Why it matters

Already facing new California employment-related requirements—including the adoption of mandatory sick leave and an uptick in the minimum wage—Los Angeles employers now have an added wrinkle to deal with. Mirroring the state, the L.A. City Council passed a new ordinance implementing a citywide raise to the minimum wage, as well as sick leave benefits for all employees who perform at least two hours of work within city boundaries, effective immediately. Beginning July 1, 2016, employers with 26 or more workers must begin raising their minimum wage payments to reach $15 per hour by July 1, 2020 (those with 25 or fewer employees have an extra year to begin their increases). The new more expansive sick leave requirements begin the same day, with employers required to provide employees with a total of 48 hours of sick leave each year—twice the state mandate of 24 hours or three days—for workers to take paid time off to care for themselves or a covered family member. Employers in Los Angeles should waste no time in familiarizing themselves with the new law and implementing the necessary requirements.

Detailed discussion

On June 2, Los Angeles Mayor Eric Garcetti signed Ordinance No. 184320, increasing the minimum wage paid to workers in the city and adding four additional days of paid sick leave per year.

"The City has recognized that income inequality is one of the most pressing economic and social issues facing Los Angeles," according to the purpose of the ordinance. "Therefore, by paying a higher than state-mandated minimum wage and providing sick time benefits, the City seeks to promote the health, safety and welfare of thousands of workers by ensuring they receive a decent wage for the work they perform and are able to attend to illnesses."

The new law applies to all employers, defined as "any person … including a corporate officer or executive, who directly or indirectly or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any Employee."

Covered by the new law: all employees who work at least two hours within the city boundaries each week and qualify as an employee entitled to a payment of a minimum wage from any employer under California state law and the California wage orders.

To reach the goal of $15 per hour on July 1, 2020, the ordinance establishes stepped increases beginning July 1 for employers with 26 or more employees, when the minimum wage will jump to $10.50 per hour. On July 1, 2017, the minimum wage will rise to $12 per hour, followed by $13.25 on July 1, 2018, and $14.25 on July 1, 2019.

Employers with 25 or fewer workers are being provided with an extra year to increase their minimum wage payments, which will rise to $10.50 per hour on July 1, 2017, and then will follow the same schedule of increases to reach $15 on July 1, 2021. For each year thereafter, the minimum wage will increase based on the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles metropolitan area published by the Bureau of Labor Statistics, with adjustments to the rates announced in February to take effect in July.

To determine their number of employees for coverage purposes, employers should calculate the average number of workers employed during the previous calendar year. For new businesses, the number of employees employed during the first pay period will be the determining factor. The ordinance does include a process for nonprofits to apply for a deferral rate schedule, but does not contain any other exemptions from coverage.

As for the new sick time benefits, paid sick days will begin to accrue on July 1 for employees who work in the city of Los Angeles for the same employer for 30 days or more within a year from the commencement of employment. Workers can begin to use paid leave beginning on the 90th day of employment or July 1, whichever is later, and are entitled to take up to 48 hours of sick leave in each year of employment, calendar year, or 12-month period.

Employers have options regarding how to provide the sick leave, i.e., either giving a worker the entire 48 sick pay hours at the beginning of each year of employment, calendar year, or 12-month period (front loading) or having employees accrue one hour of sick leave per every 30 hours worked. Accrued unused paid sick leave will carry over to the following year of employment but may be capped at 72 hours, with employers able to set a higher cap or to elect not to set a cap at all.

If an employer already has a paid leave or paid time off policy which provides payment for compensated time off that is no less than 48 hours per year, no additional sick days are required by the ordinance.

Employees can request leave either orally or in writing for themselves or a family member, which includes children (biological, adopted, and stepchildren, as well as those with whom the employee stands in loco parentis), siblings, spouses, registered domestic partners, parents (biological, adoptive, foster, step, or the legal guardian of an employee or of an employee's spouse or registered domestic partner), grandparents, and grandchildren. In addition, leave may be taken for "any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship."

Employers are permitted to require workers to provide "reasonable documentation" for paid sick leave. Employers do not have to provide compensation for accrued or unused sick leave upon termination, resignation, retirement, or other separation from employment. However, if an employee separates from an employer and is rehired within one year, the previously accrued and unused paid sick time has to be reinstated.

Waivers of an employee's rights under the new law are invalid and unenforceable, and retaliation for requesting to use or actually using paid sick leave is prohibited. A notice regarding the ordinance must be posted at every site where an employee works in every language spoken by at least 5 percent of the site's workforce. Employers must also maintain payroll records for four years to demonstrate compliance.

Violations of the ordinance trigger daily penalties of $120 to the employee until the employer cures the violation, as well as payment for any sick leave that should have been paid for. Treble paid sick leave, lost wages, and penalties may result if an employee can demonstrate that he or she has been retaliated against in connection with the sick pay requirements. Employees have the right to file a lawsuit or seek administrative remedies.

To read the Los Angeles ordinance, click here.