BILL ANALYSIS
AB 2832
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 2832 (Lieber)
As Amended August 17, 2004
Majority vote
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|ASSEMBLY: |46-30|(May 26, 2004) |SENATE: |22-14|(August 19, |
| | | | | |2004) |
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Original Committee Reference: L. & E.
SUMMARY : Sets the minimum wage at $7.25 as of January 1, 2005,
and $7.75 as of January 1, 2006.
The Senate amendments delete provisions directing the Industrial
Welfare Commission (IWC) to adopt 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. |
| |
|AS PASSED BY THE ASSEMBLY, this bill set the minimum wage at |
|$7.25 as of January 1, 2005, and $7.75 as of January 1, 2006, |
|and required IWC to adopt consistent minimum wage orders |
|without convening wage boards. |
| |
|FISCAL EFFECT: According to the Senate Appropriations |
|Committee, state wage costs for each of the $0.50 per-hour |
|increases prescribed by this bill would exceed $750,000 per |
|calendar year. Costs to in-home supportive services programs |
|would also increase by approximately $9.3 million for every |
|$0.50 minimum wage increase. Given that an estimated 7.7% of |
|adult California Work Opportunity and Responsibility to Kids |
|(CalWORKS) recipients are minimum wage earners, there would be |
|an estimated, offsetting savings to CalWORKS of approximately |
|$5.3 million per fiscal year per $0.50 increase in the minimum |
|wage. |
| |
|COMMENTS: In 1996, the voters approved the Living Wage Act, |
|which established a minimum wage of $5.75 per hour. |
AB 2832
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| |
|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. |
| |
|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. |
| |
|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. |
| |
|Although there are some exceptions, almost all 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 |
AB 2832
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|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. |
| |
|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: 0007900