The Santa Monica City Council recently passed a minimum wage and sick leave ordinance that will increase the minimum wage for all private sector employees working in the City of Santa Monica effective July 1, 2016. The ordinance was approved by the City Council on January 26, 2016. While this particular ordinance does not apply to the public sector, it is a good example of a local minimum wage ordinance that could and sometimes does apply more broadly. The minimum wage provisions of the ordinance largely mirror those adopted by both the City of Los Angeles and Los Angeles County and will raise the minimum wage in phased increases up to $15 per hour by the year 2020. The ordinance provides a one year delay to 2021 for businesses with 25 or fewer employees and for qualifying nonprofits.
The ordinance incrementally increases the minimum wages for private sector, non-hotel industry employees on the same time schedule as those enacted by Los Angeles City and County. As a reminder, the state-wide minimum wage was increased on January 1 to $10 per hour. Beginning July 1 of this year, the minimum wage for non-hotel private sector employers with 26 or more employees in Santa Monica will be $10.50 per hour. That figure will increase each year to $12.00, $13.25, $14.25 and finally to $15.00 on July 1, 2020. The ordinance creates a similar schedule for employers with 25 or fewer employees, with increases starting one year later, July 1, 2017, and ending July 1, 2021. Commencing July 1, 2022, Santa Monica’s minimum wage rates will increase in lock step with the Consumer Price Index, similar to Los Angeles City and County. New adjusted rates will be announced January 1, 2022 to take effect on July 1st of that year.
These minimum wage rates apply to any employee who in a particular week performs at least two hours of work within the geographic boundaries of the City of Santa Monica. The ordinance excludes government workers (including federal agencies, state agencies, cities, counties, school districts, and all other public entities), and allows for waiver for employees subject to collective bargaining agreements, Employees who qualify as “learners” pursuant to California law and any applicable wage orders must be paid not less than 85% of the minimum wage for the first 480 hours or six months of employment, whichever occurs first. The City Council adopted this additional provision to ensure that local businesses are incentivized to hire and retain student employees.
Paid Sick Leave provisions
Under the Santa Monica ordinance, employees will accrue one hour of paid sick leave for every 30 hours worked (including overtime hours). While this is similar to a recently adopted state law, the ordinance creates accrual and caps that differ significantly from the California statutes.
Employers with 26 or more employees must permit employees to accrue up to a maximum leave bank of 72 hours of paid sick time. Employers with 25 or fewer employees must permit employees to accrue up to 40 hours. Unlike California’s Paid Sick Leave law, there is no annual accrual or annual use limit placed on accrued sick leave.
Anti-Discrimination and Anti-Harassment provisions
It is important to note that the Ordinance includes anti-discrimination and anti-harassment provisions and provides employees or “any other person or entity acting on behalf of the public” with the right to pursue a private action for violating any of its provisions. The anti-retaliation provision of the ordinance includes a rebuttable presumption that any adverse employment action taken within 180 days of any protected activity was retaliatory.
Santa Monica employers must review their hourly rates paid to all employees in order to ensure compliance with the minimum wage increases taking effect later this year. In addition, employers should review their current paid time off policies to ensure they meet the ordinance’s sick leave requirements. Finally, employers should review their attendance and other disciplinary policies to avoid potential interference and retaliation claims.