On June 1, 2016, the Los Angeles City Council passed an ordinance impacting employers in the city of Los Angeles and mandating paid sick leave beyond that which is required under the recently passed California statute (Cal. Labor Code section 245, et. seq.). The ordinance, which took effect on July 1, 2016, has left many questions unanswered for employers as they set about revising their policies. With some additional insight that the City of Los Angeles’s Office of Wage Standards recently provided, we are now able to answer additional inquiries about the ordinance. The information below may assist employers in determining whether their policies will comply with the new Los Angeles ordinance.
Question: When must small employers start providing sick leave to employees?
The Los Angeles Minimum Wage Ordinance (No. 184320) states that employers with 26 or more employees must provide sick leave benefits pursuant to section 187.04 of the ordinance and pay wages according to a scale beginning on July 1, 2016. The ordinance also states that employers with 25 or fewer employees must provide sick leave benefits pursuant to section 187.04 and pay wages according to the scale beginning on July 1, 2017. Section 187.04 states that “employees” must receive paid sick leave benefits beginning July 1, 2016. What does this mean for small employers with regard to when they must begin providing additional sick leave benefits? Are "small employers" required to begin providing sick leave benefits on July 1, 2017, or do they have to provide sick leave benefits beginning in 2016?
Answer: The sick time benefits rules apply on July 1, 2017, for employers that qualify for the one-year small business deferral. Both sick time and minimum wage requirements for employers with 25 or fewer employees begin on July 1, 2017. (Note that the City of Los Angeles’s response differs from our June 2016 statement that all employers will have to begin providing the sick leave benefits on July 1, 2016.)
Question: What are the carryover obligations for employers that front-load leave?
Under the ordinance, employees are “entitled to take up to 48 hours of sick leave in each year of employment, calendar year, or 12-month period.” The ordinance also references an accrual cap of 72 hours; however, the term “accrual” is not defined or mentioned in the part of the ordinance that discusses how sick leave must be provided. Do employers that front-load the 48 hours (i.e., provide the total number of hours in a lump sum at the beginning of the year) also have to carry over any unused hours into the next year and provide additional hours up to the 72-hour cap or does the 72-hour cap apply only to those employers that choose to provide 1 hour of sick leave for every 30 hours worked?
Answer: Unused paid sick leave time accrued by an employee, regardless of front-loading or accrual method, must be carried over and may be capped at a minimum of 72 hours.
Question: What is a “large employer” under the ordinance?
To qualify as a “large employer,” does an employer need to have 26 employees working in the city or 26 total employees anywhere (i.e., nationwide)?
Answer: An "employee" means any individual who (1) “in a particular week performs at least two hours of work within the geographic boundaries of the City for an Employer”; and (2) “qualifies as an Employee entitled to payment of a minimum wage from any Employer under the California minimum wage law, as provided under section 1197 of the California Labor Code and wage orders published by the Industrial Welfare Commission.”
The size of an employer will be determined by the average number of "employees" employed during the previous calendar year. For a new business that did not operate during the previous calendar year, its size as an employer will be determined by the number of employees it employed during its first pay period. Therefore, an employer will look to the number of employees who are working or who worked in the city of Los Angeles only.