Key factor in minimum wage laws will be the timing.

WITH proposals from both Gov. Arnold Schwarzenegger and Democratic leaders in the Legislature, a hike in the state's $6.75-an-hour minimum wage seems almost inevitable.

The main issue being debated now is whether the minimum wage should be indexed annually to inflation: Democrat and labor leaders want it; Schwarzenegger, Republicans and business groups don't.

But lost amid the emotional debate on both sides is the crucial issue of timing. Whatever proposal passes the Legislature this year, businesses that pay employees the minimum wage will likely have to move very quickly--within weeks--to implement the first 50-cent increase.

The Schwarzenegger proposal--SB 1167, carried by Sen. Abel Maldonado, R-San Jose--has the first increase to $7.25 an hour taking effect Sept. 1, regardless of when the measure passes. (The measure could conceivably pass in the closing weeks of the legislative session in August.)

Not to be outdone, the Democratic leadership in the state Senate two weeks ago unveiled amendments to their bill--SB 328 by Sen. Gil Cedillo, D-Los Angeles--that has the first 50-cent increase raking effect 60 days after passage.

The other major bill on the table, AB 48 by Assemblywoman Sally Lieber, D-Mountain View, still has language in it from last year that has the first increase taking effect on July 1 of this year. Given that it's not likely to pass the Legislature before then, that date presumably would be pushed back.

All three measures have the second 50-cent increase to $7.75 an hour hitting on July 1, 2007. (The Cedillo and Lieber bills would then index the minimum wage to inflation starting Jan. 1, 2008.)

Whichever proposal passes the Legislature this summer, the increase to $7.25 an hour torrid take effect as soon as Sept. 1.

For companies that use payroll services, that should pose little problem: these services can usually process changes in wages within one month. But getting the word out within 30 days to the hundreds of thousands of very small businesses in the state that process their own payrolls could be quite a task, especially since many have owners who don't speak English as their first language. And the consequences for those that don't find out in time: They could be liable for back pay.

"No question it's an aggressive timetable and there may well be issues around notification," said one Democratic staff worker, who said legislators will take into consideration pleas from business owners for more time.

So far, though, business groups are focusing more on eliminating indexing from any minimum wage bill that makes it through. They also say the start date for the final legislation may be negotiable.

Staff reporter Howard Fine can be reached by phone at [phone], ext. 227, or by e-mail at [e-mail].