Title IV of the so-called "Estate Tax and Extension of Tax Relief Act of 2006" (as passed by the House) would increase the federal minimum wage on this schedule:
`(A) $5.15 an hour beginning September 1, 1997;
`(B) $5.85 an hour, beginning on January 1, 2007;
`(C) $6.55 an hour, beginning June 1, 2008; and
`(D) $7.25 an hour, beginning June 1, 2009;’.
So, California employers wouldn’t be affected until June 1, 2009, assuming there’s no further state action, right?
Wrong.
For tipped employees, it would override California law with respect to the minimum wage:
`(2) Notwithstanding any other provision of this Act, any State or
political subdivision of a State which on or after the date of
enactment of the Estate Tax and Extension of Tax Relief Act of 2006
excludes all of a tipped employee’s tips from being considered as wages
in determining if such tipped employee has been paid the applicable
minimum wage rate, may not establish or enforce the minimum wage rate
provisions of such law, ordinance, regulation, or order in such State
or political subdivision thereof with respect to tipped employees
unless such law, ordinance, regulation, or order is revised or amended
to permit such employee to be paid a wage by the employee’s employer in
an amount not less than an amount equal to–`(A) the cash wage paid such employee which is required
under such law, ordinance, regulation, or order on the date of
enactment of the Estate Tax and Extension of Tax Relief Act of 2006; and
`(B) an additional amount on account of tips received
by such employee which amount is equal to the difference between the
cash wage described in subparagraph (A) and the minimum wage rate in
effect under such law, ordinance, regulation, or order, or the minimum
wage rate in effect under section 6(a), whichever is higher.’
So, the minimum wage for regular employees would be $6.75 per state law, but tipped employees would be paid $2.13 an hour plus tips, because California Wage Orders would be void with respect to them.
The Legislature would be forced to act on or about the day of the change to avoid this, and I could see both sides using the urgency to their advantage.
Rocky waters ahead.
(Personally, I give this bill about a 25% chance of passing, so maybe it’s not worth the worry)
UPDATE: This would have the same effect in Alaska, Minnesota, Montana, Nevada, Oregon, and Washington. See a theme here? Only Nevada poses a meaningful electoral loss to the GOP. The others are solid blue.
