On Monday, two-thirds of the nine-member San Diego City Council voted to override Mayor Kevin Faulconer’s veto of legislation that would increase the minimum wage within the City of San Diego. Unless opponents of the minimum wage hike are successful in a referendum campaign, the minimum wage in the City of San Diego will increase to $9.75 in January 2015, $10.50 in January 2016, and $11.50 in January 2017. The minimum wage legislation will also provide full-time workers with five (5) paid sick days per year. If the legislation remains in its current state, the minimum wage in the City of San Diego will have increased from $8 in January 2014 (State of California minimum wage) to $11.50 in January 2017.
While much of the discussion surrounding the Mayor’s veto and the City Council’s action to override the veto has been political, San Diego employers should be aware of the broad implications of the looming minimum wage increase. As the first wage increase comes into effect in January 2015, San Diego employers will need to increase the hourly pay rate of all employees earning below the new minimum wage. Of course, this increase will also affect the employee’s pay rates for overtime, vacation, sick leave, and paid time off. Other taxes and insurance tied to the employee’s gross wage will also increase as a result of the minimum wage increase. Failure to comply with such changes may result in a barrage of wage and hour claims that could be quite costly for the employer.
From a business planning standpoint, San Diego businesses will also need to consider the future costs of doing business within the city limits. For example, employers will need to evaluate their payroll costs and determine what adjustments may need to be made to operate the business profitably. Some employers have indicated that employee benefit packages may need to be downgraded, the number of hours worked by minimum wage employees decreased, and prices of products be raised to account for the additional expenditures.
If you’re a business operating in the City of San Diego, contact the experienced corporate attorneys at The Loftin Firm, P.C. and discuss how these changes may affect your business and how you can best plan to weather the storm.