Happy Friday! This Friday’s Five, I discuss five issues California employers should consider given the minimum wage increase that took effect in many Southern California cities and counties on July 1, 2017.
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…
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.
Businesses that have worksites or operate within Los Angeles City or County need to review the minimum wage laws that go into effect July 1, 2016. While there are still many unanswered questions about the ordinances, there are key items employers need to start reviewing now to ensure compliance by the July 1, 2016 implementation. For today’s Friday’s Five, here are five issues employers need to understand about the Los Angeles minimum wage law:
- What is the new Los Angeles minimum wage?
Starting July 1, 2016, the minimum wage in the City of Los Angeles will increase according to the following rate:
|Effective Date||Employers With 26 or more Employees||Employers with 25 or fewer Employees or Non-Profit corporations with 26 or more Employees with approval to pay a deferred rate|
Los Angeles County also passed an ordinance that tracks this schedule, and applies to Los Angeles County, except for any incorporated cities within the County. See below for maps and further details.
- What are the potential penalties for violation of the City’s ordinance?
An employer who violates minimum wage requirements is liable to the employee for payment of back wages and an additional penalty of $100 for each day that the violation occurred or continued. Where retaliation has occurred, the employee is entitled to reinstatement and a trebling of all back wages and penalties.
In addition, employers are subject to administrative fines as set forth below:
|Failure to post notice of the Los Angeles Minimum Wage rate||$500 per day per employee|
|Failure to allow access to payroll records||$500 per day per employee|
|Failure to maintain payroll records or to retain payroll records for your years||$500 per day per employee|
|Failure to allow access for inspection of books and records or to interview employees||$500 per day per employee|
|Retaliation for exercising rights under the ordinance||$1,000 per day per employee|
|Failure to provide employer’s name, address, and telephone in writing||$500 per day per employee|
|Failure to cooperate with the Division’s investigation||$500 per day per employee|
|Failure to post Notice of Determination to employee||$500 per day per employee|
The maximum administrative fine that could be paid to the City for each type of violation is $5,000 per employee per year, except for a retaliation violation the maximum is $10,000 per employee per year. The County’s ordinance does not track the City’s penalties exactly, but the penalties are still very substantial.
- Which agency will enforce compliance with the City’s ordinance?
The Department of Public Works, Bureau of Contract Administration, is the Designated Administrative Agency for the Ordinance and has the administrative responsibilities to implement the guidelines and rules. The BCA will be the agency that investigates any claims for minimum wage violations, enforcement of the notice, posting, or payroll records requirements, and complaints of retaliation.
It is important to note that the ordinance provides that any adverse action against an employee within 90 days of the employee’s exercise of protected rights may be construed as retaliation for the exercise of such rights.
- What are employer’s new notice requirements?
Under Los Angeles City’s ordinance, every employer must post in a clearly visible place at any workplace or job site where any employee works, the notice published each year by the Division informing employees of the current minimum wage rate and of their rights under the Ordinance. The notices made available by the Division can be downloaded from its website here: http://wagesla.lacity.org/#information. The English and Spanish poster is embedded below.
Notices must be translated if at least 5% of the employees at the workplace or job site speak a different language. It is not clear which “workplace” should be evaluated if an employer does not have a job site not within Los Angles city or county. Just another unanswered question about this regulation.
Los Angeles County’s ordinance also sets forth that employers within the County must post a similar notice that is to be developed by the County’s Department of Consumer and Business Affairs (“DCBA”), which is required to make this notice available to employers to post. However, at the time of this article, the DCBA’s website does not have the notice available.
- How can a company determine the city or county boundaries?
The city of Los Angeles published a FAQ that “recommend visiting http://zimas.lacity.org/ as a reference” to determine the City’s boundaries. The city’s ordinance only applies to companies located or conduct business in the incorporated city limits. The County of Los Angeles also passed an ordinance that closely tracks the city’s ordinance as discussed above, and the County ordinance will apply to businesses within the County, but not within the City of Los Angeles, or other incorporated cities within the County. Click here for a map of the County of Los Angeles that also sets forth the incorporated cities.
It is important for employers to understand if the City or County requirements apply to their workforce, and understand the difference between the two. I’m sure this is not the last article I write on this topic. Stay tuned.
Also, if you would like to learn more about this topic, I am having a seminar on June 22, 2016 that will discuss these minimum wage developments, as well as other legal developments that employers need to be aware at this mid-point in 2016. More information about the event can be found here.