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Seyfarth Synopsis: Effective January 1, 2019, California’s minimum hourly wage goes up to $12.00 for large employers, and many local minimum wages will go higher still. Don’t forget that the statewide change will affect salary thresholds for white collar exemptions, as well.

Effective January 1, as New Year’s bells toll, California’s minimum hourly wage will increase to $12.00 for employers of 26 or more, and $11.00 for employers of 25 or fewer.

This latest statewide adjustment is part of a series of adjustments mandated by a 2016 statute that, by 2020, will raise the statewide minimum wage to $15.00. The latest adjustment obviously increases what employers must pay for regular and overtime wages for employees currently earning the minimum. And the new, higher minimum wage also will automatically increase the threshold salary employers must pay to maintain salary-exempt status for administrative, executive, and professional employees: the threshold salary is twice the state minimum wage for a 40-hour week. The new annual salary minimum for large employers as of 2019 will thus rise to $49,920 (2 times $12/hour times 40 hours/week times 52 weeks/year).

In addition, to maintain overtime-exempt status for commissioned salespeople (in retail and service establishments, with the earnings threshold calculated as exceeding 1.5 times the current minimum wage), employers must now pay a higher earnings threshold—$18.01 per hour—and over one-half of the earnings must consist of commissions, so commissions might have to be increased accordingly.

And, of course, employers, under the Wage Theft Prevention Act, must notify non-exempt employees in writing of any changes to their new rate of pay within seven calendar days from the time of the change.

On top of the statewide change, the following California cities will be sending their own New Year’s greetings for minimum-wage earners:

Belmont: Employers who are subject to the Belmont Business License Tax or who maintain a facility in Belmont must pay—to each employee who performs at least two hours of work per week in Belmont—a minimum wage of $13.50. This requirement applies to both adult and minor employees.

Cupertino: Employers who are subject to the Cupertino Business License Tax or who maintain a facility in Cupertino must pay—to each employee who performs at least two hours of work per week in Cupertino—a minimum wage of $15.00. Covered employees are entitled to these rights regardless of immigration status.

El Cerrito: An employee who performs at least two hours of work in a particular workweek within the geographic limits of the City of El Cerrito must be paid a minimum wage of $15.00. This minimum wage applies regardless of the size of the employer, and applies to both part-time and full-time employees.

Los Altos: Employers who are subject to the Los Altos Business License Tax or who maintain a facility in Los Altos must pay—to each employee who performs at least two hours of work per week in Los Altos—a minimum wage of $15.00. This requirement applies to both adult and minor employees.

Mountain View: Employers who are subject to the Mountain View Business License Tax or who maintain a facility in Mountain View must pay—to each employee who performs at least two hours of work per week in Mountain View—a minimum wage of $15.65. This requirement applies to both adult and minor employees.

Oakland: Employers in the City of Oakland must pay a minimum wage of $13.80 to employees who perform at least two hours of work in a workweek within the geographic limits of the city. This requirement applies to both part-time and full-time employees.

Palo Alto: Employers in Palo Alto must pay a  minimum wage of $15.00 to any employee who works two hours per week within Palo Alto.

Redwood City: Redwood City’s local minimum wage of $13.50 will apply to all business operating within the geographic boundaries of Redwood City and any employee working at least two hours per week.

Richmond: All employers in the City of Richmond must pay a minimum wage of $15.00 to employees who work at least two hours per week within the geographic boundaries of the city. This requirement applies to both minor and adult employees.

San Diego: Employers must pay all employees who perform at least two hours of work in one workweek within the geographic boundaries of the City of San Diego a minimum wage of $12.00. This requirement applies to both minor and adult employees.

San Jose: Employers who are subject to the San Jose Business License Tax or who maintain a facility in San Jose must pay—to each employee who performs at least two hours of work per week in San Jose—wages of not less than $15.00 per hour. This requirement applies to both minor and adult employees.

San Mateo: Employers who are subject to the City of San Mateo Business License Tax or who maintain a facility in the city must pay a minimum wage of $15.00. Tax-exempt nonprofit organizations must pay a minimum wage of $13.50. This requirement applies to adult and minor employees.

Santa Clara: Employers who are subject to the Santa Clara Business License Tax or who maintain a facility in Santa Clara must pay—to each employee who performs at least two hours of work per week in Santa Clara—a minimum wage of $15.00 per hour. This requirement applies to both minor and adult employees.

Sunnyvale: Employers who are subject to the Sunnyvale Business License Tax or who maintain a facility in Sunnyvale must pay—to each employee who performs at least two hours of work per week in Sunnyvale—a minimum wage of $15.65. This requirement applies to both adult and minor employees.

Below is a handy “at a glance” chart detailing these municipal increases.

City Minimum Hourly Wage Effective January 1, 2019
Belmont $13.50
Cupertino $15.00
El Cerrito $15.00
Los Altos $15.00
Mountain View $15.65
Oakland $13.80
Palo Alto $15.00
Redwood City $13.50
Richmond $15.00
San Diego $12.00
San Jose $15.00
San Mateo $15.00
Santa Clara $15.00
Sunnyvale $15.65

Finally, still more cities (including Los Angeles and San Francisco) will impose higher minimum-wage requirements next July 1. Be sure to check this space in mid-2019 for those updates.

Seyfarth Synopsis: Although there’s no right or wrong time to do a handbook update, we recommend them annually. Might as well take the opportunity when operations are typically slower, summertime, to give your handbook a shine. We’ve highlighted a few areas upon which to focus when you do so.

Ah, the joys of summer. Maybe it’s the heat, but everything seems a little harder in the summer. The sun is melting everything in sight, and sometimes it seems everyone is on vacation, leaving a little opportunity for the rest of us to have some *gasp* free time? This is the time of year, after all, when everything just seems to slooooooooooooooow dooooooooooooooooooown.

But because we’re all looking for an excuse to spend a little more time in nice air conditioned comfort, and we need to cure that summer boredom, when was the last time you updated your handbook?

Here are a few areas you may want to check while you enjoy that recycled air:

Did you update when the FEHA Regulations were amended last year?

As we discussed here, the FEHA Regulations now include many new requirements for employer policies on harassment, discrimination, and retaliation. If you haven’t had an opportunity to do so, we recommend you dust off those old policies and go through the amended regulations with a fine-toothed comb to see where improvements can be made.

How about breaks?

As we reported here, the end of 2016 saw some developments in the world of rest breaks. Some traditional policies may exert a little too much control over how employees take breaks. We’d definitely use that occasional summer thunderstorm as an excuse to spend time carefully perusing that policy.

What am I wearing?

If your dress code includes gender-specific information, now is a good time to review and make some potential modifications in light of the FEHC regulations on transgender rights, described here.

Sick of sick time yet?

Not that anyone gets sick in the summer, but if your company operates in multiple jurisdictions, it’s a great time to make sure no new sick law affects your employees. California now has six jurisdictions (San Francisco, Oakland, Emeryville, Santa Monica, San Diego, and Los Angeles, summarized here) with sick leave laws for private employers, with Berkeley right around the corner. Take this time to compare these ordinances and the state law with your current policy to make sure you’re in great shape for the upcoming flu season.

It’s also a great opportunity to spruce up your attendance policies to make sure you’re not punishing your employees from properly taking absences covered by these or other leave laws.

Who’s on leave?

A few years back, the California Legislature expanded those activities covered by the Family School Partnership Act, described here. So if you haven’t taken a look at this policy in a while, might as well get that out of the way before school starts up this fall.

For your San Francisco folks, if you haven’t had an opportunity to put together a policy/protocol covering the responsibilities of the San Francisco Paid Parental Leave Ordinance, described here, now is as good a time as any.

Also, as we discussed here, we know the law requiring the notice and posting on Domestic Violence issues became effective on July 1. Perhaps now would be a good time to consider implementing a policy on this if you don’t already have one in place.

Workplace Solution?

Although not every change in the law will make you toss out that old handbook, we do think an annual review, whether over a relaxing summer break or as you shiver indoors this winter, is a great opportunity to ensure you’re complying with the ever-evolving California and local laws. It can also serve as a reminder to compare your handbook with any benefit documents referred to inside.

Go ahead and spend a few minutes with a nice icy glass of lemonade and curl up with your favorite summer read: the company handbook! And contact your favorite Seyfarth counselor to get yours in ship shape before the kiddos come home from camp, and everything gets crazy for back to school.

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.