Increases to California’s Minimum Wage Signed into Law

On September 12, 2006, California Governor Arnold Schwarzenegger signed into law California Assembly Bill (AB) 1835 that will increase California’s minimum wage by $1.25 per hour in two steps over a period of one year. Effective January 1, 2007, the California minimum wage will increase by $0.75, from $6.75 per hour to $7.50 per hour. On January 1, 2008, the California minimum wage will increase by an additional $0.50, from $7.50 per hour to $8.00 per hour.

Companies that employ minimum wage workers in California will need to plan for the increased wage costs, including the resulting increase to overtime wage rates. Unlike the Fair Labor Standards Act (FLSA), California’s definition of “overtime” includes time worked in excess of eight (8) hours in one workday. In general, California requires payment of overtime at no less than one and a half times the minimum wage. In certain circumstances, however, overtime must be paid at no less than two times the minimum wage.

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