Employers’ Guide to Los Angeles’ Sick Leave & Minimum Wage Ordinance
by Tal Burnovski Yeyni
Most Los Angeles employers know the City Council implemented a new sick leave ordinance for employees working within the City of L.A. on June 2016.
However, as the Sick Time Benefits section was added to an existing Minimum Wage Ordinance, there has been some confusion over definitions and compliance dates.
Last week the City published revised FAQs and updated Regulations which shed some light over unanswered questions. Here is what we know about the City of Los Angeles Sick Leave Ordinance as of now:
- “Employee”: Section 187.04(A) of the Ordinance states that “every employee … is entitled to paid sick leave”. The FAQs clarify that an Employee is:
- 1. “any individual who performs at least two hours of work in a particular week within the geographic boundaries of the City of Los Angeles”; and
- 2. “… entitled to payment of a minimum wage from any Employer under the California minimum wage law…”
- Accordingly, exempt employees are excluded from the definition of Employee under the Minimum Wage and Sick Leave Ordinance and not entitled to sick leave benefits under the Ordinance. Note, however, that exempt employees working within the City of Los Angeles are entitled to sick leave benefits under the California Healthy Workplace Healthy Family Act of 2014. Employees outside the City of Los Angeles might also be covered under another local ordinance (e.g., San Diego, Santa Monica, San Francisco, etc.)
- “Particular Week”: The Regulations explain that Particular Week “means any seven (7) consecutive days, starting with the same calendar day each week. “Week” for the purpose of the [Ordinance] … shall be a fixed and regularly occurring period of seven (7) consecutive 24-hour periods which is equivalent to a period of 168 hours.
- “30 Days Requirement”: To be eligible for sick leave under the Ordinance, an Employee [as defined above — i.e., works two (2) hours within the City and entitled to minimum wage] must work within the City for the same Employer for 30 days or more within a year from the start of employment.
- Employees Working in L.A. Sporadically: As explained above, to be eligible for paid sick leave under L.A. Ordinance, an individual must meet the definition of Employee and work within the City of the same employer for 30 days or more within a year from the start of employment. But what happens when an Employee works in-and-out of the City?The Regulations offer the following explanation: “If an Employee continuously works for an Employer with only sporadic work time within the geographical boundaries of Los Angeles, ‘commencement of employment’ means the initial start date by the Employee for the Employer. The ‘year’ or 12 month period begins [on] the first ‘day’ the Employee works in the City. If the Employee has not worked a total of 30 days within that 12 month period, the Employee does not qualify for Sick Time Benefits”.Accordingly, to determine whether Employers have to start complying with the Ordinance, Employers must track employees’ work within the City. Note that even as little as 10 minutes of work within the City is considered a work day. Once an Employee has 30 days of work for an Employer within the City, the Employee is eligible for sick leave benefits.
- Compliance Date Based on Employer’s Size: Section 187.04(A) of the Ordinance states that “Every employee who, on or after July 1, 2016, works it the City … is entitled to paid sick leave.This was interpreted to mean that all Employers, regardless of size, must start complying with the Sick Leave Ordinance as of July 1, 2016. Wrong. The FAQs state there is a deferral schedule based on the size of the employer: “Paid sick leave applies on July 1, 2016 for Employers with 26 or more Employees, including Non-Profit Corporations with or without the minimum wage rate deferral. Paid sick leave applies on July 1, 2017 for Employers with 25 or fewer Employees.
Determining Size: The size of an Employer’s business shall be determined by the average number of Employees employed during the previous calendar year rounded up to the next whole number of Employees. The Office of Wage Standards (OWS) recommends small businesses to complete the MW-2 Small Business Deferral Eligibility Worksheet, which can assist Employers in determining eligibility.An Employer should not submit MW-2 to the OWS, but instead retain it with supporting documents in the Employer’s records. Supporting documents may include, but are not limited to: Payroll records; Timesheets and/or attendance records; Quarterly Contribution Return and Report of Wage (DE9 and DE9Cs); Report of New Employees (DE 34).
- Hours per Year: An eligible Employee is entitled to take up to 48 hours of paid sick leave annually. However, as with California Law, an Employee may use sick leave on or after 90 days of the first day of employment or July 1, 2016, whichever is later.
- Calculating Methods:
Front Loading Method: An Employer who chooses to provide sick leave based on the front-loading method must select one type of anniversary, either at the beginning of each year of employment, calendar year, or 12-month period. At each anniversary date, an Employer shall provide all 48 hours to an Employee.An Employer who uses the front-load method on a calendar year basis (January through January) may on July 1, 2016 (and only for the calendar year of 2016) provide 24 hours of sick leave for the period covering July 1, 2016 to December 31, 2016. On January 1, 2017, the Employer must front-load the full 48 hours.Accrual Method: An Employer who chooses to provide sick leave based on the accrual method must provide the Employee one (1) hour of sick leave per every thirty (30) hours worked. An Employee’s hours worked within L.A. must be tracked. The Regulations provide the following example for accrual: “a full-time Employee working a 40-hour work week within City boundaries (160-hours a month) will accrue 5.33 hours which must be available for use no later than 90 days after the first day of employment.Employers may select either the front-loading method or accrual method and may switch between the front-loading method or the accrual method only on an annual basis.
72 Hour Cap: Unused sick leave, either accrued or front-loaded, must be carried over to the following year, but the Employer may cap carry-over (and accrual) at 72 hours. This is where the L.A. city ordinance substantially differs from California law, which does not require carry-over when sick leave time is front-loaded.
- Permissible Uses: The Sick Leave Ordinance allows employees to take paid sick leave for all permissible uses under the Healthy Workplace Healthy Family Act of 2014, and to care for “any individual related by blood or affinity whose close association with the Employee is the equivalent of a family relationship.” However, it is unclear what an “individual related by blood or affinity” means.
- Doctor’s Note: While California Law is silent on whether Employers can require Employees to provide documentation, the FAQs state that documentation is allowed only after an Employee has used more than three (3) consecutive days of sick leave. A demand to provide description or explanation of the illness or condition necessitating the Employee’s leave is prohibited.
- Geographic Boundaries: The FAQs also refer to a new map which could help determine if a specific address/workplace, is within the City of L.A. (http://neighborhoodinfo.lacity.org/). “If an address is located within the boundaries of the City of Los Angeles and is correctly entered, then the search will locate the address on the map with detailed address information.”
The FAQs and Regulations also contain helpful and important information concerning the Minimum Wage section of the Ordinance.
For example, the Regulations state any changes in the number of Employees shall not impact the Employer’s status as a small business for purposes of the Minimum Wage deferral schedule. If an Employer’s average number of Employees from the previous calendar year was twenty five (25) or fewer, it shall pay based on the deferral schedule regardless of the changes in number of Employees for duration of the minimum wage schedule.
There is also valuable information concerning tracking of Employees’ time for work performed within the City and recommendations concerning required documentation regarding Employees’ hours.
Employers can also visit http://wagesla.lacity.org/ for additional information, relevant notices, posters and helpful charts.
Changes to Federal Employment Postings
Last week the U.S. Department of Labor announced changes to two mandatory posters, which go into effect immediately. As of August 1, 2016, employers must post the revised versions of the Federal Minimum Wage notice and the Employee Polygraph Protection Act notice. You can find revised notices here and here.
If you have questions concerning compliance with the Minimum Wage and Sick Leave Ordinance or other local ordinances and California Laws, contact employment defense counsel as soon as possible.
Tal Burnovski Yeyni is an attorney in our Employment Practice Group.