According to the Assembly Floor Analysis, Senate Bill 3 is expected to result in increased wages for more than one-third of California’s employees. Currently, minimum wage in California is $10.00 per hour. For those employed by employers with more than 25 employees, the minimum wage will slowly start rising beginning with an initial hike in January to $10.50 until it reaches $15.00 in 2023. For smaller employees, there will also be wage increases beginning in 2019 and also resulting in a $15.00 minimum wage by 2023.

While this new law may have been making national headlines for the last several months, the practical implications may not have occurred to community managers and volunteer directors. This law should have a significant impact on most homeowners associations.  Homeowners associations contract with many vendors that pay their employees minimum wages.

Who is paid a minimum wage? Again, approximately one-third of all California employees are minimum wage employees. As far as homeowners associations are concerned, you might expect the following employees of vendors to earn minimum wage:

• Administrative workers in offices, including management companies, law firms, financial services, collection companies, construction companies, etc.
• Salespeople that work at minimum wage, plus commission.
• Janitorial personnel.
• Production and transportation workers for construction materials and equipment.
• Security patrol.
• Landscape personnel.
• Construction workers.
• Maintenance workers (pools, lighting, gates, elevators, etc.)

By law, directors are required to review the financials of the homeowners association at least every quarter, and more frequently if required by the governing documents. With these increases, it is advisable to contact the association’s larger vendors to determine whether the increase in minimum wage may impact the association’s service contracts and pricing. It may be necessary to incorporate this information into mid-year or annual budget planning before these increases take effect to avoid budgetary shortfalls.