark legislation authored by Senator Mark Leno (Democrat – San Francisco), who left office November 30th due to term limits, and was signed into law April 4, 2016 by Governor Brown. SB 3 sets a schedule of increases beginning January 2017, and will over six years, increase the state minimum wage to $15 per hour by January 1, 2022 (January 1, 2023 for employers who employ less than 25 employees or less).
While California is tied for first place with Massachusetts nationwide among states with the highest minimum, on January 1st, the state will fall to 4th place, with Massachusetts, New York (in certain areas of the state), and Washington state, increasing their minimum wages to $11 per hour, effective January 1, 2017..
MINIMUM WAGE INCREASE ONE OF SEVERAL MAJOR CHANGES
The scheduled increases of the state minimum wage under SB 3 is one of several major changes impacting community-based organizations and their employees and individual providers who provide services and supports to people with disabilities (including developmental), people with mental health needs, people who are blind, low-income seniors and families.
Other recent changes included the earlier round of state minimum wage increases, under AB 10 by Assemblymember Luis Alejo (now termed out), that raised the minimum wage in California to $9 in July 2014, and to $10 per hour in January 2016; paid sick leave requirements for employees that went into effect July 2015 (with IHSS workers to follow in July 2018); overtime pay for previously exempted home care workers (including In-Home Supportive Services that went into effect February 2016, and regional center funded Supported Living, In-Home Respite Services that went into effect in the fall of 2015); direct care worker wage pass through for most regional center funded community-based organizations and individuals, that went into effect July 2016.
Another major change that impacted community-based organizations including those serving people with disabilities and seniors, was a US Department of Labor regulation that was set to go into effect December 1, 2016. That federal regulation would have raised the exemption for overtime pay for salaried employees from the current $23,660 to $47,476 (meaning, in order to avoid paying overtime to those salaried employees, that employee would have had to make at least $47,476 annually).
However that federal regulation is on hold until further notice due to a federal district court order issued on November 22nd. While the federal regulation is on hold, some community-based providers in California went ahead and implemented increases to salaried staff to comply with the federal $47,476 threshold. Others have decided to hold off until the legal situation is settled – or if California, through legislative action, decides to take up the issue in the State.
Though advocates in California pushed last spring for the State to provide rate adjustments for regional center funded community-based organizations to specifically help off-set the costs of that US Department of Labor regulation – now on hold – those efforts were not successful and no funding for that specific purpose was included in the 2016-2017 State Budget.
Effective January 1, 2017, due to the implementation of Senate Bill (SB) 3, the minimum wage in California will increase from $10.00 to $10.50 per hour for employers with 26 or more employees. As authorized by the 2016 State budget and the 2016 changes to the Welfare and Institutions Code (WIC) sections 4681.6(b), 4691.6(f) and (g), and 4691.9(b), many vendors will either receive, or be eligible to request, a rate increase if necessary to adjust employees’ pay to comply with the new minimum wage. This letter contains information on the types of vendors that are affected and what process will be used to make necessary rate adjustments.
Providers with Rates set by the Department of Developmental Services (Department)
The changes in the WIC referenced above, allow Community-Based Day Programs, In-Home Respite Agencies, and Work Activity Programs, to submit rate adjustment requests to the Department due to the increase in minimum wage for vendors employing 26 or more employees. To request a rate adjustment, providers of these services must submit to the Department, information on only those costs necessary to increase an employee’s actual hourly wage to the new $10.50 per hour minimum wage rate and associated mandated employer costs (e.g. Social Security, Medicare, and workers’ compensation).
Vendors must submit actual wage and mandated employer cost information for affected employees only and total program units of service provided for the period of July, August, and September 2016, or an applicable period of up to three (3) months. The Department will provide regional centers a copy of all letters sent to service providers in response to rate adjustment requests.
Vendors may begin submitting requests to the Department, with a copy to the vendoring regional center. However, all rate adjustment requests must be received by the Department no later than March 1, 2017.
General information about the increase in minimum wage, as well as detailed instructions and a workbook for submitting rate adjustment requests to the Department, can be found at the following website: www.dds.ca.gov/
Providers with Rates set through Negotiation by Regional Centers:
The changes in 2016 Statute also allows regional centers to negotiate rate adjustments with providers in order to pay employees no less than the minimum wage effective January 1, 2017. The rate adjustment must be specific to the unit of service that is affected by the new minimum wage and shall only include those costs necessary to increase an employee’s actual hourly wage to the new $10.50 per hour minimum wage rate and associated mandated employer costs (e.g. Social Security, Medicare, and workers’ compensation). Regional centers may use a worksheet similar to the one developed by the Department discussed above, to assist in processing negotiated rate adjustment requests; and must maintain documentation on the process to determine the rationale for granting any rate adjustment associated with minimum wage. Vendors should submit rate adjustment requests to the vendoring regional center by March 1, 2017
By April 30, 2017, regional centers must provide the Department information on all rate adjustments negotiated with vendors. The Department will follow up with regional centers on the process for reporting the needed information.
Providers with Other Rates:
Alternative Residential Model (ARM) rates/respite facilities: The ARM rates, effective January 1, 2017, for community care facilities, are enclosed. These rates also affect respite facilities (service code 869).
Non-Mobile Supplemental Rate: Pursuant to Title 17, section 57530, the supplemental reimbursement rate for Community-Based Day Programs will increase to $1.40 per hour.