We’ve previously covered California’s sweeping Paid Sick Leave Law that took effect July 1, 2015 here and here. Now Santa Monica – not to be outdone by Bay Area sister municipalities in San Francisco, Oakland, and Emeryville – enacted its own paid sick leave ordinance (“Ordinance”) on January 26, 2016 – just two weeks after it was initially proposed.

The Santa Monica Ordinance, like its Northern California counterparts, mandates that most employers provide paid sick leave well in excess of California requirements, and allows covered employees of employers with 26 or more employees to accrue up to 72 hours of paid sick leave. Further, unlike California law, the Ordinance does not place an annual use limit on accrued sick leave.

Because the Ordinance is not preempted by California law, covered Santa Monica employers must comply with both the California Paid Sick Leave Law and the Ordinance. When the two conflict, the employer must follow the provision that is more generous to the employee.

Unless there is a referendum, the Ordinance will become law after 30 days, on February 25, 2016. The Ordinance provides that paid sick leave begins to accrue as of the “operative date” of the Ordinance. That term is not defined. According to the Santa Monica City Council’s office, the effective date of the Ordinance’s paid sick leave provisions is July 1, 2016.

And now, the key provisions of the Ordinance:

Who Is Covered?

The Ordinance generally covers any employee who works at least two hours a week in Santa Monica, subject to limited exceptions noted below. “Hotel workers” (excluding those employed in a managerial, supervisory, or confidential role) whose primary place of employment is at a Santa Monica hotel are covered by the paid sick leave provision of the Ordinance, regardless of how many hours they work in Santa Monica in a particular week.

Employees excluded from coverage are federal, state, county, and city government employees (including those employed by government agencies, school districts, and all other public entities). The Ordinance also does not cover employees who have waived their paid sick leave rights in a collective bargaining agreement (CBA) if the waiver is explicitly set forth in the agreement in clear and unambiguous terms.

How Much Sick Leave Must Be Provided? (Accrual, Accrual Caps, and Carry Over)

The Ordinance mandates paid sick leave in excess of the state requirement. Like the California Paid Sick Leave Law, the Ordinance provides that employees accrue one hour of paid sick leave for every 30 hours worked (including overtime hours). Significantly, however, the Ordinance’s accrual cap for employers with 26 or more employees far exceeds the state law’s 48-hour accrual cap. Specifically, employers with 26 or more employees must permit employees to accrue up to 72 hours of paid sick leave. Employers with 25 or fewer employees must allow employees to accrue up to 40 hours of paid sick leave.

These accrual caps are point-in-time caps – not annual accrual caps. Also, all accrued, unused paid sick leave (up to the maximum cap) carries over from year to year. And unlike the California law, which permits employers to limit paid sick leave use to 24 hours or three days per year, the Ordinance does not place an annual use limit on accrued paid sick leave.

As a result, employees may be entitled to use more than 72 hours of paid sick leave in a year. For example, suppose an employee’s paid sick leave balance is at the 72-hour accrual cap on December 31 of a particular year. The employee’s entire balance carries over to the following year. The employee is ill in February and uses all 72 hours. Accordingly, she resumes accruing paid sick leave in February and continues to accrue paid sick leave throughout the year until she again reaches the 72-hour cap. And, because there is no annual use limit, she may use paid sick leave after it has accrued even though she used 72 hours earlier in the year.

The Ordinance provides that employees are entitled to use paid sick leave after the first 90 days of employment.

What about Frontloading?

Unlike the California Paid Sick Leave Law, the Ordinance does not expressly allow for frontloading of paid sick leave at the beginning of each year. And because there is no annual paid sick leave accrual cap (only a point-in-time cap) and no annual use limit, frontloading very likely is not an option under the Ordinance.

When Does Paid Sick Leave Accrual Begin?

If an employee works for an employer on or before July 1, 2016, then the employee begins accruing paid sick leave on the “operative date” of the Ordinance (presumably July 1, 2016). Under the Ordinance, new employees begin to accrue paid sick leave 90 days after the commencement of employment. But recall that new employees, under the California Paid Sick Leave Law, begin to accrue paid sick leave immediately upon hire, although an employer may forbid new employees from using any accrued paid sick leave until their 90th day of employment. Accordingly, a Santa Monica employer cannot limit accrual during the first 90 days under the Ordinance and, instead, must comply with the state law’s more generous provision.

What Are Other Key Provisions?

Other than the accrual caps and the absence of an annual use limit, the Ordinance essentially mirrors the California Paid Sick Leave Law’s notice, usage, and anti-retaliation provisions. For example, the Ordinance states that employers may require reasonable notification for use of paid sick leave. The Ordinance also provides that employees may use paid sick leave consistent with state sick leave laws. And like the state law, the Ordinance does not require employers to pay out accrued, unused sick leave upon separation from employment.

The Ordinance does not contain posting or recordkeeping requirements, so Santa Monica employers should continue to comply with the state law’s requirements.

What Do I Do Now? (Proactive Next Steps)

Employers with employees who perform work in Santa Monica should take steps now to ensure they can achieve full compliance with the Ordinance by the July 1, 2016 operative date. These are among the actions to consider:

  • Review and, as necessary, revise existing paid sick leave or PTO policies and procedures to ensure they meet the Ordinance’s requirements or, alternatively, establish a separate paid sick leave policy that complies with both the California Paid Sick Leave Law and the Santa Monica Ordinance.
  • If applicable, update internal systems so that they allow for paid sick leave accrual of up to 72 hours (for employers with 26 or more employees).
  • Take this opportunity to review and, as necessary, revise anti-retaliation, attendance, conduct, and discipline policies to prevent retaliation and interference claims under the Ordinance or the California Paid Sick Leave Law.
  • Train Santa Monica supervisory and managerial employees, as well as HR and payroll personnel, on the Ordinance’s requirements.
  • Monitor the City of Santa Monica’s website (http://www.smgov.net) for updates, frequently asked questions (FAQs), and other publications that provide guidance on how to comply with the Ordinance’s requirements.

Questions

If you have any questions about the new Santa Monica Ordinance or about California’s Paid Sick Leave Law, please reach out to Ann Marie Zaletel or another member of our California Workplace Solutions group for additional guidance.

Edited by David D. Kadue, Colleen M. Regan, and Coby M. Turner.

By Jason Allen 

Those who spent some time with us last week already know that Bay Area voters took to the polls with an eye toward employees this year. But it wasn’t just with regard to pay. They also ventured into the oh-so-complicated world of sick leave and flexible schedules.

Sick Leave 

As we have discussed before, California’s statewide Healthy Workplaces, Healthy Families Act of 2014 takes effect on January 1, 2015, and will require employers to provide paid sick leave after July 1, 2015 to most employees. The statewide Act may have engendered apoplectic responses in certain circles, but employers in San Francisco and Oakland likely review its mandates with yawns and shrugs to go with their soy lattes. San Francisco had already addressed this subject in 2007, and Oakland intends to impose requirements similar to San Francisco’s when Measure FF takes effect next year. 

Under San Francisco’s Paid Sick Leave Ordinance, employees who regularly work at least eight hours per week in San Francisco accrue one hour of sick leave for every 30 hours worked in the City, just as they do under the state law. The accrued time carries over year to year, with some limitations: for employees of businesses with fewer than 10 employees, the accrued paid sick leave is capped at 40 hours (lower than the state’s cap); for businesses with 10 or more employees, the cap is 72 hours, which is higher than the state’s cap. As with the state law, San Francisco’s ordinance does not require employers to pay employees for any unused accrued sick leave upon separation; employers are not “prevent[ed] from adopting or retaining leave policies that are more generous”; and employees may use sick leave for themselves or to help a family member. Note also that San Francisco employees can designate individuals other than a spouse, domestic partner, or other family member for whom the employee may use paid sick leave to provide assistance or care. The bottom line is that because there are areas where the San Francisco law is less or more generous than the state’s, employers must craft policies for their San Francisco employees that consider the more onerous parts of both the state and local requirements. 

Oakland’s Measure FF, which we discussed last week in the context of wage increases, also imposes sick leave requirements similar to San Francisco’s:  Employees will accrue one hour of leave for every 30 hours worked, capped at 40 hours for businesses with fewer than 10 regular employees and 72 hours for businesses with at least 10 regular employees. As under San Francisco’s ordinance, employees with no spouse or domestic partner may designate one person other than a family member for whose care or assistance they can use paid sick leave. And Oakland’s ordinance will not require any payout for unused accrued leave upon separation. But Oakland’s new ordinance may cause some consternation for employers who already offer PTO policies that meet or exceed Measure FF’s minimum sick leave requirements. 

The issue with Oakland’s new ordinance on this front may stem from its combining minimum wage and sick leave requirements in one ordinance—something that no other Bay Area city has yet done. On one hand, Measure FF includes a provision similar to those in the statewide and San Francisco mandates: employers with existing PTO policies that meet or exceed Measure FF’s sick leave requirements need not provide any additional sick leave. (See Measure FF Section 5.92.030(A)(4).)  On the other hand, the ordinance expressly precludes an employer from funding the required increases in compensation by reducing “vacation, or other non-wage benefits.”  (See Section 5.92.050(A)(2).) While that provision was likely intended to prevent employers from robbing Peter to pay Paul—to essentially pay for the costs associated with the increased minimum wage by reducing other benefits provided to employees—it looks to have additional consequences for employers in Oakland. An employer seeking to modify its existing leave policies to comply with the new ordinance by reducing existing vacation or PTO benefits to establish a distinct sick leave benefit—an adjustment that appears permissible under both state law and San Francisco’s ordinance—may run afoul of Oakland’s ordinance.

Flexible Work Schedules 

The next potential trend in local ordinances or state laws regarding employee benefits may require greater flexibility in determining or modifying employee work schedules. San Francisco stepped onto this previously untrodden ground in 2013, and, on November 4, 2014, Berkeley voters suggested that their City Council follow. 

As detailed here, here, and here, San Francisco’s Family Friendly Workplace Ordinance, effective January 1, 2014, requires employers with 20 or more employees to allow employees who regularly work eight hours per week in San Francisco to request flexible work arrangements so they can assist with caregiving responsibilities for children, parents age 65 or older, or other family members.

By approving The Berkeley Flexible Work Time Initiative of 2014, Berkeley’s voters didn’t quite force their city’s hand, but they certainly gave it an urgent nudge. The initiative “advis[es] the city of Berkeley to pass a right-to-request law that applies to employees in Berkeley.” The provisions for such an ordinance “should be based on the provisions of the Working Families Flexibility Act, first introduced [but not enacted] in Congress in 2007 as Senate Bill S. 2419, and on the Family Friendly Workplace Ordinance, passed by San Francisco in 2013.” We predict that the City will not ignore this hint, and that provisions of the sort advised will find their way into an ordinance within the next year. 

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The law in these areas, much like the ground underlying the Bay Area, is always moving and shaking. Stay tuned. We will provide updates regarding statewide and local requirements on minimum wage, sick leave, and flexible work time as they develop. And, as always, if you have any questions, please reach out to your friendly neighborhood member of Seyfarth’s California Workplace Solutions Team to help you navigate the choppy waters of the Bay.

By Jason Allen 

As the year winds down, we thought it wise to look back at what California’s busiest locality has done in developing local employment law. The folks in the Bay Area have been so busy flexing their employment law muscles that we’ve split this summary into two easily digestible posts to provide what you’ll need to hop on the trolley to compliance city.

Voter-approved measures addressed higher wages, more sick leave, and increasingly flexible work schedules for employees in Oakland, San Francisco, and Berkeley. While many have left their hearts in San Francisco, these measures will have some employers wanting to have their business elsewhere. Those measures require employers to provide wages and benefits that far exceed state and federal requirements. These new laws also may indicate what’s to come for the rest of the very active Bay Area.

Minimum Wage

As this blog has previously covered (e.g., here and here), California recently raised its minimum wage to $9 per hour, effective July 1, 2014—with an increase to $10 per hour scheduled for January 1, 2016. But the state was a bit late to this game, as several  cities had already mandated higher wages for local employees. Cities in the Bay Area have been particularly active here: San Jose ($10.15, effective March 2013, with an annual cost of living adjustment (COLA)), Richmond ($9.60, effective January 2015, with incremental increases to $12.30 by 2017, then an annual COLA), and Berkeley ($10.00, with planned incremental increases culminating at $12.53 by October 2016). 

On November 4, 2014, voters approved the following measures in Oakland and San Francisco that will raise wages in those cities to similar and even higher levels.

Oakland: Ballot Measure FF

Despite Gertrude Stein’s famous observation to the contrary, perhaps in Oakland there is some “there there: On November 4, Oakland voters passed Measure FF, adding provisions to the City’s municipal code regarding a “city minimum wage, sick leave, and other employment standards.” Effective March 2, 2015, Oakland’s minimum wage will increase to $12.25 for any employee who (a) is covered by state and federal minimum wage laws and (b) works at least two hours “[i]n a particular week … within the geographic boundaries of the City for an Employer.” Beginning January 1, 2016, and to celebrate New Year’s Day for every year that follows, the minimum wage will increase in line with a COLA.

The Oakland ordinance also includes a provision specific to employees in hospitality industries that impose “Service Charges” to collect separately for such items as banquets, deliveries, room service, or porterage. Under the new ordinance, Service Charges must be paid directly to the employees performing the relevant services. The section addressing Service Charges specifically exempts “any tip, gratuity, [or] money” given to hospitality workers “by customers over and above the actual amount due for services [or goods] rendered,” perhaps because state law already requires these payments to be provided to the employees.

San Francisco: Proposition J 

Attentive readers of this blog will recall the list of Bay Area cities with recent minimum wage ordinances. San Francisco does not appear on that list, because, as we’ve previously discussed, San Francisco set the standard for a higher minimum wage way back in 2003. That ordinance calls for annual COLA increases and, as of January 1, 2014, had set the floor for wages for San Francisco employees at $10.74.

Unwilling to let the full spotlight shine on the bright side of the Bay, Frisco’s voters, in November, passed Proposition J. This true San Francisco treat for employees has amended the existing ordinance to increase the minimum wage yet again. The local minimum wage now will increase to $11.05 per hour on January 1, 2015; will incrementally increase the minimum wage to $15 per hour by July 1, 2018; and thereafter will annually increase, in accordance with a COLA.1 

While the voters thus decided to ensure the Bay Area remains a pricey place to pay wages, they didn’t stop there. Stay tuned for next week when we walk you through two other areas where Bay Area voters let themselves be heard on behalf of employees: sick time and flexible schedules.


1 Note that “Government Supported Employees”—without getting into too many details, employees either younger than 18 or older than 55, whose positions are subsidized by federal, state, or local governments—will see increases of a different scale. Government Supported Employees must be paid a minimum wage of $12.25 effective May 1, 2015, with annual COLA increases thereafter.