United States: Enactment Of Los Angeles And San Diego Minimum Wage And Paid Sick Leave Ordinances Requires Employers To Reassess Their Policies

The cities of Los Angeles and San Diego recently approved minimum wage and sick leave ordinances that will apply to all employees who work within those cities' geographical limits.  Employers with employees who work in these cities will need to comply with those new ordinances, as well as the California state law requirements that already exist.

Los Angeles

On June 2, 2016, Los Angeles Mayor Eric Garcetti signed an ordinance into law that will increase the minimum wage of employees who work in the City of Los Angeles for at least two hours in a particular week and grant them up to 48 hours of paid sick leave per year.

The minimum wage portion of the ordinance will go into effect on July 1, 2016 for employers with 26 or more employees.  For employers with 25 or fewer employees, the minimum wage portion of the ordinance will take effect July 1, 2017.  The effective date for the sick leave portion of the ordinance as it pertains to smaller employers is ambiguous, and there are arguments that either a July 1, 2016 effective date, or a July 1, 2017 effective date, could apply.

The minimum wage for employees will increase pursuant to the following table:

Date Minimum wage for employers with 26 or more employees Minimum wage for employers with 25 or fewer employees
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

*Minimum wage set by state law

Employees who work in the City of Los Angeles for the same employer for 30 or more days within a year of starting their employment will also be entitled to sick leave.  It is unclear from the ordinance whether the employee must work all 30 days in Los Angeles before he or she is entitled to sick leave.  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.

Employers may either (1) grant employees all 48 hours of paid sick leave at the beginning of each year of employment, calendar year, or 12-month period; or (2) allow 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.  This is more generous than the 24 hours or 3 days that California law currently requires.  An employer may 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 also more generous than the current state law, which allows employers to cap accrual at 48 hours or 6 days.  Employers need not pay out accrued, unused sick leave when an employee separates from the company, but they must reinstate the accrued, unused leave if the employee is rehired within a year.

If an employer has a paid leave or paid time off policy (or provides payment for compensated time off) that provides employees with 48 hours or more of time off, the employer need not provide any additional sick leave.

Under the current state law, sick leave may be used for 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 utilize sick leave for these reasons and to care for any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.

The ordinance also expressly allows employers to require employees to provide reasonable documentation of an absence from work for which paid sick leave will be used.  California state law does not expressly allow this.

Employers who fail to comply with the minimum wage and sick leave requirements may be responsible for all wages and sick leave benefits unlawfully withheld, as well as an additional penalty of up to $120 per employee per day that each violation occurred.  If an employer retaliates against an employee, the damages are tripled.  Employers also face fines of up to $500 for failing to post the required notice, and for other violations.

If an employer operates a business within the County of Los Angeles, but outside any incorporated city, it must also abide by the County's Minimum Wage Ordinance.  Under the ordinance, the minimum wage for employees in unincorporated areas of Los Angeles County will increase over six years, pursuant to the same table above.  The ordinance does not require employers to provide sick leave.

Hospitality employers and employers with businesses operating inside Los Angeles hotels must also be aware of the minimum wage, paid time off, and sick leave requirements of the Citywide Hotel Worker Minimum Wage Ordinance, which recently went into effect.  That ordinance will be discussed more thoroughly in a separate article.

San Diego

On June 7, 2016, voters in San Diego voted to increase the city's minimum wage and modify the paid sick leave requirements for all employees who work at least two or more hours in a calendar week within the city limits.

The San Diego City Council had approved the measure in July 2014, but Mayor Kevin Faulconer vetoed the proposal.  The measure – known as Proposition I – was eventually placed on the ballot, and the voters overwhelmingly approved it.

When it becomes effective, the ordinance will immediately increase the City of San Diego's minimum wage to $10.50 per hour, and that figure will further increase to $11.50 per hour, effective January 1, 2017.  Beginning January 1, 2019, further increases will be based on San Diego's Consumer Price Index.

The ordinance also mandates that employers provide employees with one hour of paid sick leave for every 30 hours worked within the city limits.  Employers may limit an employee's use of paid sick leave to 40 hours per year, but may not cap its accrual.  The change is an increase from the state's mandate, which requires employers to provide just 24 hours or three days of paid sick leave per year to employees with an optional cap of 48 hours or six days.  The ordinance provides that employees must be allowed to accrue sick leave immediately upon hire, though employers may still prohibit use of sick leave until an employee's 90th day of employment.

Sick leave can be used for the employee's own illness, medical appointments, caring for family members, or taking time off due to domestic violence and related incidents.

Like the current state law, if an employee elects to use paid sick leave, the employer may require the leave to be used in increments of at least two hours.  Also like the state law, employees will be allowed to carry over unused sick leave to the following year, but employers are not required to pay out unused sick leave upon the employee's separation from employment.  If an employer already provides sufficient paid sick leave or other paid time off (including paid vacation or paid personal days) that already satisfies the conditions of the ordinance, it is not required to provide any additional sick leave to its employees.

The 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.

Employers who fail to comply with the minimum wage and sick leave requirements may face a civil penalty of up to $1,000.  Employers who fail to comply with the notice requirement face a penalty of $100 per employee, up to a maximum of $2,000.

The ordinance is set to go into effect as soon as the San Diego City Clerk certifies the election results.  This could take place at any time on or before July 7, 2016.  The City Council has not indicated whether there will be any grace period for employers to comply with the ordinance.

California State Law Requirements

Employers must also ensure that they are complying with California state law requirements regarding minimum wages and sick leave, which in some cases are different from the requirements under these ordinances.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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