CITY OF LOS ANGELES MINIMUM WAGE AND OFFICE OF WAGE STANDARDS ORDINANCES

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1 LOS ANGELES, PASADENA, SAN DIEGO, AND SANTA MONICA PASS NEW MINIMUM WAGE, PAID SICK LEAVE ORDINANCES The cities of Los Angeles, Pasadena, San Diego, and Santa Monica have each recently passed ordinances increasing the minimum wage effective July 1, With the exception of Pasadena, all have further passed ordinances providing for paid sick leave beyond that required by California state law. Below are summaries of these ordinances. CITY OF LOS ANGELES MINIMUM WAGE AND OFFICE OF WAGE STANDARDS ORDINANCES On June 2, 2016, Mayor Eric Garcetti approved the Los Angeles Minimum Wage Ordinance (Ordinance No ), which requires, among other things, a higher minimum wage and double the amount of paid sick leave provided for by the State of California, and Los Angeles Office of Wage Standards Ordinance (Ordinance No ), which creates an Office of Wage Standards, tasked with investigating and enforcing wage theft violations. City of Los Angeles Minimum Wage Requirements Effective July 1, 2016, the Los Angeles Minimum Wage ordinance will increase the minimum wage of employees who (1) work in the City of Los Angeles for at least two hours in a particular week and (2) are eligible to earn the minimum wage under the California Labor Code and California Industrial Welfare Commission wage orders. The minimum wage requirements apply to full time, part time, and temporary employees. The minimum wage requirements will immediately apply to employers with 26 or more employees; employers with 25 or fewer employees have until July 1, 2017 to comply with the minimum wage requirements. The size of an employer s business is determined by the average number of employees employed during the previous calendar year and includes both employees working within and outside of Los Angeles. Employers, regardless of the location of their business, are obligated to pay employees who perform at least two hours of work in a particular workweek within the City of Los Angeles for all hours worked in the City of Los Angeles. Certain non-profit employers with 26 or more employees may qualify for the deferred implementation schedule and must affirmatively apply for this deferral. These employers must establish either: (1) the CEO or highest paid employee earns less than five times the lowest wage paid by the corporation; (2) it is a certified Transitional Employer (provides transitional jobs for the long-term unemployed); (3) it serves as a child care provider; or (4) it is funded primarily by city, county, state or federal grants or reimbursements.

2 The minimum wage for employees will increase as follows: Effective Date with 26 or more employees with 25 or fewer employees July 1, 2016 $10.50 $10.00* July 1, 2017 $12.00 $10.50** July 1, 2018 $13.25 $12.00 July 1, 2019 $14.25 $13.25 July 1, 2020 $15.00 $14.25 July 1, 2021 $15.00 $15.00 *Current State of California minimum wage **State of California minimum wage will have already increased to $10.50 as of January 1, 2017 Beginning July 1, 2022 and each year thereafter, the minimum wage will increase based upon the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles metropolitan area. City of Los Angeles Paid Sick Leave Requirements The Los Angeles Minimum Wage Ordinance also mandates paid sick leave entitlements, effective July 1, Though many of the provisions of the Los Angeles ordinance mirror the existing California Healthy Workplace, Healthy Families Act of 2014, the ordinance differs in the following ways: 1. Eligible Employees This ordinance applies to any employee who (1) works for the same employer for 30 days or more within a year of hire and (2) works in the City of Los Angeles for at least two hours in a given workweek. 2. Paid Sick Leave Accrual and Use Under California law, employees are entitled to use 24 hours or three days of sick leave each year. The ordinance doubles this requirement to 48 hours per year, regardless of the size of the employer. The ordinance only refers to sick leave time in increments of hours, not days. As with the California law, an eligible employee may use paid sick leave on the 90th day of employment or July 1, 2016, whichever is later. a. Accrual Method: As with California law, eligible employees will accrue no less than one hour of paid sick time for every 30 hours worked (including overtime hours). It is unclear from the ordinance whether the accrual is limited to work performed within the City of Los Angeles. Accrual begins on the first day of employment or July 1, 2016, whichever is later. Any accrued, unused paid sick leave will carry over to the following year. While California law permits

3 employers to cap the accrual of paid sick leave to no less than 48 hours, the ordinance allows employers to cap accrual to no less than 72 hours. As with the California paid leave law, employers are not required to pay accrued, unused paid sick leave upon the end of employment. b. Lump Sum Method: Employers may provide the entire 48 hours of sick leave in a lump sum at the beginning of each year of employment, calendar year, or 12- month period. 3. Purpose of Use The ordinance explicitly incorporates the provisions of the California Labor Code permitting the use of paid sick leave for an employee s own health condition, a family member s health condition, or if the employee is a victim of domestic assault, sexual violence, and/or stalking and further expands the permissible use of sick leave for any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship. 4. Reasonable Documentation Unlike state law, the ordinance allows an employer to request reasonable documentation of an absence from work for which paid sick leave is being used, though it does not define the term reasonable documentation. Since the California sick leave law does not expressly authorize employers to require such documentation, an employer may be accused of interfering with an employee s use of paid sick leave if it requires a doctor s note as a condition for paid sick leave. 5. Pay Rate As detailed above, sick leave must be paid at no less than the newly implemented minimum wage rates ($10.50, effective July 1, 2016 for employers with at least 26 employees). 6. Paid Leave/PTO Policies If an employer has a paid leave or paid time off policy that provides no less than 48 hours of paid time off per year, and which can be used for the same purpose as the sick leave law, no additional paid sick leave time is required. 7. No Collective Bargaining Exemption While the state law exempts workers under a valid collective bargaining agreement that already provides for paid sick leave, subject to meeting certain criteria, the Los Angeles ordinance does not include a similar provision. City of Los Angeles Office of Wage Standards The Los Angeles Office of Wage Standards Ordinance requires that employers post the current Los Angeles minimum wage rate, sick time benefits, and employee s rights under the ordinance.

4 The notices will be published by the Office of Wage Standards and shall be posted in English, Spanish, Chinese, Hindi, Vietnamese, Tagalog, Korean, Japanese, Thai, Armenian, Russian, Farsi, and any other language spoken by at least 5% of employees. Employers must also provide in writing to each employee the employer s name, address and telephone number, either upon hire or July 1, 2016, whichever is later. Employers may not discriminate or retaliate against employees for exercising their rights under the ordinance. Taking an adverse action against an employee within 90 days of the employee s exercise of rights under the ordinance raises a rebuttable presumption of retaliation. PASADENA MINIMUM WAGE ORDINANCE Effective July 1, 2016, Pasadena Ordinance No will increase the minimum wage of employees who work in the City of Pasadena for at least two hours in a particular week and who are entitled to the minimum wage under the California Labor Code and California Industrial Welfare Commission wage orders. The minimum wage requirements immediately apply to employers with 26 or more employees; employers with 25 or fewer employees have an additional year to comply with the minimum wage requirements. The size of an employer s business is determined by the average number of employees employed during the previous calendar year. Certain non-profit employers with 26 or more employees may qualify for the deferred implementation schedule and must affirmatively apply for this deferral. These employers must establish either: (1) the CEO or highest paid employee earns less than five times the lowest wage paid by the corporation; (2) it is a Transitional Employer (provides transitional jobs for the long-term unemployed); (3) it serves as a child care provider; or (4) it is funded primarily by city, county, state or federal grants or reimbursements. The minimum wage for employees will increase as follows: Effective Date with 26 or more employees with 25 or fewer employees July 1, 2016 $10.50 $10.00* July 1, 2017 $12.00 $10.50** July 1, 2018 $13.25 $12.00 *Current State of California minimum wage **State of California State minimum wage will have already increased to $10.50 as of January 1, 2017 The Pasadena ordinance further provides that the City Council will vote again in 2019 on whether to continue raising the minimum wage to $14.25 per hour in 2019, then to $15.00 per hour in 2020, then adjusting the minimum wage based on the Consumer Price Index for Urban Wage Earners and Clerical Workers in the Los Angeles metropolitan area beginning in 2022.

5 Employers must post the adjusted minimum wage rate and employee s rights under the ordinance. Employers must also provide in writing to each employee the employer s name, address and telephone number at the time of hire. Employers are prohibited from terminating or otherwise discriminating or retaliating against an employee for exercising their rights to the minimum wage under the ordinance. An adverse action against a person within 90 days of the person s exercising their rights raises a rebuttable presumption of retaliation. CITY OF SAN DIEGO EARNED SICK LEAVE AND MINIMUM WAGE ORDINANCE The City of San Diego Earned Sick Leave and Minimum Wage Ordinance (No. O-20390) was approved by the San Diego City Counsel in August 2014 and introduced on the June 7, 2016 ballot, where it passed with 63% of San Diego voters. The new requirements are set to take effect as soon as the election results are certified, sometime in July It is reported that the requirements will take effect on July 7, As with the Los Angeles ordinance, the San Diego ordinance also designates an Enforcement Office, tasked with implementing and enforcing the ordinance. City of San Diego Minimum Wage Requirements Upon the effective date, the City of San Diego will increase the minimum wage of employees who work in the City of San Diego for at least two hours in one or more calendar weeks to $10.50 per hour. On January 1, 2017, the city will raise the minimum wage to $11.50 per hour. Beginning January 1, 2019, wage increases will correspond with the yearly percentage increase, if any, in the cost of living as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers, U.S. City Average. The size of the employer is inconsequential. Employers must post a bulletin and notice published by the city. The bulletin and notices must be posted in English and in any language spoken by at least 5% of employees. The bulletin announces the minimum wage and its effective date for the upcoming year. The notice will inform employees of the current minimum wage and their rights to the minimum wage and paid sick leave. Employers must also provide in writing to each employee the employer s name, address and telephone number at the time of hire or effective date, whichever is later. City of San Diego Paid Sick Leave Requirements As with the Los Angeles ordinance, the San Diego ordinance largely mirrors California paid sick leave laws. Under California law, employees are entitled to use 24 hours or three days of sick leave each year. The San Diego ordinance increases this requirement to 40 hours per year, regardless of the size of the employer. The ordinance only refers to sick leave time in increments of hours, not days. As with the California law, an eligible employee may use paid sick leave beginning on the 90th day of employment, but employees begin accruing paid sick leave upon hire.

6 1. Eligible Employees Eligible employees must (1) perform at least two hours or work within the City of San Diego in one or more calendar weeks of the year and (2) qualify for the payment of minimum wage under State of California minimum wage law. Independent workers, certain youth employees in publicly subsidized summer or short-term employment programs, and certain counselors at organized outdoor camps are not covered by the ordinance. 2. Accrual Method The San Diego ordinance does not provide a lump sum method of earning sick leave. Rather, eligible employees will accrue one hour of paid sick time for every 30 hours worked by the employee within the city of San Diego. Exempt employees are assumed to work 40 hours a week for the purposes of calculating their paid sick leave accrual, unless the employee works less than 40 hours a week. Accrual begins on the first day of employment or the effective date of the ordinance, whichever is later. Employers are not obligated to allow the accrual of paid sick leave in less than one-hour increments. 3. No Cap On Accrued Leave Any accrued, unused paid sick leave will carry over to the following year. While California law permits employers to cap the accrual of paid sick leave to no less than 48 hours, the San Diego ordinance does not cap the accrual of sick leave, and unused time must be carried over to the following year. Use of paid sick leave, however, may be limited to 40 hours a year. As with the California paid leave law, employers are not required to pay accrued, unused paid sick leave upon the end of employment. 4. Purpose of Use Paid sick leave under this ordinance can be used for an employee s own illness, injury or medical condition; for a family member s (child, spouse, parent, grandparent, grandchild, sibling, or child or parent of a spouse) illness, injury or medical condition; for the use of Safe Time (time away necessary due to domestic violence, sexual assault, or stalking); or if the employee s place of business or the school/child care provider of their child is closed due to a public health emergency. 5. Incremental Use As with California law, employers may set a reasonable minimum increment for the use of paid sick leave, not to exceed two hours. 6. Required Notice Where the need for leave is foreseeable, an employer may require advance notice of up to seven days; where the need is not foreseeable, an employee is only required to provide notice of the need for paid sick leave as soon as practicable.

7 7. Reasonable Documentation Unlike state law, the ordinance allows an employer to request reasonable documentation of an absence from work for more than three consecutive days. An employer must accept documentation signed by a licensed health care provider indicating the need for the amount of paid sick leave taken and may not require that the documentation specify the nature of the injury, illness, or medical condition. Since the California sick leave law does not expressly authorize employers to require such documentation, an employer may be accused of interfering with an employee s use of paid sick leave if it requires a doctor s note as a condition for paid sick leave. 8. Pay Rate Sick leave must be paid at the employee s rate of compensation at the time the sick leave is used, but no less than the newly implemented minimum wage rates ($10.50, upon the effective date of the ordinance). 9. Paid Leave/Vacation/PTO Policies If an employer has a paid leave, vacation, personal time off, or paid time off policy that provides an amount of leave sufficient to meet the requirements of the ordinance and which can be used for the same purposes, the employer is not required to provide additional paid sick leave. 10. Rehire Rights Upon an employee s separation, employers are not required to pay unused leave, but if an employee is rehired within six months of separation, the employee is entitled to the use of previously accrued paid sick leave. 11. Collective Bargaining Exemption While the state law exempts workers under a valid collective bargaining agreement that already provides for paid sick leave, subject to meeting certain criteria, the San Diego ordinance provides that it is not intended to modify any collective bargaining agreement providing higher wages or more paid sick leave. SANTA MONICA MINIMUM WAGE AND PAID SICK LEAVE ORDINANCE On May 10, 2016, the City of Santa Monica adopted Ordinance No requiring increased minimum wage and paid sick leave. Santa Monica Minimum Wage Requirements Effective July 1, 2016, the Santa Monica ordinance will increase the minimum wage of employees who work in the City of Santa Monica for at least two hours in a particular week and

8 who are entitled to the minimum wage under the California Labor Code and California Industrial Welfare Commission wage orders. The minimum wage requirements immediately apply to employers with 26 or more employees; employers with 25 or fewer employees have an additional year to comply with the minimum wage requirements. The size of an employer s business is determined by the average number of employees employed per quarter during the previous calendar year. Certain non-profit employers with 26 or more employees may qualify for the deferred implementation schedule and must affirmatively apply for this deferral. These employers must establish either: (1) the CEO earns less than five times the lowest wage paid by the corporation; (2) it is a certified Transitional Employer (provides transitional jobs for the long-term unemployed); (3) it serves as a child care provider; or (4) it is funded primarily by city, county, state or federal grants or reimbursements. The ordinance provides a higher wage for employees of hotels and businesses operating on hotel property, $13.25 effective July 1, Beginning July 1, 2017, hotel workers will receive a minimum wage rage of $15.37 plus an increase based on the consumer price index. With the exception of hotel workers, the minimum wage for employees will increase as follows: Effective Date with 26 or more employees with 25 or fewer employees July 1, 2016 $10.50 $10.00* July 1, 2017 $12.00 $10.50** July 1, 2018 $13.25 $12.00 July 1, 2019 $14.25 $13.25 July 1, 2020 $15.00 $14.25 July 1, 2021 $15.00 $15.00 *Current State of California minimum wage **State of California State minimum wage will have already increased to $10.50 as of January 1, 2017 Beginning July 1, 2022 and each year thereafter, the minimum wage will increase based upon the Consumer Price Index for Urban Wage Earners and Clerical Workers for the Los Angeles metropolitan area. Employers must post a bulletin published by the City of Santa Monica informing employees of the current wage rate and their rights under the ordinance. The postings must be posted in English, Spanish, and any other language spoken by at least 5% of the employees. Employers must also provide employees with the employers name, address, and telephone number in writing at the time of hire. The provisions of the Santa Monica ordinance may be waived in a bona fide collective bargaining agreement, provided that the waiver is explicitly set forth in clear and unambiguous terms.

9 An adverse action against an employee within 90 days of the employee s exercising their rights to the minimum wage raises a rebuttable presumption of retaliation. Santa Monica Service Charges The ordinance requires that employers who collect service charges from customers must pay the entirety of those charges to the workers performing those services. Service charge proceeds cannot be distributed to employees whose primary roles are managerial or supervisory. Employers must share with employees how they distribute service charge proceeds and must keep records of service charge revenue, receipts, and spending. Service charges can be shared between front and back of house workers apart from hotel banquet/catering, porterage, and delivery charges. Healthcare surcharges must be spent entirely on workers and follow specific guidelines. Employers must also clearly disclose all service charges to customers before they make a purchase or selection Santa Monica Paid Sick Leave Requirements The Santa Monica ordinance also mandates paid sick leave entitlements, effective January 1, Though many of the provisions of the Santa Monica ordinance mirror the existing California Healthy Workplace, Healthy Families Act of 2014, the ordinance differs in the following ways: 1. Eligible Employees This law applies to any employee who (1) is entitled to the minimum wage under the California Labor Code and California Industrial Welfare Commission wage orders and (2) works in the City of Santa Monica for at least two hours in a particular workweek. 2. Paid Sick Leave Accrual and Use Under California law, employees are entitled to use 24 hours or three days of sick leave each year. The ordinance increases the requirement over the next two years, depending on the size of the employer. The ordinance only refers to sick leave time in increments of hours, not days. a. Accrual Method: Eligible employees will accrue one hour of paid sick time for every 30 hours worked. Accrual begins upon the start of employment, and employees may not accrue paid sick leave in increments of less than one hour. i. Employers with 26 or more employees: These employers must provide at least 40 hours of accrued paid sick leave as of January 1, 2017 and at least 72 hours of accrued paid sick leave as of January 1, Unused accrued paid sick leave will carry over, until the amount accrued reaches 40 hours as of 2017 and 72 hours the following year, unless the employer establishes a more generous policy.

10 ii. Employers with 25 or fewer employees: These employers must provide at least 32 hours of accrued paid sick leave as of January 1, 2017 and at least 40 hours of accrued paid sick leave as of January 1, Unused accrued paid sick leave will carry over, until the amount accrued reaches 32 hours as of 2017 and 40 hours the following year, unless the employer establishes a more generous policy. b. Lump Sum Method: Employers may provide sick leave at the start of the calendar, fiscal, or employment year, so long as the leave is consistent with the required accrual amounts above. 3. Use of Paid Sick Leave Employees are eligible to use paid sick leave after 90 days of employment, or as consistent with the employer s policies, whichever is sooner. As with the California paid leave law, employers are not required to pay accrued, unused paid sick leave upon the end of employment. 4. Purpose of Use The use of paid sick leave under the ordinance is consistent with California State law, permitting the use of paid sick leave for an employee s own health condition, a family member s health condition, or if the employee is a victim of domestic assault, sexual violence, and/or stalking. 5. No Discrimination/Retaliation As with California State law, employers are prohibited from denying the right to use the sick days, requiring employees to find replacements in order to take such days off, and from discriminating or retaliating against an employee for exercising their rights to paid sick leave under the ordinance. Though California State law provides that a rebuttable resumption of unlawful retaliation will exist when an employer takes adverse action against a person within 30 days of any protected action by the employee, the ordinance expands the timeframe such at an adverse action against an employee within 90 days of the employee s exercising their rights raises a rebuttable presumption of retaliation. 6. Unlawful Practices In addition to the anti-discrimination and anti-retaliation provisions of the ordinance, employers may not directly fund the wages and benefits required by the ordinance by reducing their employees pension, vacation, or other non-wage benefits, nor may an employer increase charges for parking, uniforms, meals or other work-related materials to fund the increased wages and sick leave. 7. Collective Bargaining Exemption

11 The provisions of the Santa Monica ordinance may be waived in a bona fide collective bargaining agreement, provided that the waiver is explicitly set forth in clear and unambiguous terms.