Sacramento Enacts Local Minimum Wage - Goes Into Effect in 2017

Topics: New Laws & Legislation, Wage & Hour Issues

On October 27, the Sacramento City Council, by a 6-3 vote, passed an ordinance that will raise the minimum wage to $12.50 in gradual increments.  The new city minimum wage will provide for citywide minimum wages for most businesses as follows:

$10.50 in 2017
$11.00 in 2018
$11.75 in 2019
$12.50 in 2020
After 2020 (inflation based increases)

Small businesses will have a slightly different schedule and will operate on a timeline that is 12 months behind those for larger operations.  More specifically, businesses with 100 employees or less will not have to raise their wages for one year behind the above schedule for larger companies.

Employers will be able to get a credit of up to $2 by offering health care benefits.  Thus, businesses that provide health care will be able to pay a lower minimum wage (as long as they are still paying the state minimum, which rises to $10 an hour in 2016). 

Unfortunately, the City Council decided to ignore the recommendations of the Sacramento City Minimum Wage Task Force, which had proposed exemptions for (a) workers under age 18, (b) certain developmentally disabled employees and (c) workers whose total compensation (including commissions, bonuses and tips) exceed $15 an hour.  These exemptions seemed to make sense to help ensure that teen jobs and jobs for the disabled are not eliminated as a result of the ordinance and to help ensure that employers are not required to raise the wage rate of workers who are already making significant compensation from commissions, bonuses and tips.  The majority of Council members seemed to support the total compensation exemption, but appeared to be intimidated by claims from the SEIU and other opponents that that exemption was legally risky and would subject the City to litigation.