In recent days, New York and California took the first steps in addressing new demands for a “living wage,” with both states raising the minimum wage to $15 per hour. New York City and San Francisco also enacted monumental legislation regarding paid family leave.

fist_of_cashOn April 4, 2016, California enacted a law which mandates an incremental increase of the minimum wage over the next five to six years. For employers with 26 or more employees, the minimum wage will increase to $10.50 per hour starting on January 1, 2017, $.50 per hour on the next year, and then will increase by $1 an hour each year until the minimum wage is $15 by 2022.  Employers with 25 or less employees have an extra year to comply with the minimum wage increase, with the same increases starting on January 1, 2018 through 2023.  Notably, this law also affects exempt employees as California requires their salaries to be at least two times the State’s minimum wage.  Currently, the minimum exempt salary is $41,600, but it will ultimately rise to $62,400.

On the same day, New York passed its 2016-17 state budget which also provides for the state minimum wage to be incrementally increased to $15 per hour.  The timing for the increase is dependent on both employer location and number of employees.  New York City employers with 11 or more employees must pay $11 per hour by the end of this year, with a $2 increase each year, until the minimum wage is $15 by the end of 2018.  For New York City employers with 10 or less employees, the minimum wage will increase to $10.50 by the end of this year, with a $1.50 per hour increase each year, until the minimum wage is $15 by the end of 2019.  Employers elsewhere have a more gradual increase, with some counties having until 2021 to reach $15 per hour.

Through its budget, New York also enacted landmark paid family leave, providing employees with up to 12 weeks of paid family leave.  Employees who have worked at least six months for the employer will now be eligible for 12 weeks of partially paid leave to care for an infant, a family member with a serious health condition, or to ease family pressures when a family member is called to active military service.  This change will be enacted gradually, beginning in 2018 at 50% of an employee’s average weekly wage (and capped at 50% of the statewide average weekly wage) and rising through 2021, when eligible employees may receive 67% of their average weekly wage (capped at 67% of the statewide average weekly wage).  These new benefits will be funded by an employee payroll deduction, not directly by employers.

Also this week, San Francisco approved legislation requiring employers to provide employees with 6 weeks of fully paid parental leave.  This applies to both mothers and fathers and for both births and adoptions.  Currently, California’s state disability program provides employees with up to 55% of their wages for 6 weeks of family leave.  This new legislation requires employers with 20 or more employees to provide the remaining 45% of the employee’s wages. Employees must work eight or more hours a week to be eligible.

These are big changes to wages and pay for time off for employers with employees in California and New York, and especially in New York City and San Francisco.  If you have people working there, now is the time to learn all about these changes and prepare for them, as their effective dates will be here before you know it.