On May 30, the California Assembly passed AB 10, which aims to increase the state’s minimum wage incrementally over a three-year period to $9.25 per hour by 2016. California’s current minimum wage is $8 per hour. It was last increased in 2008 by 50 cents.

The measure, which now passes to the state senate for its consideration, would increase the minimum wage to $8.25 by January 2014, $8.75 by January 2015, and $9.25 by January 2016. The measure would also allow California’s minimum wage to be adjusted annually based on the rate of inflation, beginning in 2017. The rate would stay the same in years in which there is deflation. 

Some California cities have already raised the minimum wage that employees in those cities receive. As covered on our firm blog in “San Jose Minimum Wage is Now $10.00 Per Hour,” the city of San Jose’s new minimum wage came into effect in March of 2013. Last January, the city of San Francisco’s minimum wage increased to $10.55 per hour, making San Francisco’s the highest minimum wage in the country.

According to Betsy Johnson, the managing shareholder in the Los Angeles office of Ogletree Deakins: “Raising the minimum wage on a state-wide basis is likely to have a chilling effect on California’s fragile economic recovery. The increases in the minimum wage will discourage those employers that cannot pass the increased payroll costs through to customers from hiring additional or inexperienced employees.” 

Ameneh K. Ernst, J.D. is an editor of firm publications in the Torrance, California office of Ogletree Deakins.