Los Angeles Employers Must Prepare For Even More Mandatory Wage Increases

On May 19, 2015, the Los Angeles City Council voted to raise the minimum wage within the City of Los Angeles in annual increments to $15.00 per hour by 2020. The City Council's vote sent the proposed measure to the Los Angeles City Attorney, who will prepare a wage ordinance.

The new measure proposes two different wage increase schedules based on the size of the employer. Smaller businesses and non-profits (i.e., those with fewer than 25 employees) will be placed on a modified schedule that will delay increases by one year, but wages will increase in the same amounts. 

For businesses with over 25 employees, the first increase will take effect in 2016 and will raise the minimum wage from $9.00 per hour to $10.50 per hour.  Businesses with 25 employees or less will not experience the first increase until 2017. Also, the City is developing a special rule for non-profits which will enable certain of them to apply for a waiver though the Department of Public Works (the details will be fleshed out in the new ordinance). 

Recall that the City of Los Angeles minimum wage of $10.50 per hour (which goes into effect on July 1, 2016) is on top of the State's minimum wage increase to $10.00 per hour which takes effect on January 1, 2016. 

When determining whether an employer has 25 or more employees under the L.A. City ordinance, you use the average number of individuals employed over the preceding calendar year. 

Below are the two wage schedules under the L.A. Ordinance. 

• Larger employers (+25 employees):

July 1, 2016:  $10.50

July 1, 2017:  $12.00

July 1, 2018:  $13.25

July 1, 2019:  $14.25

July 1, 2020:  $15.00

• Smaller employers (< 25 employees):

July 1, 2017:  $10.50

July 1, 2018:  $12.00

July 1, 2019:  $13.25

July 1, 2020:  $14.25

July 1, 2021:  $15.00

Beginning in 2022, further increases under the L.A. Ordinance will be based on the Consumer Price Index averaged over the previous 20 years.

The new measure is in the very early stages of the legislative process. Once an ordinance is drafted and presented, we will provide further information regarding the specifics of the ordinance. In the meantime, employers should proactively review their policies, work rules, agreements and economic decisions that may be affected by the increases well in advance of their effective dates.

If you have any questions about the contents of this article, you may contact any member of the Firm. We can be reached at (818) 508-3700, or online at www.brgslaw.com.

Have a good Memorial Day holiday.