A New Chapter or a Missed Opportunity? The Battle Over Proposition 32
In an era where inflation and cost of living dominate headlines, minimum wage debates are more relevant than ever. In November 2024, California voters were presented with Proposition 32, a ballot initiative that proposed raising the state’s minimum wage to $18 per hour by 2026. Supporters saw it as a lifeline for struggling workers. Opponents feared economic ripple effects for small businesses. The proposition was narrowly defeated, but the conversation around it is far from over.
So, what did Proposition 32 promise, why was it rejected, and what does its failure mean for California workers and employers going forward?
What Proposition 32 Proposed
Proposition 32 aimed to raise the minimum wage in California through a two-step increase:
- For employers with 26 or more employees:
- Increase to $17/hour immediately upon enactment.
- Increase to $18/hour by January 1, 2025.
- For employers with 25 or fewer employees:
- Increase to $17/hour by January 1, 2025.
- Increase to $18/hour by January 1, 2026.
Following these adjustments, the minimum wage would have been indexed to inflation, with increases capped at 3.5% annually to provide predictability (Source).
This plan was designed to build on California’s history of progressive wage policies. However, the slim majority of voters who rejected the measure voiced concerns that went beyond worker support.
Why Voters Rejected Proposition 32
1. Economic Uncertainty for Businesses
One of the most cited reasons for opposition was concern about the economic impact on small and midsize businesses. Employers feared that higher wages would lead to:
- Reduced hiring
- Layoffs or hour reductions
- Higher prices for consumers
A study from the Employment Policies Institute suggested that aggressive minimum wage increases could cost thousands of jobs, especially in sectors like food service and retail (EPI Report).
2. Overlap with Existing Wage Laws
California already has some of the highest minimum wages in the country, with local municipalities setting their own rates. For example:
- San Francisco: $18.07/hour
- Los Angeles: $16.78/hour (scheduled to rise again in 2025)
In addition, fast-food and healthcare workers received industry-specific hikes to $20/hour and $25/hour respectively in 2024. Many voters may have seen Proposition 32 as redundant (AP News).
3. Economic Timing
With inflation, rising interest rates, and post-pandemic economic recovery still in flux, opponents argued that 2024 was not the right time to impose new financial obligations on businesses.
How This Affects Workers
While Proposition 32 failed, that doesn’t mean minimum wages in California are frozen. The statewide minimum wage is still set to increase to $16.50/hour in January 2025, with further increases tied to inflation (California DIR).
Still, the rejection of Prop 32 means:
- No guaranteed path to $18/hour by 2026 statewide
- Workers in low-wage areas may continue earning significantly less than peers in cities with local ordinances
- Cost-of-living pressures will remain a challenge for many households
Workers who were counting on Prop 32 to help make ends meet may need to turn to local initiatives or legislative action to bridge the wage gap.
Impact on Employers
For employers, especially small business owners, the rejection of Prop 32 may come as a relief. But that doesn’t mean they’re in the clear.
Employers still need to:
- Comply with state minimum wage increases
- Stay informed about city-level wage mandates
- Review employee classifications to avoid wage-and-hour lawsuits
Moreover, wage increases in specific sectors (like fast food and healthcare) have already reset expectations for many job seekers across industries. Employers may still feel pressure to raise wages competitively to attract and retain talent.
What Other States Are Doing
California isn’t alone in its push for higher wages. Here’s a quick look at minimum wage trends elsewhere:
- Washington: $16.28/hour
- Massachusetts: $15/hour
- Colorado: $14.42/hour (Denver: $18.29/hour)
States like New York and Illinois are also implementing annual increases tied to inflation.
The national momentum remains clear: wage floors are rising. California’s Prop 32 defeat doesn’t reverse this trend, but it may slow statewide momentum.
Legal Questions Surrounding Wage Laws
Failing to comply with wage laws can lead to costly consequences for employers:
- Back pay claims
- Penalties for late payment of final wages
- Class-action lawsuits for misclassification or overtime violations
Employees may be unsure whether they’re being paid lawfully, especially if they work across multiple jurisdictions.
That’s why working with an experienced employment law firm is essential. Legal guidance helps:
- Employers audit practices for compliance
- Employees evaluate potential claims
What Happens Next?
Although Proposition 32 was defeated, advocates have already begun planning new strategies. Labor unions and worker advocacy groups have hinted at:
- New legislation in the California Assembly
- Renewed efforts for a similar ballot initiative in 2026
- Local ballot measures in cities without current $18/hour minimums
If you’re an employer, now is the time to prepare for future increases. If you’re a worker, staying informed can help you understand your rights and push for fair pay.
Why Employment Law Guidance Matters
California’s wage laws are among the most complex in the nation, and they’re evolving rapidly. Whether you’re an employer facing compliance questions or a worker wondering if you’re being paid fairly, you deserve clarity.
At Shaumyan & Derbarseghian, LLP, we specialize in employment law with a focus on helping both workers and businesses navigate wage disputes, compliance challenges, and employee rights.
Contact us today for a free consultation. We’ll review your situation, answer your questions, and help you make informed decisions about your next steps.
