$15 Minimum Wage and Increased Sick Pay Benefits Adopted in the City and County of Los Angeles

Effective on July 1, 2016, employers in the City of Los Angeles and the unincorporated parts of Los Angeles County must comply with a new set of minimum wage laws aimed at increasing the minimum wage to $15 per hour by 2020. And the City has also passed a new sick leave law that increases the benefits over and above the State of California minimums. Many other California cities have similar laws under consideration.  

Countywide Minimum Wage Ordinance

Effective on July 1, 2016, the minimum wage for all employers with 26 or more employees in unincorporated areas of Los Angeles County will be $10.50 per hour. The new minimum wage will increase annually to $12.00, $13.25, $14.25 and $15.00 by July 1, 2020, with a similar schedule of increases but delayed for one year (to July 1, 2017) for employers with 25 or fewer employers. 

Though the Countywide Ordinance covers only the “the unincorporated areas of Los Angeles County,” many incorporated cities within Los Angeles County have or are considering city-level wage ordinances.

Many other cities in California already have minimum wage ordinances, including: Berkeley, El Cerrito, Emeryville, Los Angeles, Mountain View, Oakland, Palo Alto, Pasadena, Richmond, San Diego, San Francisco, San Jose, Santa Clara, Santa Monica, and Sunnyvale.

City Minimum Wage (and Sick Paid Leave) Ordinance

Effective July 1, 2016, the Los Angeles City Council has amended the Los Angeles Municipal Code to include certain minimum wage pay rates and sick leave benefits for all employees who “in a particular week perform at least two hours of work” within the City of Los Angeles.

The Los Angeles City Ordinance imposes the same schedule of minimum wage rate increases as the Countywide Ordinance. This means the minimum wage for employees within the City of Los Angeles will be $10.50 per hour for employers with 26 or more employees.

However, unlike the County Ordinance, the City Ordinance requires that an employer provide certain sick leave benefits. The California state sick leave law – The Healthy Workplaces, Healthy Families Act of 2014 – already requires paid sick leave. Our prior client advisories on the California state sick leave law are found here, here and here. Generally, the state law requires:

• All employers who employ at least one employee who works more than 30 days in a year in California, to provide all employees (including part-time, temporary, and seasonal employees) at least 24 hours (i.e., 3 days) per year of paid sick leave. Certain coverage exceptions apply, such as employees covered by a collective bargaining agreement that provides equivalent paid leave.
• There are two methods in which employers may account for the accrual of the requisite 24 hours. Employees may accrue paid sick leave on an hourly basis, at rate of one hour of paid sick time for every 30 hours worked.  If accrued on an hourly basis as described here, accrued paid sick time must roll-over year-to-year, but may be capped at 48 hours (i.e., 6 days). Alternatively, employers may provide 24 hours (i.e., 3 days) of sick leave annually on a lump sum basis, instead of on an hourly accrual basis, without any roll-over to the following year. There is no requirement that employers pay out unused sick time on termination.
• Employers can restrict the use of accrued paid sick time to following the 90th day of employment for new hires, and 24 hours (i.e., 3 days) per year. Employees must be allowed to use accrued sick time in increments as small as 2 hours, for their own illness or preventive care, or for the illness or preventive care of a “family member,” which is defined broadly.  Employees who are victims of domestic violence, sexual assault, or stalking can use paid sick time to seek aid, treatment or assistance related thereto.
• Employers must provide notice to employees of the sick leave policy, must provide employee sick leave accrual balances on pay stubs, and are prohibited from retaliating against employees for using accrued paid sick leave.

The Los Angeles City Wage Ordinance paid sick leave requirements match the state law in most, but not all, respects. Certain portions of the City Ordinance provide employees with greater paid sick leave benefits than the state law, including:

• The City Ordinance requires employees be allowed to use 48 hours of paid sick leave per year. This is double the 24 hours mandated by the state law. The City Ordinance does not contain the coverage exemptions, so all employers covered by the City Ordinance must comply with it.
• There are two methods in which employers may account for the accrual of the requisite 48 hours under the City Ordinance. Hourly Accrual:  like the state law, an employee may accrue one hour of paid sick leave for every 30 hours worked (i.e., hourly accrual basis). However, unlike the state law hourly accrual roll-over cap of 48 hours per year, the roll-over cap under the City Ordinance is a minimum of than 72 hours. Lump Sum Accrual:  alternatively, employers may provide the full 48 hours of paid sick leave as a lump sum at the beginning of year (which may be on a calendar year, the employee’s anniversary, or other 12-month period), with roll-over to the following year up to 72 hours (but use may be limited to 48 hours during the defined 12-month period). The state law only requires 24 hours of lump sum accrual without any roll-over to the following year.
• The City Ordinance, unlike the state law, does not expressly allow for use of accrued sick leave in as little as two hour increments, implying as if less than two hour increments may be required. And, while, the state law allows for employees to use accrued paid sick leave for the illness or preventive care of a “family member,” the City Ordinance expands the definition of a “family member” to include, “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”
• The City Ordinance states than an employer “may require an Employee to provide reasonable documentation of an absence from work for which paid sick leave is or will be used.” The state law has no such requirement. But, “reasonable documentation” is undefined, and neither the state law nor the City Ordinance requires an employee be sick enough to see doctor in order to use accrued paid sick leave.

The Los Angeles City Council published a Frequently Asked Questions document to assist employers covered by the City Ordinance.

What Should Los Angeles Area Employers Do Now?

In response to the Los Angeles Countywide Wage Ordinance and the Los Angeles City Minimum Wage Ordinance, employers should take the following steps. Employers should confirm whether they are covered by the Countywide Ordinance (i.e., covering unincorporated areas of Los Angeles County) or the City Ordinance (i.e., within the incorporated City of Los Angeles). If covered, employers should comply with the posting requirements. The Countywide Ordinance includes a posting requirement as well as an Initial Compensation Disclosure Statement, which can be found here. Similarly, the City Ordinance requires that employers to display the new posting “in a conspicuous place,” which can be found here. Both require non-exempt employees be paid a minimum wage rate of at least $10.50 per hour starting on July 1, 2016. Employers covered by the City Ordinance should confirm that employees receive paid sick leave in compliance with such; specifically, by ensuring that the additional requirements set forth above are incorporated into the existing employer policy meant to satisfy the state sick leave law.