By Chris Olmsted, Esq., Ogletree Deakins
On July 26, the San Diego City Council ratified a minimum wage and sick pay ordinance approved by voters on June 7. Effective as of July 11, the ordinance imposes a citywide minimum wage rate and also obligates businesses to provide sick pay benefits to employees. As amended, the ordinance will allow employers to front load an annual sick pay allotment and also place a cap on accrual. Employers with workforces in San Diego will want to immediately update their pay practices and sick pay policies.
Minimum Wage
Effective July 11, employees working inside city limits for more than 2 hours in any workweek must be paid at least $10.50 per hour, with narrow exceptions. The minimum wage rate will increase to $11.50 per hour on January 1, 2017.
Sick Pay
On July 26, 2016, the city council voted to amend the sick pay provisions of the ordinance. The amendment should become effective in the near future, unless the mayor vetoes the measure (which is not expected to happen).
As originally drafted, the ordinance required employers to accrue sick pay at the rate of 1 hour for every 30 hours worked, with an available 40 hour per year use limit. The ordinance did not contemplate a front load option, nor did it include an accrual cap.
The amended ordinance provides a front load option and an accrual cap. Specifically, the amended ordinance will:
- allow employers to front load no less than 40 hours of sick leave to an employee at the beginning of each benefit year;
- allow employers to cap an employee’s total accrual of sick leave at 80 hours.
The amended ordinance also contains the following clarification:
An Employer who provides greater paid time off, either through a contract, collective bargaining agreement, employment benefit plan, or other agreement, than that required by this Division, is deemed to be in compliance even if the Employer utilizes an alternative methodology for calculation of, payment of, and use of Earned Sick Leave or other paid time off that can be used as Earned Sick Leave.
Published Notice and Poster
The ordinance requires employers to display a poster in the workplace and also provide employees with notice of their rights. The city has now published model documents for this purpose on its website.
Practical Impact
The San Diego ordinance mandates greater benefits for employees than required by California’s paid sick leave law. By comparison to this city law, the minimum state benefit is 24 hours or 3 days. However, the local front load and accrual cap provisions will help employers seeking to structure a statewide policy. An increasing number of California cities (for example, Emeryville, Los Angeles, and Santa Monica) have enacted local sick pay ordinances. California employers should continue to monitor developments on a local and statewide basis.