Attorney Thomas R. Saltarelli Examines Effects of California Minimum Wage Increase

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Thomas R. Saltarelli, principal attorney of Saltarelli Law Corporation, in light of a San Diego Union-Tribune article about a significant California minimum wage increase, discusses its potential effect on small businesses.

The largest group that this will hit will be small businesses. With all of the taxes California individuals and corporations pay in this state, a substantial raise of the minimum wage could cause even more businesses to leave California.

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According to a March 31, 2016,San Diego Union-Tribune article, California legislators recently approved a landmark agreement that will make California the first state in the country to commit to raising the minimum wage to $15 per hour statewide by January 1, 2022. Furthermore, the article states that in order to comply with this legislation, many small businesses will be forced to raise the wages of their employees over the next few years, regardless if the business is prospering or faltering.

“I agree that some gradual increase over five years or so might be good, but $15 an hour is a very large increase and should be gradual wherever implemented,” said Thomas R. Saltarelli, founder of Saltarelli Law Corporation. “The largest group that this will hit will be small businesses. With all of the taxes California individuals and corporations pay in this state, a substantial raise of the minimum wage could cause even more businesses to leave California.”

Saltarelli also points out the potential for “Wage Creep,” which occurs when wages at the bottom are increased and a company, practically speaking, must increase each level above the lowest paid level, so that the existing wage differentials are somewhat maintained. “This can cost an employer a huge increase in its compensation budget and cash outlay,” said Saltarelli. “Additionally, when wages increase, all of the other related employer expenses, such as taxes and workers’ compensation insurance, increase.”

This can also cause some employees to be terminated or made part-time in order to keep the wage budget within its ability to pay and maintain some level of earnings after all expenses and taxes. “I really do not see any major upside for small businesses with regards to this dramatic minimum wage increase,” said Saltarelli.

About Thomas R. Saltarelli, Saltarelli Law Corporation
Thomas R. Saltarelli focuses his practice on business and real estate transactional matters, and also acts as outside General Counsel to small and medium size business entities. He is a member of the Orange County, Los Angeles County and American Bar Associations, State Bar of California, District of Columbia Bar and California Trial Lawyers Association. Saltarelli Law Corporation specializes in real estate and business law, but also offers its clientele legal services in a variety of areas. For more information, please call (949) 833-9200, or visit http://www.saltarellilaw.com. The law office is located at 100 Bayview Circle, Suite 500, Newport Beach, CA 92660.

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