California Labor &
Employment Law Blog
Jun 10, 2016

San Diego Voters Approve Minimum Wage Increase and Mandatory Paid Sick Leave Law

Topics: Employee Benefits, New Laws & Legislation, Wage & Hour Issues

On Tuesday, San Diego's voters overwhelmingly voted in favor of a ballot measure to pass Proposition I, which increases the minimum wage for workers in the City of San Diego and mandates that these employees be provided with paid sick leave benefits that exceed the benefits already mandated by California state law.  The San Diego City council had previously approved this minimum wage and paid sick leave ordinance in 2014, but a voter referendum caused it to be placed on the 2016 ballot for voter approval.

The new law applies to employers regardless of size.  Covered employees are those who, in one or more calendar weeks of the year, perform at least two hours of work within the geographic boundaries of the City of San Diego.  Effective essentially immediately (technically, when the results of the election are certified -- on or before July 7, 2016), employers must pay covered employees at least $10.50 per hour for each hour worked in the City.  Effective January 1, 2017, the local minimum wage will rise to $11.50 per hour.  Beginning January 1, 2019, the  minimum wage will be adjusted in accordance with the CPI.  In October of each year, the City will publish a bulletin announcing the adjusted minimum wage for the next year.

In addition to raising the local minimum wage, the new law imposes more burdensome paid sick leave requirements on San Diego employers. Covered employees must accrue one hour of paid sick leave for every 30 hours worked within the City.  Newly hired employees begin accruing paid sick leave immediately but may prohibited from using the leave until their 90th day of employment.  Exempt employees are presumed to work a 40-hour workweek, unless their regular work schedule is less than 40 hours, in which case their accrual is based on their regular workweek.  

Importantly, the new law does not permit caps on accrual of paid sick leave, however an employer may limit an employee's use of such leave to 40 hours in a 12-month period (i.e. calendar year, anniversary year, or other 12-month period defined by the employer).  Even though the employee's use of leave may be limited to 40 hours in a year, the employee continues accruing paid sick leave at the rate of one hour for every 30 hours worked and all accrued, unused leave carries over from year to year.  An employer is not required to pay out unused leave on termination of employment.  However, if an employee is rehired within 6 months, any and all previously accrued, unused leave must be reinstated (unless it was paid out on termination of employment).

Sick leave can be used for an employee's own illness, medical treatment, or preventive care, or to attend to a family member's illness, medical care, or treatment.  It can also be used for purposes of seeking treatment, attending legal proceedings, or similar activities stemming from the employee or employee's family member being a victim of domestic violence, sexual assault, or stalking.  Finally, sick leave can be used if the employer's office is closed due to a public health emergency or the employee's child's school or daycare is closed due to a public health emergency.  Sick leave must be paid at the same hourly rate or other method of compensation the employee earns from his or her employment.

An employer may set a minimum increment for use of paid sick leave, but the minimum increment cannot exceed 2 hours.  Where the need for leave is forseeable, the employer can require reasonable advance notice, not to exceed 7 days' advance notice.  Where the need for leave is not forseeable, the employer can require notice as soon as reasonably practicable.  For an absence of 3 or more consecutive days, an employer can require reasonable documentation (e.g. a doctor's note) confirming that the leave was taken for a covered purpose.  An employer may not require an employee to find a replacement worker as a condition of using sick leave.

An employee may not be retaliated against for excercising rights afforded and protected by the new law.

An employer who has a paid time off or personal time off policy that provides at least the minimum amount of paid leave time as required by this law, and who allows such leave to be used for the same purposes and under the same conditions as the paid sick leave law, does not need to provide a covered employee with additional sick leave time under the new law.  Given that most paid time off policies have caps on accruals of paid time off, it is questionable whether such policies will suffice to exempt employers from complying with the San Diego law (because the new law does not authorize accrual caps). It is also questionable whether a policy that simply frontloads 5 or more days of paid time off each year will comply (even though it seems that it should because it satisfies the purpose of the new law).  This is because the San Diego law is silent on the issue of frontloading paid sick leave time and does not allow caps on accrual (even though an employer can limit use to 40 hours in a year).

The new law of course has notice and posting requirements as well.  The City will publish a notice for employees that must be posted in any workplace where covered employees work.  Employers must also provide each current employee and covered new hires with written notice of the employer's name, address, phone number, and the requirements of the new law.  The City will publish a template for this notice.  Employers may provide this notice by way of electronic communication in lieu of paper notice.

Employers must keep records of wages paid and accruals and use of sick leave for 3 years.  The new law of course has enforcement mechanisms and penalties for non-compliance built in.  The text of the law is available here.  Employers with employees working in San Diego should review their minimum wage and paid sick leave policies and revise them as necessary to ensure compliance with the new local law.

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