What You Should Know About California, New York's New Minimum Wage

The federal minimum wage stands at a paltry $7.25 an hour. But while the federal government might be fine with you paying so little, some states recently have instituted drastic increases to their minimum wages.

Just last week, California and New York both adopted new laws setting a $15 minimum wage. That's a major change to the status quo -- an almost livable minimum wage, set to roll out over the next few years. Here's what you need to know.

Workers in California Get a 50 Percent Raise

California became the first state to embrace the $15 minimum wage last week, when Governor Brown announced he'd reached a compromise with labor leaders, allowing living wage legislation to go forward. (The compromise allowed the government to avoid a ballot measure that would have called for a faster path to a higher wage.)

California already has the highest minimum wage in the country, at $10 an hour, but the new law will increase it even more -- but slowly. For companies with 26 or more employees, the minimum wage rises to $10.50 an hour in 2017, $11 an hour in 2018, and increases by $1 a year from there on, until hitting $15 in 2022.

Smaller companies, with 25 or fewer employees, are on a similar schedule, but their increases are delayed one year.

New York Keeps It Complicated

Just as Sacramento was setting a new minimum wage standard, Albany came along to steal its thunder. The same day that California passed its increase, New York Governor Cuomo signed legislation establishing a $15 minimum wage in the Empire State -- along with 12 weeks paid family leave.

But where California established a simple step-by-step increase, New York created something a bit more labyrinthine. While workers throughout the state will eventually get paid a minimum of $15 an hour, the increases vary significantly by location.

Here's the plan, as laid out by the Governor's office:

• For workers in New York City employed by large businesses (those with at least 11 employees), the minimum wage would rise to $11 at the end of 2016, then another $2 each year after, reaching $15 on 12/31/2018.
• For workers in New York City employed by small businesses (those with 10 employees or fewer), the minimum wage would rise to $10.50 by the end of 2016, then another $1.50 each year after, reaching $15 on 12/31/2019.
• For workers in Nassau, Suffolk and Westchester Counties, the minimum wage would increase to $10 at the end of 2016, then $1 each year after, reaching $15 on 12/31/2021.
• For workers in the rest of the state, the minimum wage would increase to $9.70 at the end of 2016, then another .70 each year after until reaching $12.50 on 12/31/2020 -- after which will continue to increase to $15 on an indexed schedule to be set by the Director of the Division of Budget in consultation with the Department of Labor.

And that might not be the end of it. As New York and California ramp up their minimum wage, other states are facing pressure to do the same, meaning that a $15 minimum could spread to neighboring areas in the near future.

Related Resources:

• California, New York Governors Sign Minimum Wage Increase Into Law (The Wall Street Journal)
• How to Prepare for California's Fair Pay Act (FindLaw's In House)
• There Is No Future for Pay Secrecy (FindLaw's In House)
• Franchise Trade Group Sues to Block Seattle Minimum Wage Law (FindLaw's In House)