At the June 7, 2016 election, San Diego (the “City”) voters approved Proposition I to increase minimum wage and paid sick leave requirements. The new Ordinance takes effect upon certification of the election results, which is expected to occur the week of July 11, 2016 or July 18, 2016.

Qualifying “Employees” and “Employers”

The Ordinance governs any “employer” who exercises control over wages, hours, or working conditions, whether or not the employer has an office or facility in the City of San Diego. It also covers both exempt and non-exempt employees who perform at least two hours of work within the geographical boundaries of the City of San Diego during a calendar week of the applicable year.

The following individuals are not considered “employees” under the Ordinance: independent contractors, people with special state licenses to be employed at less than minimum wage, certain youth employees in publicly subsidized summer or short-term employment programs, and certain counselors at organized outdoor camp.

Minimum Wage Rate

Once the Ordinance takes effect, employers are required to pay qualifying employees a minimum wage of $10.50 an hour for all hours worked in the City of San Diego. The minimum wage then rises to $11.50 per hour on January 1, 2017 and potentially again on January 1, 2019 to reflect an increase in the cost of living.

Paid Sick Leave

(1) Accrual and Use

Under the new Ordinance, employees must begin to accrue paid sick leave on the first day of employment in the amount of one hour of paid sick leave for every 30 hours worked within the geographical boundaries of the City of San Diego. Employees who do not qualify for overtime (generally exempt employees), are assumed to work 40 hours in a workweek, unless their regular workweek is less than 40 hours. Under such circumstances, accrual reflects the employee’s actual regular workweek.

Employees cannot use accrued paid sick leave until the ninetieth (90th) day of employment or July 1, 2016, whichever is later. Thereafter, paid sick leave can be used in connection with preventative care or for the diagnosis, care or treatment of an existing illness, injury, or medical condition of an employee or an employee’s family member. In addition, paid sick leave can be used if an employee or his/her family member is the victim of domestic violence, sexual assault, or stalking. Finally, paid sick leave may be used when the employer is closed by order of a public official due to a public health emergency, or the employee is providing care or assistance to a child whose school or child care provider is closed by order of a public official due to a public health emergency.

(2) Use Limitations and Pay Outs

Employers may set a reasonable minimum increment for the use of paid sick leave not to exceed two hours. They furthermore have the option to limit the use of paid sick leave to forty hours in a twelve month period. Employers cannot, however, cap paid sick leave and must carry over any earned, unused amounts from year to year.

Additionally, employers are not required to pay out accrued, unused paid sick leave upon separation. If employees are rehired within six months of separation by the same employer, they are entitled to reinstatement of any previously accrued and unused paid sick leave.

(3) Notice Requirements and Enforcement

To provide notice of the new Ordinance, employers must (1) display a poster which is to be created by the City and (2) provide written explanation to each new hire. Violations of these notice requirements could result in a penalty between $100 and $2,000 per employee. Other infractions of the new Ordinance may result in penalties of up to $1,000 per violation. The Ordinance may also provide employees with a private right of action for back wages, liquidated damages, reinstatement, reasonable attorneys’ fees, and costs.

(4) Conflicting Provisions

Typically, employers must comply with both local and state paid sick leave laws. To the extent that local and state laws conflict, the more generous provision controls. In light of the inherent complexity, we strongly recommend that San Diego employers consult with legal counsel and update all applicable sick leave policies.