BILL ANALYSIS
AB 2832
Page 1
ASSEMBLY THIRD READING
AB 2832 (Lieber)
As Introduced February 20, 2004
Majority vote
LABOR AND EMPLOYMENT 6-2 APPROPRIATIONS 15-5
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|Ayes:|Koretz, Mullin, Chan, |Ayes:|Chu, Berg, Corbett, |
| |Chu, Laird, Leno | |Correa, Firebaugh, |
| | | |Goldberg, Leno, Nation, |
| | | |Negrete McLeod, Oropeza, |
| | | |Pavley, Ridley-Thomas, |
| | | |Wesson, Wiggins, Yee |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Shirley Horton, Houston |Nays:|Runner, Bates, Daucher, |
| | | |Haynes, Keene |
| | | | |
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SUMMARY : Sets the minimum wage at $7.25 as of January 1, 2005,
and $7.75 as of January 1, 2006, and would require the
Industrial Welfare Commission (IWC) to adopt consistent minimum
wage orders without convening wage boards.
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|EXISTING LAW authorizes IWC to determine minimum wages in |
|accordance with a prescribed procedure that includes the |
|selection of wage boards to consider and make recommendations |
|regarding wage issues. The current minimum wage for all |
|industries is $6.75 per hour. |
| |
|FISCAL EFFECT: According to the Assembly Appropriations |
|Committee, data from the State Controller's Office indicate |
|that the State of California each year employs between 1,000 |
|and 2,000 minimum wage workers, mostly seasonal employees of |
|the California Conservation Corp. If the state pays an average |
|of 1,500 employees the minimum wage for three months each year, |
|the cost to the state of paying the higher minimum wage rates |
|specified in this bill would be $390,000 in 2004-05 and |
|$780,000 each fiscal year thereafter. |
| |
|COMMENTS: In 1996, the voters approved the Living Wage Act, |
|which established a minimum wage of $5.75 per hour. IWC, under |
|the authority delegated to it by the Legislature, acted in 2000 |
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|to increase the minimum wage from $5.75 to $6.25, effective on |
|January 1, 2001, and to $6.75 on January 1, 2002. |
| |
|A recent report by the California Budget Project states that |
|58.1% of minimum wage earners in California are 25 years of age |
|and older. The report also reveals that 50.7% of minimum wage |
|earners who are women work 35 hours of more per week. Over 69% |
|of male earners of the minimum wage work 35 hours per week or |
|more. The same report states that despite increases in the |
|minimum wage, the purchasing power of California's minimum wage |
|is down 28% since 1968. |
| |
|1)IWC: IWC is obligated to conduct a full review of the |
| adequacy of the minimum wage at least once every two years. |
| IWC is authorized on its own, or when it receives a petition, |
| to adopt, amend, or rescind a wage order. In February of |
| 2003, IWC halted the process of discussing increases in the |
| minimum wage based on their determination that an increase at |
| this time was unsubstantiated. |
| |
|Last year, the IWC's budget was reduced by half in part over |
| concerns regarding its commitment to fulfil its statutory |
| obligations. Additionally, IWC has recently reported that, |
| due to fiscal constraints, it has not begun its review of the |
| minimum wage that should have begun in November of 2003. |
| |
|2)Other states: California's minimum wage is the lowest on the |
| West Coast. In 1998, Washington indexed its minimum wage, |
| which is currently $7.16, by ballot initiative. In 2002 |
| Oregon increased its minimum wage to $7.05 an hour, with |
| annual indexing beginning after January 1, 2004, and Alaska |
| recently increased its minimum wage to $7.15 an hour. |
| |
|3)Federal and state law: Most employers in California are |
| subject to both the federal and state minimum wage laws. The |
| effect of this dual coverage is that when there are |
| conflicting requirements in the laws, the employer must |
| follow the stricter standard; that is, the one that is the |
| most beneficial to the employee. Thus, since California's |
| current law requires a higher minimum wage rate than does the |
| federal law, all employers in California who are subject to |
| both laws must pay the state minimum wage rate unless their |
| employees are exempt under California law. |
| |
|4)Exemptions: Although there are some exceptions, almost all |
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| employees in California must be paid the minimum wage as |
| required by state law. Effective January 1, 2002, the |
| minimum wage in California is $6.75 per hour. There are some |
| employees who are exempt from the minimum wage law, such as |
| outside salespersons, individuals who are the parent, spouse, |
| or child of the employer, and apprentices regularly |
| indentured under the State Division of Apprenticeship |
| Standards. |
| |
|There is an exception for learners, regardless of age, who may |
| be paid not less than 85% of the minimum wage rounded to the |
| nearest nickel during their first 160 hours of employment in |
| occupations in which they have no previous similar or related |
| experience. |
| |
|There are also exceptions for employees who are mentally or |
| physically disabled, or both, and for nonprofit organizations |
| such as sheltered workshops or rehabilitation facilities that |
| employ disabled workers. Such individuals and organizations |
| may be issued a special license by the Division of Labor |
| Standards Enforcement authorizing employment at a wage less |
| than the legal minimum wage. |
| |
|5)Previous legislation: SB 57 (Burton) automatically adjusts |
| the hourly minimum wage on January 1, 2004 and each year |
| thereafter based on the California Consumer Price Index for |
| All Urban Consumers. This bill was held in Senate |
| Appropriations Committee and is now dead. |
| |
|SB 996 (Alarcon) requires IWC to establish minimum living wage |
| requirements, indexed to inflation, that would apply to |
| specified employers that enter into specified contracts with |
| the state or receive certain types of state assistance. This |
| bill passed the Senate, 25 to 14, on June 4, 2003, but was |
| subsequently held at the Assembly Desk. |
| |
| |
| |
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Analysis Prepared by : Nick Louizos / L. & E. / (916) 319-2091
FN: 0005551