Get Ready California

July 8, 2016 |

Get Ready California: Los Angeles, Santa Monica, and San Diego Passed Minimum Wage and Paid Sick Leave Ordinances

In a move that will leave many employers scrambling for timely compliance, the cities of Los Angeles, Santa Monica, and San Diego recently approved minimum wage and sick leave ordinances that will apply to all employees who work within city lines.  The ordinances will impose additional compliance obligations on employers still coming to terms with extensive California state law requirements. Below is a summary of the new ordinances as well as a comparison to existing California law.  For employers with employees working in San Diego, Santa Monica, and Los Angeles, the ordinances will require modifications of existing sick leave policies.

Los Angeles

Minimum Wage

Commencing July 1, 2016, employers with 26 or more employees working at least two hours in a particular week in Los Angeles will increase to $10.50.  For employers with 25 employees or less, the minimum wage will remain at $10.00 until July 1, 2017.

The minimum wage increase:

Date 26+ Employees Less than 25employees
July 1, 2016 $10.50 $10.00
July 1, 2017 $12.00 $10.50
July 1, 2018 $13.25 $12.00
July 1, 2019 $14.25 $13.25
July 1, 2020 $15.00 $14.25
July 1, 2021 $15.00 $15.00

Employers operating outside an incorporated city, but inside the County of Los Angeles will also be required to comply with the County’s Minimum Wage Ordinance.  Minimum wage for employees in unincorporated areas of Los Angeles County will increase according to the schedule above.  The ordinance does not require employers to provide sick leave.

Sick Leave

Employees who work in the City of Los Angeles for the same employer for 30 or more days within a year of the start of their employment will be entitled to 48 hours of sick leave per year.  This sick leave ordinance is more generous than the 24 hours or 3 days that California law currently requires.

Like the state mandatory sick leave law, employees must begin accruing sick leave immediately upon hire (or July 1, 2016, whichever is later) and may use accrued sick leave after their 90th day of employment.

Accrual

Employers have the option of granting employees all 48 hours of paid sick leave at the beginning of each year of employment, calendar year, or 12-month period; or allowing employees to accrue one hour of sick leave for every 30 hours worked.  Employees will be entitled to take up to 48 hours of sick leave each year.

Employers will have the ability to cap accrual of sick leave at 72 hours, but must allow employees to carry over all accrued but unused sick leave to the following year.  This is a higher accrual cap than California law, which allows employers to cap accrual at 48 hours or 6 days.

Like the state mandatory sick leave law, employers do not have to pay out accrued, unused sick leave at termination or resignation, although they do have to reinstate accrued, unused leave for any employee rehired within a year.

Existing Policies

The law does state that if an employer has vacation or PTO policy that provides employees with at least 48 hours of time off, the employer does not need to provide any additional sick leave, provided employees are allowed to use the time for the purposes set forth in the law. However, where most of these plans were drafted to comply with the requirements of the state mandatory sick leave law, it is unlikely existing plans will comply.

Use

In addition to the sick leave uses set forth in the state sick leave law (i.e. the employee’s own illness, medical appointments, caring for family members, or taking time off due to domestic violence and related incidents), under the Los Angeles ordinance, employees may also utilize sick leave to care for any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.

Documentation

The Los Angeles ordinance does expressly allow employers to require employees to provide reasonable documentation of an absence from work for which paid sick leave will be used; however, the California state law does not expressly allow this.  Current guidance from the DLSE has discouraged employers from requesting documentation under the state mandatory sick leave law, so employers should proceed carefully with requests for documentation.

Los Angeles Citywide Hotel Worker Minimum Wage Ordinance

Hospitality employers and employers with businesses operating inside Los Angeles hotels should also be aware of the separate minimum wage, paid time off, and sick leave requirements of the Citywide Hotel Worker Minimum Wage Ordinance.

Santa Monica

With some limited exceptions, the Santa Monica Ordinance applies to all employees who work two or more hours during “a particular week” in the City of Santa Monica.  Private employers that are situated, or do business, in Santa Monica will be required to meet the minimum wage standards and provide paid sick leave in excess of the requirements under state law.

Minimum Wage

The Santa Monica minimum wage provision largely mirrors the Los Angeles ordinance, raising the minimum wage to $15.00 an hour by 2020.

 Sick Leave

Similar to state law, under the Santa Monica Ordinance, employees will accrue one hour of paid sick time for every 30 hours worked (including overtime hours) in Santa Monica, unless the employer provides for a faster accrual rate. Sick time accrues only in whole hour increments.

It is important for employers to note that like the San Francisco sick leave ordinance, the Santa Monica Ordinance does not expressly allow for front-loading of sick leave, which is allowed under the California mandatory sick leave law.  Additionally, current employees will begin to accrue sick time on the effective date of the ordinance or the 90th day of employment, whichever is later.  This is a slightly different requirements from the California mandatory sick leave law, which requires accrual beginning the first day of employment, but allows an employer to prevent employees from using sick leave until the 90th day of employment. It is important to note that because Santa Monica-based employees must accrue sick time during their first 90 days of employment under California law, an employer cannot limit accrual during the first 90 days under the Santa Monica Ordinance. Similarly, although California law allows employers to provide a lump sum of 24 hours of sick leave at the start of the benefit year, the Santa Monica ordinance will require employers who provide a lump sum of 24 hours to continue to track sick leave hours so that employees continue to accrue until they reach the maximum accrual.

Accrual

Employers with 26 or more employees must permit employees to accrue up to a maximum bank of 72 hours of paid sick time; and employers with 25 or fewer employees must permit employees to accrue up to a maximum bank of 40 hours of paid sick time.  However, this accrual is a floating accrual rather than an annual accrual.  This means that an employee may accrue a paid sick leave bank up to 72 hours, and once that employee uses that leave, the employee will immediately begin to accrue new sick time, and can use that additional accrued sick time during the same year immediately upon accrual.

Use of Leave

Other than the differences addressed above, the Santa Monica Ordinance largely mirrors the requirements of California law in terms of usage, notice, and anti-retaliation provisions.

Existing Leave Policies

The law does allow for employers to continue to maintain other paid leave policies, such as vacation, sick, floating holidays, personal days, or other paid time off (PTO) provided the policies meet or exceed the of the Ordinance.  However, as stated above, where most policies were drafted to comply with the California mandatory sick leave law, we recommend that all employers revisit their policies to ensure compliance. The requirements of the Ordinance may be waived in a collective bargaining agreement, so long as the waiver is explicitly set forth in the agreement in clear and unambiguous terms.

Minimum Wage

The Ordinance increases the minimum wages for private sector, non-hotel industry employees on the same time schedule listed above for the City of Los Angeles and Los Angeles County.

Hotel Workers

The Ordinance also establishes minimum wage rates for hotel workers.  Starting on July 1, 2016, Santa Monica’s minimum wage will be $13.25 for hotel workers, including those who work in sublet businesses in a hotel facility or in conjunction with a hotel. Note that these rates do not track the Los Angeles Citywide Hotel Worker Minimum Wage Ordinance, which does not apply to Santa Monica-area hotels.  On July 1, 2017, the minimum wage will increase to $15.37 per hour and will then mirror the Los Angeles Citywide Hotel Worker Minimum Wage rate, currently in effect.  Starting on July 1, 2018, the minimum wage rate for Santa Monica hotel workers will increase according to the Consumer Price Index.

Certain “hotel workers,” (excluding managerial, supervisory, or confidential employees) whose primary place of employment is at one or more hotels in Santa Monica are also covered by the sick leave ordinance, regardless of how many hours worked during “a particular week” in Santa Monica.

San Diego

Effective as soon as the City Clerk certifies the election results (which could be any time between now and mid-July), San Diego will increase the minimum wage to $10.50 per hour and employees who work at least two or more hours in a calendar week within the city limits will be entitled to paid sick leave.

Minimum Wage

The ordinance will immediately increase the City of San Diego’s minimum wage to $10.50 per hour, rising to $11.50 per hour, effective January 1, 2017.  Beginning January 1, 2019, minimum wage increases will be based on San Diego’s Consumer Price Index.

Sick Leave

San Diego’s sick leave ordinance requires provides employees with one hour of paid sick leave for every 30 hours worked within the city limits.

Accrual

Although employers may limit employees’ use of paid sick leave to 40 hours per year, employers may not cap accrual of leave.  This means that employees may continue to accrue sick leave indefinitely, although they may use only 40 hours of sick leave per year.  The ordinance is a steep increase from the state’s mandatory sick leave law, which requires employers to provide 24 hours or three days of paid sick leave per year with an optional cap of 48 hours or six days.  Like the California mandatory sick leave law, employees will begin accruing sick leave upon hire, but employers may prohibit use of sick leave until the 90th day of employment.

Use of Leave

The San Diego ordinance tracks the California mandatory sick leave law usage requirements, allowing employees to use sick leave for the employee’s own illness, medical appointments, caring for family members, or taking time off due to domestic violence and related incidents.  Also like the state law, employers may require the leave to be used in increments of at least two hours, and employers are not required to pay out unused sick leave at separation from employment.

Existing Policies

The ordinance provides that if an employer provides sufficient paid sick leave or other paid time off (including paid vacation or paid personal days) that satisfies the conditions of the ordinance, the employer will not be required to provide any additional sick leave to its employees.  However, as noted with regard to the Los Angeles and Santa Monica ordinances, policies drafted for compliance with the California mandatory sick leave law will not be in compliance with the San Diego ordinance.

The San Diego ordinance also requires employers to post notices within the workplace, and to provide each new employee with written notice of the minimum wage and paid sick leave requirements of the ordinance on the date of hire.

Recommendations

Employers in Los Angeles, Santa Monica and San Diego who crafted sick leave policies in compliance with the California mandatory earned sick leave law will need review and likely amend their policies to reflect the additional responsibilities imposed by the city ordinances. This can be accomplished either by drafting an addendum to current sick leave policies, or by crafting a new policy that tracks the language of the ordinance.

Specifically, policies should be amended to reflect that each of the ordinances increases the minimum number of hours of paid sick leave employers must offer, the accrual, and the carryover provisions required by the state sick leave law.  Although each of the ordinances states that existing paid leave policies may comply, it is unlikely that any employer has an existing policy that sufficiently tracks the language of the ordinances.

Our office is available to help amend and draft policies to ensure timely compliance with these new ordinances. This blog post should not be considered legal advice.

 

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