July 13, 2016 San Diego’s Earned Sick Leave and Minimum Wage Ordinance is Now In Effect

On July 11, the San Diego City Council voted to adopt the June election results, rendering the Earned Sick Leave and Minimum Wage Ordinance effective immediately.  As we previously reported, the ordinance sets the minimum wage for employees working within the San Diego city limits at $10.50 per hour and requires employers to provide a more generous sick leave policy than required by state law (five days instead of three).

The City Council also approved the first reading of an implementing ordinance, which can be found here.  The implementing ordinance addresses issues with accrual and carry-over that we raised last month in an E-Update and makes the San Diego ordinance more consistent with state law.

Discussion

Once the implementing ordinance is approved, employers will be permitted to:

  • Cap accrual of paid sick leave at 80 hours; or
  • Pre-load each full-time, part-time and temporary employee with 40 hours of paid sick leave at the beginning of each benefit year (known as the “bank method” under state law).  If this method is used, employers are not required to track employees’ sick leave accrual and need not allow any unused sick leave to carry over to the following year.

The implementing ordinance also provides:

  • Employers who provide employees with at least 40 hours of paid time off, paid vacation or paid personal days which can be used for the same purposes, and under the same conditions, of the ordinance are not required to provide additional leave; and
  • Employers who provide greater paid time off than is required by the ordinance (such as through a collective bargaining agreement or benefit plan) are deemed in compliance with the law, even if the employer uses an alternative method for calculation, payment, or use of paid sick leave.

The implementing ordinance also strengthens enforcement provisions and sets higher penalties for non-compliance.

If the City Council approves the implementing ordinance at its second reading (expected to be July 25, 2016), it will go to the Mayor to approve or veto.  If the Mayor approves the implementing ordinance, it will take effect 30 calendar days from his approval.  Although we don’t know for certain, we expect both the Council and the Mayor to approve the new ordinance.  We will be providing another E-Update once these decisions are announced.

The City will publish the required poster and employee rights notice by September 1, 2016.  Employers must provide the notice to all new hires and current employees by October 1, 2016.  Failure to provide the required notice can result in a penalty of $500 for each employee, up to a maximum of $2,000.

Conclusion

The minimum wage in San Diego increased to $10.50 as of July 11.  If any employees were inadvertently paid at a lower rate, employers should make an adjustment on the next payroll to ensure employees receive at least $10.50 per hour for every hour worked beginning on July 11.

Employers should also revise their policies to comply with the paid sick leave portion of the ordinance.

Employers should plan to post the required poster as soon as it becomes available and distribute the required notices to employees on or before October 1.  When published, the poster and notices will be available here.

This E-Update was authored by Camille Gustafson.  For more information, please contact Ms. Gustafson or any other Paul, Plevin attorney by calling (619) 237-5200.