In 2016, California passed legislation to increase the State minimum wage to $15 per hour over time. Under the provisions of that law, California’s minimum wage will increase on January 1, 2021 to $14 per hour for employers with 26 employees or more and $13.00 per hour for employers with 25 or fewer employees.
Below is the mandated schedule to raise the State minimum wage to $15 by 2023. Please note that some cities and counties have a local minimum wage that is higher than the state rate.
| Date | Minimum Wage for Employers with 25 Employees or Less | Minimum Wage for Employers with 26 Employees or More |
| January 1, 2018 | $10.50/hour | $11.00/hour |
| January 1, 2019 | $11.00/hour | $12.00/hour |
| January 1, 2020 | $12.00/hour | $13.00/hour |
| January 1, 2021 | $13.00/hour | $14.00/hour |
| January 1, 2022 | $14.00/hour | $15.00/hour |
| January 1, 2023 | $15.00/hour |
The change in the minimum wage has a domino effect on other California employment compliance areas that are linked to the state minimum wage. Many of the exemptions afforded to construction employers’ signatory to a collective bargaining agreement (CBA) are dependent on the CBA providing for “premium” wage rates. The following are some of the key areas the minimum wage increase may impact construction employers.
Collective Bargaining Agreements – Hours and Days of Work
Under California Industrial Welfare Commission Wage Order 16, construction employers and unions are permitted to bargain hours and days of work different from those required by the Wage Order, so long as their employees are covered by a valid CBA designating wages, hours and working conditions and the employees’ regular hourly rate of pay is not less than 30 percent more than the state minimum wage. Employers should determine whether their union agreements or other procedures are affected.
Paid Sick Leave
Construction employers in California must provide paid sick days to their employees, unless the employees are covered by a valid CBA and fall under the exemptions included in Labor Code Section 245.5. The construction exemption to California’s paid sick leave law requires that a premium regular hourly rate of pay of not less than 30 percent more than the state minimum wage be paid to exempt employees.
Tools or Equipment
Employers who require employees to provide their own tools or equipment may also be affected pursuant to Industrial Welfare Commission Wage Order 16. Generally, when tools or equipment are required by the employer or are necessary to the performance of a job, they must be provided and maintained by the employer. However, an employee receiving wages that are at least two times the state minimum wage can be required to provide and maintain their own hand tools and equipment customarily required by the trade or craft. If employers are taking advantage of this provision, they should ensure they are paying employees twice the new state minimum wage.