From the Community Association Attorneys at SwedelsonGottlieb
The minimum wage is going up. As a result of a change in the law to take effect on January 1, 2017, the statewide minimum wage will gradually increase over the next six years until it hits $15 per hour. Further, Los Angeles and San Francisco already have their own laws in place to hit this mark even sooner and may see higher increases depending on the rate of inflation as measured by the Consumer Price Index (CPI).
The wage increase will affect an associations existing employees and will likely impact any association’s existing and potential vendor contracts. Roughly one-third of all California employees are paid minimum wage, and many vendors serving associations rely heavily on minimum wage employees. In the past, California has increased the minimum wage by 1-3% annually, but the pending increase represents a 50% rise over six years, which represents a considerable cost for any vendor to absorb. As a result, vendors will undoubtedly pass along their higher labor costs to the associations they serve.
An association’s board of directors would do well to understand how the minimum wage increase will affect its budget and existing and potential vendor contracts. If an association’s vendors seek to pass along their higher employment costs, it may be necessary for the board of directors to incorporate this information into its regular budget planning to avoid shortfalls.
Questions? Contact the community association attorneys at SwedelsonGottlieb