United States: Los Angeles Paid Sick Leave Ordinance Requirements

On June 2, 2016, Mayor Garcetti approved a City of Los Angeles Paid Sick Leave Ordinance, and it will go into effect on July 1, 2016, along with the City of Los Angeles Minimum Wage Ordinance. We have outlined some of the key terms of the paid sick leave ordinance as well as highlighted differences with California's paid sick leave law.

Coverage

Any employee who in a particular week performs at least two hours of work in Los Angeles for the employer and, on or after July 1, 2016, works in Los Angeles for the same employer for 30 days or more in a year will now be entitled to receive paid sick leave benefits. Unlike California law, which contains exceptions for construction workers, certain home health workers, flight crews, and workers covered by union agreements (if certain conditions are met), the Los Angeles ordinance has no such exceptions. While you are likely aware if your place of employment is within the boundaries of the City of Los Angeles, we have provided the attached interactive map set up by the City, showing the specific City of Los Angeles boundaries, to assist in determining whether this policy must be adopted. (http://zimas.lacity.org/)

It will be important to consider the implications of your employees transferring locations or traveling in and out of the City of Los Angeles in determining whether the Los Angeles Paid Sick Leave Ordinance will apply.

Timing

For businesses with 26 or more employees, Los Angeles ordinance compliant paid sick leave must start accruing on the first day of employment or July 1, 2016, whichever is later. Employees may use paid sick leave beginning on the 90th day of employment or July 1, 2016, whichever is later.

The language of the ordinance is frustratingly ambiguous with respect to when businesses with 25 or fewer employees will be required to comply with the paid sick leave provision. However, after consulting the Office of Wage Standards of the Bureau of Contract Administration, the municipal entity tasked with interpreting this ordinance, and reviewing the legislative history, it appears as though small businesses have a one year deferral, and will not be required to provide paid sick leave to their employees until July 1, 2017.

Usage Limit

Employees may take up to 48 hours of sick leave in each year of employment, calendar year, or 12-month period. This amount is double the annual amount under California law, meaning that most California employers will have to increase their "Usage Cap.

Accrual/Lump Sum Method

Employers may provide either: (1) the entire 48 hours to an employee at the beginning of each year of employment, calendar year, or 12-month period; or (2) provide one hour of paid sick leave per every 30 hours worked, which may be capped at 72 hours. This means that most California employers will have to increase their "Accrual Cap" to comply with this ordinance.

Carryover

Unused paid sick leave carries over to the following year, up to the 72 hour Accrual Cap.

Note that California law provides that if an employer uses the "lump grant" method, then unused sick leave does not carry over and unused balance is simply replaced by the new lump grant each year. Under the Los Angeles ordinance, however, up to 72 hours must carry over from year to year. So, while an Los Angeles employee can use only 48 hours of sick pay in a year, the ordinance suggests (illogically) that the employee, even under the lump sum method, must be permitted carry over 72 hours of paid sick leave. Despite an interpretation of this ordinance which suggests that the 72 hours "carry over" requirement only applies to "accrued sick leave," in soliciting further guidance from the Office of Wage Standards of the Bureau of Contract Administration, it stated that the 72 hour "carry over" requirement applies regardless of which method used.

Paid Time Off Policy

If an employer has a paid leave or paid time off (PTO) policy that provides 48 hours or more of compensated time off, no additional time is required. This provision is frustratingly vague and provides no further guidance as to how an employer can rely on a paid leave or PTO policy to comply with this ordinance. Under California law, employers may meet their paid sick leave obligations through a PTO policy that uses an alternative accrual method so long as it essentially provides no less than 24 hours/3 days of paid sick leave by the 120th calendar day of employment in each year. Additionally, the California law contains a "grandfather provision," which provides for an additional alternative accrual method. The Los Angeles Ordinance is entirely silent on this issue, which seems to suggest that only the 48 hour lump sum or 1 hour for every 30 hours worked accrual method can be used to comply with this new law.

Family Members and Equivalents

Employers must provide paid sick leave upon the oral or written request of employees for themselves, family members as defined by the California paid sick leave law, or "any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship." As you can see, this is far broader than California law and essentially puts the employee in control of for whom he or she may use their paid sick leave.

Documentation

Under the Los Angeles ordinance, the employer may require the employee to provide reasonable documentation. This provision of the Los Angeles City Ordinance potentially conflicts with the California state law. At this time, until further clarity with respect to the interplay with California law is provided, we recommend refraining from adopting any policy or practice which requires employees to submit documentation of an absence from work for which paid sick leave is or will be used.

Separation/Reinstatement

An employer is not required to provide compensation to an employee for accrued or unused sick days upon separation of employment. However, if the employee is rehired with one year from the date of separation, previously accrued and unused paid sick time must be reinstated. Unlike California law, the Los Angeles ordinance has no exception to reinstatement of sick time if paid sick leave was paid out on termination.

Enforcement Agency

The Los Angeles city ordinance implemented a brand new administrative agency, the Office of Wage Standards of the Bureau of Contract Administration, as bearing administrative and enforcement responsibilities, which "may promulgate guidelines and rules for the implementation" of the ordinance. Of note, this agency may "allow an Employer's established paid leave or paid time off policy or one which provides payment for compensated time off to remain in place and comply with this article even though it does not meet all the requirements in Section 187.04, if [the agency] determines that the Employer's established policy is overall more generous." Importantly, as the California Department of Labor Standards and Enforcement rolled out, we expect the Office of Wage Standards to provide further guidance regarding this law, potentially through Guidelines, Rules, and/or Frequently Asked Questions. We also expect the Office of Wage Standards to update the Los Angeles City Minimum Wage Poster to include the paid sick leave benefits.

Notice Requirements

Employers in the City of Los Angeles will have to provide the following posting, http://wagesla.lacity.org/sites/g/files/wph471/f/Minimum%20Wage%20Poster%2011-17_0.pdf, regarding the City of Los Angeles minimum wage, and the Office of Wage Standards will likely be circulating a revised posting to address the City of Los Angeles Paid Sick Leave Ordinance prior to July 1, 2016. Additionally, employers who revise their paid sick leave policies to comply with the Los Angeles Ordinance, implicate the California state paid sick leave law notice requirements, which provide that employers must advise employees of any changes to the paid sick leave policy within seven days of the policy change. In most cases, we recommend providing employees affected by this policy change with a brief memo attaching the revised policy and informing employees that such will be implemented on July 1, 2016 in compliance with the City of Los Angeles Paid Sick Leave Ordinance. Moreover, for newly hired employees within the City of Los Angeles, an employer can continue to use the DLSE "Notice to Employee" form, but should check the box that applies in light of the City of Los Angeles policy revisions. For most employers, this will be "Box 2" – "2. Accrues paid sick leave pursuant to the employer's policy which satisfies or exceeds the accrual, carryover, and use requirements of Labor Code §246."

The Los Angeles City Ordinance is silent on a host of provisions addressed by the California state paid sick leave law. While we expect the Office of Wages Standards and Bureau of Contract Administration to provides further guidance on these issues, we are recommending that, unless there is a clear conflict with the California state regulations and the Los Angeles City Ordinance outlines greater protections for employees, an employer can maintain the compliant California state policy provisions.

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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