Alerts and Updates

San Francisco Voters Approve Minimum Wage Increase to $15 Per Hour by 2018

November 7, 2014

Proposition J applies to nearly all employees who perform at least two hours of work for an employer within the geographic boundaries of San Francisco in a particular week.

Voters in San Francisco on November 4, 2014, overwhelmingly approved "Proposition J," which amends the Minimum Wage Ordinance San Francisco voters passed in November 2003.

The current minimum wage is $10.74 per hour for work performed in San Francisco, well above the current national minimum wage of $7.25 per hour and the state minimum wage of $9.00 per hour. Prior to the election, San Francisco's minimum wage was scheduled to rise to $11.05 per hour, effective January 1, 2015.

Proposition J increases the minimum wage in the following manner:

  • $12.25 per hour effective May 1, 2015;
  • $13.00 per hour effective July 1, 2016;
  • $14.00 per hour effective July 1, 2017; and
  • $15.00 per hour effective July 1, 2018.

Further, beginning on July 1, 2019, the minimum wage will continue to increase annually according to the consumer price index.

San Francisco Mayor Ed Lee applauded the voting results in a statement late on November 4:

"Tonight, San Francisco voters sent a message loudly and clearly to the nation that we can take on the growing gap between rich and poor, we can give a well-deserved raise to our lowest-wage workers, and we can do it in a way that protects jobs and small business."

Proposition J applies to nearly all employees who perform at least two hours of work for an employer within the geographic boundaries of the city in a particular week. There is no exemption for "tipped-employees." (In California, employers may not use tip credit to offset the required minimum wage. Employers must pay their employees the full minimum wage rate, regardless of tips.)

San Francisco is the second U.S. city to mandate that workers will earn at least $15 per hour, the highest rate in the country. Earlier this year, Seattle's City Council passed legislation that provides for an increase in the minimum wage in the city of Seattle to $15 an hour, phased in over a period of years, depending on an employer's size.

Across the San Francisco Bay, voters in Oakland on November 4 approved a minimum wage increase to $12.25 per hour beginning in March 2015. That minimum wage rate will increase yearly based on increases in the cost of living. The Oakland ballot measure also requires, among other things, that employers in Oakland—like employers in San Francisco—provide paid sick leave to their employees beginning on March 2, 2015. The measure provides for enforcement by the city or by an employee's lawsuit.

The San Francisco and Oakland increases reflect a growing number of California localities, including San Jose, Berkeley and Richmond, that have increased (or are in the process of increasing) the city minimum wage above the state minimum wage.

The trend toward increasing minimum wage expands beyond California. Also on November 4, voters in Alaska, Arkansas, Nebraska and South Dakota approved proposals to increase their state-level minimum wages over the next few years. None of those increases, however, rise to the level of San Francisco's minimum wage increase.

What This Means for Employers

Employers of all types and sizes should be aware that, regardless of where a company is headquartered, if they have employees working in San Francisco, Oakland or other California cities with local minimum wage laws, they are required to comply with the new rules.

For Further Information

If you have any questions about this Alert or would like more information, please contact any member of the Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.