Voters in the city of San Diego overwhelmingly supported a June 7 ballot measure that imposes a citywide minimum wage and also obligates businesses to provide sick pay benefits to employees. Employers with workforces in San Diego will want to immediately update their pay practices and sick pay policies.

Local Minimum Wage

Upon its effective date, Proposition I will increase the minimum wage for workers within San Diego city limits to $10.50 per hour. The effective date will likely be in mid-July of 2016, after the election results are certified by the San Diego Registrar of Voters, and then ratified by the San Diego City Council.

This increase edges San Diego ahead of California’s state minimum wage, which rose to $10.00 per hour in January of 2016. The state minimum wage is set to increase to $10.50 on January 1, 2017 for employers with 26 or more employees (large businesses), and on January 1, 2018 for employers with 25 or fewer employees (small businesses). However, the San Diego minimum wage will remain higher than the statewide minimum for at least a few years. In San Diego, the local minimum wage will jump to $11.50 per hour on January 1, 2017. Beginning in 2019, the San Diego minimum wage will increase according to the cost of living. It is likely that the statewide minimum wage will surpass the San Diego minimum wage between 2019 and 2021. Below is a chart comparing the San Diego minimum wage to the California minimum wage.

Click here to view the table.

The San Diego measure applies to all private sector employers, but the minimum wage is owed only to employees who work at least two or more hours in one or more calendar weeks within the San Diego city limits.

San Diego joins a number of other California cities that have enacted minimum wage ordinances. The table below summarizes recent or impending local minimum wage rate increases throughout the state. (Note that the definitions of “large businesses” and “small businesses” vary from city to city.)

Click here to view the table.

San Diego Sick Pay Mandate

The ordinance also requires employers to grant employees up to five days of paid sick leave per year beginning in 2015. The exact amount of sick pay will depend in part upon the number of hours worked by the employee. The sick pay provisions are numerous and technical, but generally employers will need to comply with the following requirements:

  • Sick pay will accrue at the rate of at least 1 hour per 30 hours worked within city limits.
  • Use of accrued sick pay may be limited to 40 hours per year.
  • Accruals of sick pay must carry over into the next year.
  • Sick pay can be taken in a minimum of two-hour increments.
  • Accrued sick pay must be reinstated if the employee is rehired within six months of separation.
  • Sick pay is not cashed out upon termination of employment.

Sick leave can be used for the employee’s own illness, medical appointments, to care for family members, and to take time off due to domestic violence and related incidents. Generally, employers will be permitted to require medical documentation excusing absences that exceed three consecutive days.

The San Diego measure resembles the California sick pay law in some respects. Both laws provide for an accrual rate of 1 hour per 30 hours worked. Upon discharge, employers are not obligated to cash out accrued sick pay under either law. However, unlike the California law, San Diego’s ordinance does not allow employers to cap sick time use at 24 hours per year. Rather, the cap is 40 hours per year. This means that a full-time worker could accrue and use up to five days of sick pay per year. Additionally, unlike the California law, the San Diego ordinance does not allow for an annual 24 hour lump sum allocation. Furthermore, while the California law provides for a maximum accrual carryover cap of 48 hours, the local ordinance allows employees to carry over all accrued hours from one year to the next. This requirement could result in accrual balances of much more than 48 hours.

Compliance Requirements

Employers will be required to post workplace notices of the new ordinance. Businesses that violate the ordinance will be subject to civil litigation by aggrieved employees or enforcement action by the city. Fines may be imposed in the amount of $1,000.00 per violation.

Businesses that employ workers within San Diego city limits should plan to update their pay practices and sick pay policies before the end of July of 2016.