On May 19, 2015, the Los Angeles City Council passed proposed legislation to considerably increase the City of Los Angeles’ minimum wage. The measure—which was approved by an overwhelming 14-1 vote—directs the City Attorney to write an Ordinance that will, if approved by a final vote of the Council and then the Mayor, increase the minimum wage to $15 per hour by 2020.

The Ordinance is likely expected to take effect on July 1, 2016. On this date, the anticipated Ordinance will require Los Angeles City businesses to increase their minimum wage to $10.50. From there, the minimum wage will increase each year on July 1, reaching $12 in 2017, $13.25 in 2018, $14.25 in 2019, and ultimately $15 in 2020. Starting in 2022, the minimum wage in Los Angeles will continue to rise based on inflation as measured by the consumer price index.

The proposed Ordinance is expected to give minor exceptions for small businesses and nonprofits. For businesses with less than 25 employees, they will probably have an extra year to comply. In other words, minimum wage increases for small businesses will follow the same pattern, but will start a year later in 2017. Nonprofits are also likely to be given an extra year to comply with the Ordinance, but they can obtain a complete waiver under certain conditions: if its top executive earns less than five times what the lowest paid workers makes; if the nonprofit provides transitional jobs; if it provides child care or if it is funded by government grants or reimbursements.

Notably, the expected Ordinance will also apply to the restaurant industry. This is so because tipped employees cannot make less than minimum wage in California. Hence, waitresses and waiters in Los Angeles will also receive the increased minimum wage.

Seattle, San Francisco, and other west coast cities have taken similar action to significantly raise their local minimum wages above the federal floor of $7.25 an hour. However, Los Angeles is expected to be the largest city in the United States to adopt such a standard. In other places, local minimum wage hikes are gaining national momentum. In fact, a $15 minimum wage has also been proposed in New York City, Washington, D.C., and Kansas City.

It is important to note that although this anticipated wage increase will only apply to people working in actual City of Los Angeles, the County and other neighboring cities will likely also raise their own wages as well.

Moving forward, Los Angeles businesses should monitor local legislative action to prepare for the likely minimum wage increases.