Seyfarth Synopsis:  June 7, 2018, when the city’s new Paid Sick Leave rules take effect, marks the latest chapter in the City by the Bay’s long history of imposing local employment standards that exceed state requirements. Here’s what you need to know before this latest San Francisco peculiarity begins.

On May 7, 2018, after considering public input on proposed rules to the City’s Paid Sick Leave Ordinance (PSLO), the San Francisco Office of Labor Standards Enforcement (OLSE) published new rules interpreting the PSLO, which is the granddaddy of municipal paid sick leave (PSL) mandates. The OLSE enacted its original interpretative PSL rules in May 2007. More recently, on January 1, 2017, the OLSE amended the PSLO. Now, nearly 18 months later, updated rules will take effect on June 7, 2018. Highlights of some key aspects follow.

Joint Employers

The PSLO broadly defines “Employer” as “any person…who directly or indirectly…employs or exercises control over the wages, hours, or working conditions of an employee.”

The new rules state that if an employee is jointly employed, and at least one employer is covered by the PSLO, each employer must comply with the PSLO. The rules follow California law to determine if an employee is jointly employed. The OLSE notes, by way of example, that joint employment can occur when an employer uses a temporary staffing agency, leasing agency, or professional employer organization. The new rules further state that a “controlled group of corporations” (as defined by the IRS Code), is considered to be a single employer under the PSLO. Employees of unincorporated businesses also are counted as working for one employer if the business satisfies the IRS’s “controlled group of corporations” definition.

Documentation

Under the PSLO, an employer may only take reasonable measures to verify or document an employee’s use of PSL. As stated in the OLSE’s original PSL rules, employers generally can require employees to provide reasonable documentation justifying their use of PSL for absences of more than three consecutive full or partial workdays. The new rules further explain that employer policies requiring a doctor’s note or other documentation when employees use PSL (a) to attend a medical appointment, or (b) in situations of a pattern or clear instance of abuse will be presumptively reasonable even if the use of PSL was for three consecutive workdays or less.

Rate of Pay

The new rules also provide guidance on calculating employees’ rate of pay for used sick leave and generally track the California statewide standards. Like the CA law,  San Francisco’s new PSL rules require different rate of pay calculations for exempt and non-exempt employees. Although the PSLO does not define “regular rate of pay” or “exempt employee,” the new rules defer to the California Division of Labor Standards Enforcement for calculating an employee’s regular rate of pay, and state that an employee’s exempt or non-exempt status is based on whether the employee is exempt from overtime pay under the FLSA and California law. If an individual is exempt, and no other forms of paid leave are provided, the employee must be paid his or her salary without any deduction for sick time taken. However, the time taken can be applied against the employee’s sick leave balance.

Rehired Employees and Breaks in Service

Under the PSLO, employees are entitled to use accrued PSL beginning on the 90th day of employment. For rehired employees, if an employee separates from the employer and is rehired by the same employer within one year, all previously accrued, unused PSL must be reinstated.

In instances where an employee separates from an employer before the 90th day of employment and is rehired within one year, the new rules clarify that the original period of employment is counted toward satisfying the 90-day usage waiting period. For example, if an employee separates from an employer after working for 45 days, and then one month later is rehired, the employee must work another 45 days before the employer needs to permit the employee to use his or her accrued PSL.

Unionized Workforces

The new rules make clear that many PSL practices or policies that have been deemed reasonable in a bona fide collective bargaining agreement (“CBA”) remain so, even if the CBA does not explicitly waive or reference the corresponding PSLO section. This can include practices or policies about notification, verification, increments of time in which paid sick leave must be taken, and sick leave pay rate.

The Upshot

In its introduction to the new rules, the OLSE stated that it was guided by the need to provide clear direction to employers and employees about the PSLO. While these new rules clarify certain gray areas under the PSLO, it remains to be seen whether they will result in further clarification or modifications to the OLSE’s interpretation of the Ordinance.

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Seyfarth Synopsis: Dominating this spring’s planting of proposed employment-related legislation are bills aimed at ending sexual harassment and promoting gender equity. Among the secondary crops are bills regarding accommodation, leave, criminal history, and wage and hour law. It threatens to be another bitter fall harvest for California’s employer community.

California legislators stormed into the second half of the 2017-18 legislative session, introducing over 2,000 bills by the February 16 bill introduction deadline. With Spring upon us, one must ponder what L&E-related bills planted thus far will grow into by the time of the legislative harvest this fall. By that time some will have died on the vine in the summer heat, and some, fully ripened, will go to the Governor. Will the Governor, among the closing acts of his term, approve or reject them?

Meanwhile, the newly planted bills will get a week to rest as legislators head for Spring Break today, March 22. The Legislature reconvenes on April 2 for committee hearings and amendments. June 1 is the deadline for legislation to pass out of its house of origin. Stay tuned for more in-depth analyses of the proposed bills as the session continues.

Sexual Harassment

No fewer than ten bills address the issue of sexual harassment. Some are merely spot bills, while others are more developed. Because you all have day jobs, we have read the bills so you won’t have to. A brief summary of each follows. Contact us if you want to know more. Or even just to vent.

AB 1867 would require employers with 50 or more employees to retain records of all internal employee sexual harassment complaints for ten years, and would allow the Department of Fair Employment and Housing (DFEH) to seek an order compelling non-compliant employers to do so.

SB 1300 would amend the Fair Employment and Housing Act (FEHA) to (1) absolve a plaintiff who alleges that his/her employer failed to take all reasonable steps necessary to prevent discrimination and harassment from occurring from proving that sexual harassment or discrimination actually occurred, (2) prohibit release of claims under FEHA in exchange for a raise or a bonus or as a condition of employment or continued employment, and (3) require employers, regardless of size, to provide two hours of sexual harassment prevention training within 6 months of hire and every two years thereafter to all employees—not just supervisors.

SB 1343, which closely resembles SB 1300, would require employers with five or more employees to provide at least two hours of sexual harassment training to all employees by 2020 and then once every two years thereafter. SB 1343 would also require the DFEH to produce and publish a two-hour video training course that employers may utilize.

SB 224 would extend liability for claims of sexual harassment where a professional relationship exists between a complainant and an elected official, lobbyist, director, or producer. AB 2338 would require talent agencies to provide to employees and artists, and the Labor Commissioner to provide minors and their parents, training and materials on sexual harassment prevention, retaliation, nutrition, reporting resources, and eating disorders.

Assembly Member Gonzalez-Fletcher introduced a package of spot bills (to which substance will later be added) targeting “forced arbitration agreements” and increasing protections for sexual harassment victims. AB 3080 would prohibit (1) requiring employees to agree to mandatory arbitration of any future claims related to sexual harassment, sexual harassment, or sexual assault as a condition of employment and (2) non-disclosure provisions in any settlement agreement. AB 3081 would create a presumption that an employee has been retaliated against if any adverse job action occurs against that employee within 90 days of making a sexual harassment claim, and would extend current sexual harassment training requirements to employers with 25 or more employees. AB 3082 would create a statewide protocol for public agencies to follow when In Home Support Service (IHSS) workers encounter harassment and sexual harassment prevention training for IHSS workers and clients. AB 2079—soon to be named the “Janitor Survivor Empowerment Act”—would enact specific harassment training rules for the janitorial service industry. AB 2079 builds upon AB 1978—the Property Services Workers Protection Act, effective July 1, 2018—which established requirements to combat wage theft and sexual harassment for the janitorial industry.

AB 1761 would require hotels to (1) provide employees with a free “panic button” to call for help when working alone in a guest room, (2) maintain a list of all guests accused of violence or sexual harassment for five years from the date of the accusation and decline service for three years to any guest on that list when the accusation is supported by a sworn statement, and (3) post on the back of each guestroom door a statement that the law protects hotel employees from violent assault and sexual harassment.

SB 1038 would impose personal liability under FEHA on an employee who retaliates by terminating or otherwise discriminating against a person who has filed a complaint or opposed any prohibited practice, regardless of whether the employer knew or should have known of that employee’s conduct. (Personal liability already exists for harassment, but not for retaliation.)

AB 2366 would extend existing law, which already protects employees who take time off work related to their being a victim of domestic violence, sexual assault, and stalking. AB 2366 would also protect employees who take time off because an immediate family member has been such a victim. AB 2366 would also add sexual harassment to the list of reasons for which this protection applies.

AB 2770 addresses the apprehension that harassment complaints and employer responses might trigger defamation suits. AB 2770 creates a “privilege” for complaints of sexual harassment by an employee to an employer based upon credible evidence, for subsequent communications by the employer to “interested persons” and witnesses during an investigation, for statements made to prospective employers as to whether an employee would be rehired, and for determinations that the former employee had engaged in sexual harassment. The California Chamber of Commerce has sponsored this bill.

AB 1870 would extend the time an employee has to file a DFEH administrative claim (including, but not limited to, a sexual harassment claim). The current deadline is one year from the alleged incident. AB 1870 would make it three years! In a similar bill, AB 2946 would extend the time to file a complaint with the DLSE from six months to three years from the date of the violation. This bill would also amend California’s whistleblower provision to authorize a court to award reasonable attorney’s fees to a prevailing plaintiff.

AB 1938 would limit employer inquiries about familial status during the hiring or promotional process. AB 1938 would make it unlawful to make any non-job related inquiry about an individual’s real or perceived responsibility to care for family members.

SB 820, the “Stand Together Against Non-Disclosure” (STAND) Act, would prohibit provisions in settlement agreements entered into on or after January 1, 2019 that require the facts of the case to be kept confidential, except where the claimant requested the provision, in cases involving sexual assault, sexual harassment, and sex discrimination. SB 820 would allow settlement amounts to be kept private. The bill is sponsored by the Consumer Attorneys of California and the California Women’s Law Center.

AB 3109 would void any contract or settlement agreement entered into on or after January 1, 2019 that waives a party’s free speech and petition rights, meaning one that would limit a party’s ability to make any written or oral statement before or in connection with an issue before a legislative, executive, or judicial proceeding, or make any written or oral statement in a place open to the public or a public forum in connection with an issue of public interest. The bill would also prohibit contracts or settlement agreements that restrict a party’s rights to seek employment or reemployment in any lawful occupation or industry.

Pay Equity

SB 1284 is another effort to mandate annual reporting of pay data. It follows last year’s vetoed AB 2019 attempt at a pay data report, though it more closely resembles last year’s failed revised federal EEO-1 report. SB 1284 would require employers with 100 or more employees to report pay data to the Department of Industrial Relations on or before September 30, 2019 and on or before September 30 each year thereafter. The report is to include the number of employees by race, ethnicity, and sex; all levels of officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers; and each employee’s total earnings for a 12-month period. Non-compliant employers would be subject to a $500 civil penalty. In contrast, last year’s AB 1209 would have required California employers with 500 or more employees to gather information on pay differences between male and female exempt employees and male and female board members and report the information annually to the Secretary of State for publishing (i.e., public shaming).

Wage/Hour

Pay Statements: SB 1252 would grant employees the right “to receive” a copy (not just inspect) their pay statements. AB 2223 would provide employers the option to provide itemized pay statements on a monthly basis in addition to the currently required semi-monthly basis or at the time wages are paid. Conversely, AB 2613 would impose penalties of $100 for each initial violation plus $100 for each subsequent calendar day, up to seven days, and more than double for subsequent violations, payable to the affected employees, on employers who violate Labor Code provisions requiring payment of wages twice per month on designated paydays, and once per month for exempt employees.

Flexible Work Schedules: AB 2482 would allow non-exempt employees working for private employers and not subject to collective bargaining agreements to request a flexible work schedule to work ten hours per day within a 40-hour workweek without overtime for the 9th and 10th hours, as long as the employee does not work more than 40 hours in the workweek.

Contractor Liability: AB 1565 is an urgency statute that would take effect immediately upon receiving the Governor’s signature. AB 1565 would repeal the express provision that relieved direct contractors for liability for anything other than unpaid wages and fringe or other benefit payments or contributions including interest owed. The law currently extends liability in construction contracts for any debt owed for labor to a wage claimant incurred by any subcontractor acting under, by, or for the direct contractor or the owner.

PAGA: AB 2016 would require that the employee’s required written PAGA notice to the employer include a more in-depth statement of facts, legal contentions, and authorities supporting each allegation, and include an estimate of the number of current and former employees against whom the alleged violations were committed and on whose behalf relief is sought. AB 2016 would also prescribe specified notice procedures if the employee or employee representative seeks relief on behalf of ten or more employees. The bill would exclude health and safety violations from PAGA’s right-to-cure provisions, increase the time the employer has to cure violations from 33 to 65 calendar days, and provide an employee may be awarded civil penalties based only on a violation actually suffered by the employee. (In sum, a valiant effort to provide employers with some modicum of due process in PAGA case, but it doesn’t stand a chance.)

Accommodations

Lactation: AB 1976 would clarify existing law so that employers must make reasonable efforts to provide a room or location for lactation, other than a bathroom. This bill cleared its first hurdle—the Assembly Labor and Employment Committee—by receiving unanimous approval on March 14. SB 937 would require even more: a lactation room must be safe, clean, and free of toxic or hazardous materials, must contain a surface to place a breast pump and personal items, must contain a place to sit, and must have access to electricity. SB 937 would also require employers to develop and implement a new lactation accommodation policy. The policy must describe an employee’s right to a lactation accommodation, how to request an accommodation, the employer’s obligation to provide accommodation, and the employee’s right to file a request with the Labor Commissioner. Employers would be required to respond to an employee’s accommodation request within five days and provide a written response if the request is denied, and maintain accommodation request records for three years. SB 937 would make employers with fewer than five employees eligible for an undue hardship exemption from the room or location requirement. The bill would also charge the DLSE with the responsibility of creating a model lactation policy and request form and making it available to employers on the DLSE website.

Marijuana: About a dozen states now protect medical cannabis users from employment discrimination. California, meanwhile, has permitted employers to enforce policies against the use of cannabis, which remains illegal under federal law. AB 2069 would change that. AB 2069 would prohibit employers from refusing to hire, taking adverse action against, or terminating an employee based on testing positive for cannabis if the employee is a qualified patient with an identification card or their status as one. The bill would permit employers to take corrective action against an employee who is impaired while on the job or on the premises, and would not apply to employers who would lose a monetary or licensing benefit under federal law if they hired or retained such an employee.

Sick & Other Leaves

AB 2841 would increase an employer’s alternate sick leave accrual method from 24 hours by the 120th calendar day of employment to 40 hours (or 5 days) of accrued sick leave or paid time off by the 200th calendar day of employment. But an employee’s total sick leave accrual would not need to exceed 80 hours (or 10 days). An employer would be able to limit the amount sick leave carried over to the following year to 40 hours or 5 days. This increase would apply to IHSS providers beginning January 1, 2026.

AB 2587 would remove an employer’s ability to require an employee to take up to two weeks of earned but unused vacation before the employee receives family temporary disability insurance benefits under the paid family leave program to care for a seriously ill family member or to bond with a minor child within one year of birth or placement during any 12-month period the employee is eligible for these benefits.

Criminal History

Following the state-wide Ban-the-Box law that went into effect on January 1, 2018, AB 2680 would require the California Department of Justice (DOJ) to create a standard consent form that employers must use when requesting that a job applicant consent to a DOJ criminal conviction history background check. Meanwhile, the “Increasing Access to Employment Act,” SB 1298, would limit the criminal history information the DOJ will provide employers to recent misdemeanors and felonies (within five years), and other offenses for which registration as a sex offender is required. The bill would also prohibit the disclosure of any convictions that have been dismissed, exonerations, or arrests that have been sealed.

SB 1412 would allow employers to inquire into a job applicant’s particular conviction, regardless of whether that conviction has been judicially dismissed or sealed, under these specified conditions: (1) the employer is required by state or federal law to obtain information about the particular conviction, (2) the job applicant would carry or use a firearm as part of the employment, (3) the job applicant with that particular conviction would be ineligible to hold the position sought, or (4) the employer is prohibited from hiring an applicant who has that particular conviction.

AB 2647 would prohibit evidence of a current or former employee’s criminal history from being admitted, under specified circumstances, in a civil action based on the current or former employee’s conduct against an employer, an employer’s agents, or an employer’s employees.

In a category all its own, yet still notable:

SB 954 would require an attorney representing a party in mediation to inform the client of the confidentiality restrictions related to mediation and obtain informed written consent that the client understands these restrictions before the client participates in the mediation or mediation consultation.

Workplace Solutions.

Don’t fret yet! Spring has only just sprung, and these bills all have a lot of growing to do (with some pruning for improvement?). Stay tuned … . We’re keeping our eyes and ears glued on the Capitol.

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.

Seyfarth Synopsis: Many employers have “no fault” attendance policies in place to manage employee absenteeism.  Are these policies putting California employers on shaky ground? Read on….

“No fault” attendance policies are one popular method among employers to, with consistency, counsel, discipline and, in some instances, terminate employees who rack up excessive absences.  Under these policies, the reason for the employee’s absence is usually irrelevant–there’s “no fault” for the absence.  These policies typically involve assigning employees a certain number of days that they can miss or be late, known as “occurrences” or “occasions,” without facing discipline.  But when the number of absent days or instances of tardiness reaches a set level, the employee is often put on a disciplinary track, which can begin with a write-up or counseling, and end in termination.

While  in theory “no fault” policies are relatively easy to implement and administer, in practice they can land employers on shaky ground.  Employers well-versed in federal law are likely aware that best practices advise that they not count certain legally-protected absences covered by the Americans with Disabilities Act and/or the Family and Medical Leave Act in their “no fault” attendance policy calculations.  Riding the aftershocks of shifts in federal law, California’s Healthy Workplace Healthy Family Act complicates things even more, as we have blogged before.

Finding Cracks in “No Fault” Attendance.  AB 1522, California’s Healthy Workplace Healthy Family Act, set forth new laws on the accrual and usage of paid sick leave, which we have reviewed in more detail here.  It is important to keep in mind that the new law broadens the scope of reasons for using sick leave.  And while the basis for leave may not bear on an employee’s attendance under a “no fault” policy, to the extent an employee’s leave is covered by AB 1522, its provision regarding retaliatory conduct by employers for absences covered by the act, and penalties for doing so, may matter.  AB 1522 advises against employers denying an employee the right to use paid sick leave, discharging or threatening to discharge an employee who uses paid sick leave, or demoting, suspending or discriminating against an employee.  Damages for AB 1522 violations may range from mandatory reinstatement to hefty civil and/or administrative penalties.

Here is where things get shaky.  The no-retaliation restriction of AB 1522 makes it challenging to impose “no fault” attendance policies or evaluate performance based on leave an employee takes under the new law.  Setting aside instances of fraud or failure to report absences, employer-imposed discipline for taking leave under the new law can cause a 9.0 on the Richter scale.  But fear not–“no fault” policies need not be levelled entirely.

What about Perfect Attendance Rewards?  On the flip side of “no fault” attendance policies, many employers reward employees with perfect attendance with cash bonuses, gift cards, or extra planned time off.  While such rewards reinforce and incentivize good employee behavior, including punctuality and reliability, the threat of violating the ADA, FMLA and/or AB 1522 still looms.  For example, FMLA regulations indicate that employers may not count FMLA as a “negative factor in employment actions, such as hiring, promotions or disciplinary actions”.  See, 29 C.F.R. § 825.220(c).  Considering AB 1522 contains similar language regarding retaliation (see supra) for covered leave, employers who make exceptions to their policies may want to include AB 1522 absences as one in many perfect attendance reward considerations.

Reducing Hazards with a “Two-Bucket” Approach.  If employers do not distinguish between AB 1522 leave and policy-based leave, they run the risk of facing penalties for discipline (or rewards) based on employee attendance where that employee may have used paid-time-off.  To continue applying their “no fault” attendance policies, employers can adopt a “two-bucket” approach to tracking the accrual and use of sick leave and vacation that would allow them to separately monitor each employee’s accrual and usage of AB 1522-mandated leave versus non-protected time off.  Employers could thereby isolate leave for which discipline can be issued and subject it to their attendance and/or performance standards.  Employers must also be aware that given California’s multitude of protected reasons for taking time off, even with the “two-bucket” system, some vacation time may still be protected time.

Alternatives to the “Two-Bucket” Approach–is there a way to retrofit existing policies?  A little flexibility in “no fault” attendance policies can go a long way. Employers may choose to carve out leave protected under federal, state, and local laws from their tally of employee absences.  One way to incorporate such flexibility is to expressly state in the attendance policy that the employer will excuse absences protected by federal, state, and local laws, and will consider them on an individual basis.

Another method of avoiding aftershocks would be to change attendance policy numbers to account for leave for legally authorized purposes.  In other words, employers may limit penalties to employees whose absences go above and beyond the amount time that is, or may be, authorized under AB 1522 (or other federal, state and local laws).  Ultimately, the goal is to ensure that employers do not penalize or discriminate against employees taking lawful leave.

A few tips on preparedness and prevention:

As you can gather from the information above, this area of employment law is complex, technical and, like the ground in California, ever-shifting.  No employer should rely solely on dated or generalized information in forming, revising, or implementing “no fault” attendance policies.  It is best to proceed with caution, and the assistance of expert employment counsel.  That being said, here are some key takeaways:

  • Communicate attendance policies clearly to all employees. Include the policies in handbooks and on posters in common areas.
  • Avoid taking adverse employment actions against an employee who requests or takes legally-authorized leave.
  • For actions against employees pursuant to a “no fault” attendance policy, or reward based on perfect attendance, document business reasons for the action on file.
  • Keep an eye on employment laws, and review and revise your attendance policies to comply with the law regularly–there’s no telling when a new shift will change the landscape again.

We will continue to monitor and report any activity on this front, but feel free to reach out to your favorite Seyfarth attorney if you have questions.

Edited by Chelsea Mesa.

Seyfarth Synopsis: After hitting some major roadblocks, the San Diego Earned Sick Leave and Minimum Wage Ordinance has now been enacted. The Ordinance is to take effect this summer, most likely by the end of July. The Ordinance adds another perplexing piece to California’s paid sick leave patchwork.

After taking a nearly two-year hiatus, the San Diego Earned Sick Leave and Minimum Wage Ordinance was finally enacted on June 7, 2016, by San Diego voters. The Ordinance, originally approved by the San Diego City Council on August 18, 2014, hit a major snag when opponents sought a referendum. The City Council responded by suspending the Ordinance pending voter approval. The voters have now spoken.

San Diego joins six other California municipalities—San Francisco,[1] Oakland, Emeryville, Los Angeles,[2] Santa Monica,[3] and Long Beach[4]—that now supplement California sick pay law with additional paid sick leave entitlements. Because the statewide paid sick leave law does not supersede local ordinances, employers must comply with both the state and local laws, whichever most favors employees.

While the Ordinance’s effective date is currently unclear, signs point to a July 2016 effective date. We, of course, will keep you posted on any developments. In the meantime, employers should take steps now to ensure their policies and practices comply with the impending law.

Below is a detailed summary of the Ordinance and the key obligations it imposes on employers. Most notably, the Ordinance does not set a cap on either the amount of earned sick leave that employees can accrue in a year or the amount of unused earned sick leave that employees can carry over from year to year. The Ordinance also increases the minimum wage that San Diego employers must pay. The minimum wage will increase to $10.50 once the Ordinance goes into effect and will increase to $11.50 per hour on January 1, 2017. Starting January 1, 2019, the minimum wage will increase to an amount correlating with the cost of living.

Which Employers Are Covered by the Ordinance?

The Ordinance will cover all employers with at least one eligible employee working in San Diego, and defines “employers” as any person (including any association, organization, partnership, business trust, limited liability company, or corporation) who exercises control over the wages, hours, or working conditions of any employee, who engages an employee, or who permits an employee to work. Employers do not include persons who receive in-home supportive services care, under state law.

The Ordinance notes that covered employers need not provide additional earned sick leave where they provide their employees with an amount of paid leave under either a paid time off or other paid leave policy that meets or exceeds the Ordinance’s minimum standards and requirements, including the protected conditions and reasons for using sick leave.

Which Employees Are Covered by the Ordinance?

The Ordinance broadly defines a covered employee as one who performs at least two hours of work within the City of San Diego in one or more calendar weeks of the year and who qualifies as an individual entitled to minimum wage under California minimum wage law.

The following individuals are not subject to earned sick leave or the minimum wage increase:

  • Individuals authorized to obtain less than the minimum wage under a special license pursuant to California Labor Code sections 1191 or 1191.5.
  • Persons employed on a publicly subsidized summer or short term youth employment program.
  • Any student employee, camp counselor, or program counselor of an organized camp.
  • Independent contractors.

Earned Sick Leave Overview

How Much Sick Time Can Employees Accrue, Use, and Carry Over?

Employees accrue one hour of paid, earned sick leave for every 30 hours worked, at the same hourly rate or other measure of compensation that the employee earns. Accrual for employees exempt from California’s overtime laws is based on a 40-hour workweek, unless the employee’s regular workweek is less than 40 hours, in which case accrual is based on the regular work week. Employees will begin accruing earned sick leave on the later of the Ordinance’s effective date or the employee’s commencement of employment, and employees can begin using their accrued time 90 days thereafter.

Employers may limit use of sick leave to 40 hours in a 12-month period and can set a reasonable minimum increment for using sick leave, not to exceed two hours. Importantly, and as noted above, while the Ordinance sets an annual usage cap, accrual itself cannot be capped. In other words, employees must be allowed to accrue as much earned sick leave as possible based on their hours worked. Making matters worse for employers, unused leave, in whatever amount, must be carried over at year-end. In essence, employees can carry over an unlimited amount of accrued, unused sick leave, but may be limited to using 40 hours per calendar year. This accrual provision of the Ordinance is much more expansive than California’s statewide paid sick leave law, which provides that employers may cap the amount of accrued leave at 48 hours or six days, whichever is greater.

This distinction is problematic because it increases the risk of employee confusion. California law requires employers to provide employees with notice of their available number of sick leave hours either on the employees’ pay stubs, or in separate writings issued the same day as the employees’ paychecks. An employee who has, for example, 140 hours of accrued leave may not understand why only 40 hours of leave is available to use within a 12-month period.

The Ordinance’s unlimited accrual and carryover caps also make it risky for employers who seek to front-load earned sick leave in the form of an annual lump grant. Unlike the California statewide sick leave law, the Ordinance is silent on whether front-loading removes an employer’s accrual and year-end carryover obligations. As a result—and barring any future guidance from the City—this alternative sick leave delivery method may be unavailable to San Diego employers.

Under What Circumstances May Employees Use Sick Leave?

Qualified employees may use their earned sick leave for any of the following reasons:

  • If an employee is physically or mentally incapable of performing duties because of an illness, injury or medical condition, or is absent for the purpose of obtaining professional diagnosis or treatment of a medical condition or for other medical reasons, such as pregnancy or obtaining a physical examination.
  • If an employee is absent from work due to a family member’s[5] need to obtain treatment or professional diagnosis of a medical condition, or to provide care or assistance to a family member with an injury, illness or medical condition.
  • If, under certain circumstances, the employee or the employee’s family members are absent because of domestic violence, sexual assault or stalking.
  • If, by order of a public official because of a public health emergency, there is a closure of the employee’s place of business or the employee’s child’s school or child care provider.

What Notice Must Employees Provide When Using Sick Leave?

If the use of earned sick leave is foreseeable (e.g., scheduled doctor’s appointments), then an employer may require employees to provide up to seven days’ notice. But if use of sick leave is not foreseeable (e.g., a sudden illness), then an employer may require only as much notice as is practicable.

What Documents Can Employers Ask Employees to Provide When Using Sick Leave?

If employees are going to be absent for more than three consecutive work days then an employer may require employees to provide reasonable documentation that the employee used earned sick leave for a permitted purpose. Employers must accept doctor’s notes or other documentation signed by licensed health care providers indicating the need for the amount of leave taken. An employer however, may not require that the note specify the nature of the injury, illness or medical condition.

Is an Employer Required to Pay Unused Time upon Employment Separation?

No. Employers are not required to pay an employee for unused accrued sick leave upon termination. However,when an employee is rehired within six months of separation, the employer must reinstate the employee’s previously accrued, unused sick leave that was not paid upon separation, and the employee is entitled to use said leave.

Minimum Wage Increase Overview

What is the New Minimum Wage and When does it Go Into Effect?

Employees must be paid a minimum wage of $10.50 an hour upon the Ordinance’s effective date, which, again, we anticipate will occur in July 2016. Starting January 1, 2017, the minimum wage will increase to $11.50 an hour. Starting January 1, 2019, the minimum wage will increase by an amount corresponding to the prior year’s increase, if any, in the cost of living, as defined by the Consumer Price Index. If however, California or federal laws provide a higher minimum wage rate, then the minimum wage under this Ordinance will be increased to match the higher California or federal wage, effective on the same date that the increased California or federal wage takes effect.

Employer Obligations under the Ordinance

Employer Notice Requirements

Employers must post notices published by the City in a conspicuous place in the workplace informing employees of the current minimum wage, their right to the minimum wage, and their right to earned sick leave. The notice must also include information about the accrual and use of sick leave, the right to be free from retaliation, and the right to file a complaint with the designated enforcement office. The posted notice must be in English, Spanish and any other language spoken by at least five percent of employees at the employer’s job site.

In addition, at the time of hire or on the Ordinance’s effective date, employers are required to provide employees with written notice of the employer’s requirements under the Ordinance, and the employers name, address, and telephone number. Electronic notice is permitted.

Records Maintenance Requirement

Employers must create written or electronic records documenting employees’ wages earned, and accrual and use of sick leave, and retain these records for at least three years.

Prohibitions

Employers are prohibited from (1) requiring employees seeking to use their sick leave to search for or find a replacement worker, (2) disclosing the medical condition of the employee or his or her family member unless ordered to do so by the employee or authorized by federal or state law, and (3) retaliating against an employee who exercises his or her rights under the Ordinance.

Remedies/Penalties

An employer that violates any requirement of the Ordinance is subject to a civil penalty for each violation of up to, but not to exceed, $1,000 per violation. An employer failing to comply with the notice and posting requirements is subject to a civil penalty of $100 for each employee who was not given appropriate notice, up to a maximum of $2,000. Additionally, employees may file a complaint with the designated enforcement office or in court. Notably, filing a complaint with the enforcement office is not a prerequisite to filing a claim in court.

What Should Employers do Now?

With the Ordinance’s effective date looming, San Diego employers should take steps now, including the following, to achieve compliance:

  • Review existing sick leave policies and either implement new policies or revise existing policies so that they satisfy the Ordinance.
  • Post the required notices in all applicable languages.
  • Prepare notices in all applicable languages to provide to employees at the time of hire or once the Ordinance is implemented.
  • Review policies on attendance, anti-retaliation, conduct, and discipline.
  • Train supervisory and managerial employees, as well as HR, on the new requirements.
  • Ensure that payroll records adequately reflect accrual and use of earned sick leave and the increase in minimum wage.

[1] On June 7, 2016, San Francisco voters approved an amendment to the San Francisco Paid Sick Leave Ordinance.  The amended San Francisco law becomes effective on January 1, 2017.

[2] As discussed here and here, the Los Angeles City Council in April 2016 voted for 48 hours of paid sick leave for Los Angeles employees as an amendment to an LA City minimum wage ordinance. The LA ordinance is effective July 1, 2016.  Further, certain hotel employers must comply with additional compensated time off obligations set forth in the Los Angeles Citywide Hotel Worker Minimum Wage Ordinance.

[3] The Santa Monica paid sick leave law is effective January 1, 2017.

[4] Long Beach Resolution No. RES-12-0049 establishes paid sick leave and minimum wage requirements for certain hotel employers.

[5] Family members include an employee’s child, spouse, parent, grandparent, grandchild, sibling (including step-siblings), whether biological or not, or the child or parent of a spouse.

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.

(Photo) Sick PhoneBy Kristina Launey

On March 26, 2015, Assembly Member Lorena Gonzalez – the author of California’s Paid Sick Leave law, the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”) – introduced amendments to that law. The vehicle for those amendments, Assembly Bill 304, was re-referred to the Assembly Committee on Labor and Employment to be set for hearing.

The bill would amend Labor Code sections 245.5, 246, and 248.5, to make the following changes to the Act:

  • Require that an employee work for the same employer for 30 or more days within the previous 12 months to qualify for paid sick leave under the Act.
  • Regarding the definitions in the Act:
    • Exclude a retired annuitant of a public entity and a worker covered by the Railroad Unemployment Insurance Act, as specified, from the definition of employee.Remove the definition of health care provider.
    • Authorize an employer to provide for sick leave accrual on a basis other than one hour for each 30 hours worked, provided that the accrual is on a regular basis and the employee will have at least 24 hours of paid sick leave accrued by the 120th calendar day of employment.
  • Clarify that no accrual or carry over is required if employees receive the full amount of paid sick leave at the beginning of each calendar year, year of employment, or 12-month basis, rather than the previous ambiguous reference to simply “year.”
  • Permit an employer that provides unlimited sick leave to its employees to satisfy notice requirements by indicating “unlimited” on the employee’s itemized wage statement.
  • Delete the current rate of pay provision in Section 246(k), and instead provide that if the employee receives different hourly rates when the accrued sick leave is taken, then the rate of pay would be calculated in the same manner as the regular rate of pay for purposes of overtime.
  • Provide that an employer is not required to reinstate accrued paid time off to an employee who is rehired within one year of separation from employment, that was paid out at the time of termination, resignation, or separation.
  • From Section 248.5(e), remove “any person” with respect to enforcement of the Act’s provisions, which would likely remove concern that a private right of action exists.
  • Make other “technical and conforming changes.”

But the bill contains no urgency clause—which would be necessary for the amendments to take effect prior to the effective date of July 1, 2015 that applies to the bulk of the Act’s rights and obligations. Unless later amendments add an urgency clause (as they should), the contemplated amendments to the bill won’t take effect until January 1, 2016.

We’ll continue to follow this bill as it moves through the legislative process and keep you updated. For background on the Act, see our prior blog posts here and here.

(Illustration) Sick PayBy Kristina M Launey

The Labor Commissioner has issued a new and updated set of FAQs interpreting California’s new Paid Sick Leave Law (AB 1522 of 2014).

If you’ve been following along, you know that after passage of the new law last year, the Labor Commissioner issued a template Poster and Wage Theft Prevention Notice for employers to use and post, as well as a first set of FAQs.

The new FAQs obligate employers to inform existing employees of the new sick pay law and changes in policy via the Wage Theft Notice, provide guidance regarding when such notice must be given to existing employees, and provide guidance regarding sick leave eligibility for seasonal or break-in-service employees, as well as part-time and alternative work schedule employees.

Wage Theft Prevention Notices: Employees hired before January 1, 2015 must receive a new Notice that contains the new information regarding paid sick time under amended Labor Code section 2810.5, even if there is no change in employer policy.

Employers must give all employees (not just those hired after January 1, 2015) a new Wage Theft Prevention Notice, announcing any change to paid sick leave, within seven days of the actual change. Although the FAQs are silent on this point, note that Labor Code section 2810.5,  which requires Wage Theft Prevention Notices, applies only to non-exempt employees.

The “date of actual change” would depend on when the employer either establishes a paid sick program under the paid sick leave law or changes an existing paid leave program to comply with this law, but would be no later than July 1, 2015. Thus, the last date to provide notice of changes would be no later than July 8, 2015 (seven days after the July 1 sick leave entitlement effective date).

Employers who do not want to issue new Wage Theft Prevention Notices to all current employees may instead inform those employees of the change to paid sick leave by using an alternative method authorized by Labor Code section 2810.5(b)(1) or (b)(2) (e.g., giving notice of change in a pay stub or itemized wage statement). Employers who choose this route should take care to follow the requirements of these alternatives and keep records of having provided those employees with the notice.

Even employers whose existing policy satisfies the minimum requirements of the law must still provide notice—via the new Wage Theft Prevention Notice or an alternative method—regarding the new paid sick leave law. The notice must contain information about the new paid sick leave law and how the employer intends to meet its requirements for the particular employee. For example, a timely writing provided to each employee that refers to or summarizes the existing policy and contains the points of information specified in the revised Wage Theft Prevention Notice would comply with the individual notice requirement. Continue Reading CA Paid Sick Leave Update: Labor Commissioner Issues More FAQs

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. 

*          *          *

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.