Many cities and counties across California are set to increase their minimum wages in July 2017, and employers need to start preparing now.  For example, Los Angeles City and County are increasing the minimum wage for employers with 26 or more employees to $12 per hour on July 1, 2017 (currently at $10.50 per hour). This Friday’s Five video covers five issues that employers should start to review in order to comply with these increases in the minimum wage.

For more information about the local minimum wages in place throughout California:

San Diego: http://www.californiaemploymentlawrep…

Los Angeles: http://www.californiaemploymentlawrep… and http://www.californiaemploymentlawrep…

Southern California overview of various minimum wage requirements: http://www.californiaemploymentlawrep…

Sample model pay stub: https://www.dir.ca.gov/dlse/PayStub.pdf

 

With the arrival of 2017, many employers are recognizing the difficulties in navigating the complex set of paid leave laws in Southern California.  For regular readers of the blog, this may seem like a repeat, but this post is five items employers need to remember about paid sick leave laws in Southern California.

1. The law – either state or local –  that provides the most generous benefits to the employees must be followed by the employer.

California’s paid sick leave law applies to all employers and provides employees with 24 hour or 3 days of paid sick leave.  As set forth below, many local cities and counties have implemented their own paid sick leave requirements.  Employers must comply with the law that provides the most benefits to employees.

2. Southern California cities and counties that have implemented paid sick leave laws

State/City Minimum Wage Paid Sick Leave
California $10/hr January 1, 2016; $10.50 January 1, 2017 for employers with 26 or more employees Current: 3 days or 24 hours
Los Angeles – City July 1, 2016: $10.50/hr; July 1, 2017 $12; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00 * July 1, 2016: 48 hours*
Los Angeles – County Same as LA City No specific requirement – CA law applies
San Diego July 2016: $10.50; January 1, 2017 $11.50; January 1, 2019 indexed to inflation 5 paid sick days (effective July 11, 2016)
Santa Monica $10.50 July 1, 2016; July 1, 2017 $12.00; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00* January 1, 2017: 32 hours for small businesses, 40 hours for large businesses; January 1, 2018: 40 hours for small business, 72 hours for large businesses*
Malibu $10.50 July 1, 2016* No specific requirement – CA law applies
Pasadena $10.50 July 1, 2016* No specific requirement – CA law applies
* Employers with 25 or fewer employees the implementation is delayed one year.

3. How to determine which law applies to your business operating in the County of Los Angeles

There is a lot of confusion about what law applies to businesses operating in Los Angeles County.  The County of Los Angeles’ ordinance only applies to unincorporated cities within the county.  Here is a list of the incorporated cities in the County of Los Angeles. If the employer is located in an incorporated city, the employer must comply with the incorporated city’s paid sick leave requirements, and if the city does not have any requirements, California’s paid sick leave law would apply.

4. Understand the difference between use cap and accrual caps

Under California state law, employers may apply an accrual cap at 48 hours or 6 days per year.  The employees must be allowed to accrue up to this amount and carry it over from year to year.

The accrual cap is different from the annual use cap.  The annual use cap allows employers to limit the amount of paid sick leave used by the employee within one year.  Under California state law, employers can also impose an annual use cap of 24 hours or 3 days (whichever is greater) each year.

Employers need to pay careful attention about the differences in the state and local laws that apply to their companies in this regard.  For example, under Santa Monica’s paid sick leave ordinance, the accrual cap is 40 hours for large employers in 2017.  However, because accrual cap is less than what is permitted under California law, employers must follow California’s more generous requirements of allowing accrual of up to 48 hours or 6 days per year) and 72 hours in 2018.

5. Can employers change accrual methods after one has been implemented?

Yes, there is nothing that prohibits employers from changing accrual methods (i.e., up-front grant or the accrual method).  However, as employers are already required to provide non-exempt employees with an individualized Notice to Employee as required under Labor Code section 2810.5 that sets forth the employer’s accrual method, employers should consult an employment attorney about how to provide advanced notice to employees prior to changing the policy and how to treat already accrued and unused paid sick leave under the old policy.

The City of San Diego passed the Earned Sick Leave and Minimum Wage Ordinance which took effect on July 11, Coronado Bridge2016.  Now, less and two months later, the City has approved an “Implementing Ordinance” clarifying the law’s regulations.  The Implementing Ordinance takes effect on September 2, 2016.  This Friday’s Five provides five issues that have been updated by the City of San Diego’s Implementing Ordinance:

1. The “Implementing Ordinance” is effective September 2, 2016.

The original ordinance became effective on July 11, 2016.  However, there was a lot of confusing issues that left employers concerned about how to comply with the law, and many issues that were simply not addressed by the original ordinance.  In an attempt to clarify the issues, the City passed the Implementing Ordinance clarifying some issues.  The Implementing Ordinance is effective as of September 2, 2016.

2. Employers are required to provide a written notice to employees about its paid sick leave policy by October 1, 2016.

The Implementing Ordinance requires that every employer must also provide each employee at the time of hire, or by October 1, 2016, whichever is later, written notice of the employer’s legal name and any fictitious business names, address, and telephone number and the employer’s requirements under the law.  The notice must also include information on how the employer satisfies the requirements of the law, including the employer’s method of earned sick leave accrual.  The notice must be provided to employees in English and in each employee’s primary language, if it is a language if it is spoken by at least five percent of the employees at the employer’s workplace.  Employers may provide this notice through an accessible electronic communication in lieu of a paper notice.  The City published a form notice to comply with these requirements, which can be downloaded here.

3. Under the Implementing Ordinance, employers may set a cap on the total amount of accrual at 80 hours.

Under the Implementing Ordinance, employers may cap an employee’s total accrual of earned sick leave at 80 hours.  The language under the original ordinance did not permit employers to cap the amount of accrued sick leave.  The law does not automatically set the cap for employers, but merely states that employers are allowed to set the cap.  Therefore, employers with employees that are covered by the City’s law should develop a written policy that sets this cap if desired.

4. The implementing ordinance allows employers to front load no less than 40 hours of sick leave at the beginning of each benefit year.

An employer may satisfy the accrual and carry-over provisions of the law if no less than 40 hours of earned sick leave are awarded to an employee at the beginning of each benefit year.  This front-loading of the 40 hours must be provided to all employees regardless of their status as full-time, part-time, or temporary workers.

5. Employers may set minimum increment for use, but not more than two hour increments.

Employees may determine how much earned sick leave they need to use, provided that employers may set a reasonable minimum increment for the use of earned sick leave not to exceed two hours.

Surfing - Crab BoyWelcome to this weeks Friday’s Five.  In the last two weeks in early June 2016, many local governments in Southern California have passed laws increasing the minimum wage and the amount of paid sick leave benefits to employees.  This Friday’s Five is a summary of five minimum wage and paid sick leave requirements that employers in Southern California should understand.  Employers are required to comply with the law that provides the most benefits to the employees, therefore it is important for employers to understand which laws apply to their operations and to take steps to comply with the quickly approaching deadlines.

State/City Minimum Wage Paid Sick Leave
1) California $10/hr January 1, 2016; $10.50 January 1, 2017; $11/hr January 1, 2018; $12/hr January 1, 2019; $13/hr January 1, 2020; $14/hr January 1, 2021; $15/hr January 2022* Current: 3 days or 24 hours
2) Los Angeles – City (click here for a previous article about Los Angeles City’s minimum wage and paid sick leave laws) July 1, 2016: $10.50/hr; July 1, 2017 $12; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00 * (click here for more information about Los Angeles’s minimum wage ordinance) July 1, 2016: 48 hours*
3) Los Angeles – County Same as LA City No specific requirement – state law applies
4) San Diego City July 2016: $10.50 (date not set yet – likely effective in first half of July 2016); January 1, 2017 $11.50; January 1, 2019 $11.82; January 1, 2020 $12.15; January 1, 2021 $12.49; January 1, 2022 $12.84 5 paid sick days (date not set yet – likely effective in first half of July 2016)
5) Santa Monica (click here for Santa Monica’s website setting for details of the new law) $10.50 July 1, 2016; July 1, 2017 $12.00; July 1, 2018 $13.25; July 1, 2019 $14.25; July 1, 2020 $15.00* January 1, 2017: 32 hours for small businesses, 40 hours for large businesses; January 1, 2018: 40 hours for small business, 72 hours for large businesses*
*Employers with 25 or fewer employees the implementation is delayed one year.

Photo: crab boy