BILL ANALYSIS Ó
SB 3
Page 1
Date of Hearing: March 30, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 3
(Leno) - As Amended March 28, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill increases the state minimum wage from $10 an hour to
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$10.50 an hour starting January 1, 2017. Starting January 1,
2018, this bill increases to the state minimum wage by $1 each
year until the wage reaches $15 an hour, subject to certain
economic conditions. This bill also provides a timeline to
provide three sick days for In Home Support Services (IHSS)
providers. Specifically, this bill:
1)Provides the following scheduled increases to the state
minimum wage for employers who employ 26 or more employees:
a) Starting January 1, 2017 increases the minimum wage to
$10.50 per hour.
b) Starting January 1, 2018 increases the minimum wage to
$11 per hour.
c) Starting January 1, 2019, increases the minimum wage to
$12 per hour.
d) Starting January 1, 2020, increases the minimum wage to
$13 per hour.
e) Starting January 1, 2021, increases the minimum wage to
$14 per hour.
f) Starting January 1, 2022, increases the minimum wage to
$15 per hour.
2)Delays the above scheduled increases by one year for
businesses who employ 25 or fewer employees.
3)Defines "employer" to mean any person who directly or
indirectly, or through an agent or any other person, employs
or exercises control over the wages, hours or working
conditions of any person (consistent with the definition
contained in the Industrial Welfare Commission Wage Orders).
"Employer" includes the state, political subdivisions of the
state, and municipalities.
4)Provides that employees who are treated as employed by a
"single qualified taxpayer" under a specified provision of the
Revenue and Taxation Code shall be considered employees of
that taxpayer for purposes of this bill.
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5)Authorizes the Governor to temporarily suspend a scheduled
increase to the state minimum wage if the Director of Finance
determines certain economic conditions or budget conditions
cannot support a scheduled increase as follows:
a) Economic Conditions: On or before July 28, 2017, and
each year thereafter until the minimum wage is $15 per
hour, the Director of Finance is required to determine and
certify to the Governor and Legislature whether statewide
job growth for the previous three and six month period and
sales tax receipts for the preceding 12 months are
negative. If these negative conditions are met, the bill
authorizes the Governor to provide initial notice to the
Legislature of a temporary suspension of the scheduled wage
increase. If the Governor makes an initial notification to
suspend the wage increase, a final determination by
proclamation shall be made by the Governor by September 1.
b) Budget Conditions: On or before July 28, 2017, and each
year thereafter until the minimum wage is $15 per hour, the
Director of Finance is required to make a determination and
certify to the Governor and Legislature whether the state
General Fund would be in a deficit in the current fiscal
year, or in either of the following two fiscal years.
"Deficit" is defined as a negative balance that exceeds 1
percent of the total state General Fund revenues and
transfers.
If this negative condition is met, the bill authorizes the
Governor to provide initial notice to the Legislature of a
temporary suspension of the scheduled wage increase. If
the Governor makes an initial notification to suspend the
wage increase, a final determination by proclamation shall
be made by the Governor by September 1.
The Governor may temporarily suspend a scheduled minimum
wage increase related to a General Fund deficit no more
than two times.
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6)Specifies, if a scheduled state minimum wage increase is
suspended, all dates specified for scheduled increases that
are subsequent to the final determination must be postponed by
one additional year.
7)Provides that, following implementation of the $15 per hour
minimum wage for all employers, on or before August 1 of that
year (and each year thereafter), the Director of Finance is
required to calculate an adjusted minimum wage (indexing).
Specifies this calculation must increase the minimum wage by
the lesser of 3.5 percent, or the rate of change in the United
States Consumer Price Index for Urban Wage Earners and
Clerical Workers (US CPI-W), as specified. The result will be
rounded to the nearest ten cents. Each adjusted minimum wage
calculated will take effect on the following January 1.
8)Specifies, if the rate of change in the US CPI-W is negative,
there shall be no increase or decrease in the minimum wage.
9)Specifies, if the rate of change in the US CPI-W exceeds 7% in
the first year of implementation of the $15 per hour minimum
wage for employers with 26 or more employees, the indexing
provisions described above shall be implemented immediately,
such that indexing will be effective the following January 1.
10)Revises the definition of an employee under the Healthy
Workplaces, Healthy Families Act of 2014 to include providers
of in-home support services (IHSS). This change in law allows
IHSS providers to accrue one hour of sick leave for every 30
hours worked.
11)Entitles a provider of IHSS services who works in California
for 30 or more days within a year to paid sick days as
follows:
a) Eight hours or one day beginning July 1, 2018.
b) Sixteen hours or two days beginning when the minimum
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wage for employers with 26 or more employees has reached
$13 per hour.
c) Twenty-four hours or three days beginning when the
minimum wage for employers with 26 or more employees has
reached $15 per hour.
12)Requires the State Department of Social Services (DSS), in
consultation with stakeholders, to convene a working group to
implement paid sick leave for IHSS providers. The workgroup
shall finish its implementation work by November 1, 2017, and
DSS shall issue guidance such as an all-county letter or
similar instruction by December 1, 2017.
FISCAL EFFECT:
1)Current year costs of approximately $19 million General Fund
(GF), and Budget Year costs of approximately $40 million GF,
to increase state minimum wages for IHSS, Department of
Developmental Services and civil service employees from $10 an
hour to $10.50 an hour starting January 1, 2017. These costs
include offsetting savings to Medi-Cal and CalWORKS programs,
assuming increases in the minimum wage will result in
individuals and families no longer qualifying for all or a
portion of these services. The Administration estimates costs
of $3.6 billion GF assuming a minimum wage of $15 an hour is
provided by 2022-23.
2)General Fund costs of approximately $90 million GF in 2018-19
to provide one day of sick leave to the approximately 468,000
IHSS providers in California. These costs are estimated to
increase to approximately $227 million GF in 2022-23, when the
state provides three paid sick days per year. Medi-Cal does
not provide federal funding for services not rendered by IHSS
providers, therefore, the state is responsible for the costs
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of a provider's wage while on paid sick leave. These cost
estimates also include back up provider costs, Case
Management, Information and Payroll System (CMIPS) automation
changes and Department of Social Services administrative
costs.
COMMENTS:
1)Purpose. There are approximately 7 million hourly workers in
California, of which about 2.2 million earn the minimum wage.
This bill, supported by Governor Brown and several labor
organizations including the California Labor Federation and
SEIU United Long Term Care Workers, would make California the
first state in the nation to commit to raising the minimum
wage to $15 per hour statewide.
The Administration has expressed concerns over prior
Legislative proposals to raise the minimum wage due to costs.
This plan differs from prior proposals since it allows for
increases to be phased in over a six year period, consistent
with economic expansion, and includes mechanisms to "pause"
the scheduled increases if there is a forecasted budget
deficit or poor economic conditions. Once the minimum wage
reaches $15 per hour for all businesses, wages would be
increased each year by up to 3.5 percent (rounded to the
nearest 10 cents) for inflation.
2)Expansion of sick days to IHSS workers. This bill also
provides sick leave for In-Home Supportive Services workers
starting in July 2018. AB 1522 (Gonzalez), Chapter 317,
Statutes of 2014, enacted the Health Workplaces, Healthy
Families Act of 2014 and provided paid sick days to
approximately 6.5 million California employees starting July
1, 2015. Providers of IHSS were originally included in AB
1522 but were excluded towards the end of the Legislative
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process due to cost concerns. These cost concerns have been
addressed by phasing in the provision of paid sick days,
consistent with increases in the minimum wage.
Analysis Prepared by:Misty Feusahrens / APPR. / (916)
319-2081