SAN DIEGO EMPLOYERS: ARE YOU READY FOR THE MINIMUM WAGE AND SICK LEAVE CHANGES MANDATED BY PROP I?

San Diegans will head to the polls on June 7, 2016 to vote on the passage of several propositions, including Proposition I. This measure is on the ballot to allow voters to decide whether to keep or reject the City Council’s “Earned Sick Leave –Minimum Wage Ordinance,” which was approved by the Council in 2014. If approved by the voters, Prop I will immediately increase the minimum wage to $10.50 within the City of San Diego, and it will also significantly change paid sick leave requirements.  There has been little organized opposition to Prop I, and many believe it is likely to pass.  If Prop I is approved by the voters, its provisions will become effective immediately.   Employers within the City of San Diego will therefore need to move quickly to assess their current minimum wage and paid sick leave policies and ensure that they comply with both the new city ordinance and California state law. The key provisions of Prop I are as follows:

  • Minimum Wage Increase.  Prop I calls for annual increases in the minimum wage within the City of San Diego. The minimum wage rate would immediately jump to $10.50 per hour from the current $10.00 per hour. On January 1, 2017, the rate would increase again to $11.50 per hour. Beginning January 1, 2019, the California state minimum wage increases to $12 per hour and would surpass the San Diego minimum wage rate at that time and going forward.  Note that San Diego’s new minimum wage rate would go into effect immediately, however it would not be retroactive (no possibility of back pay to the beginning of 2016).
  • Paid Sick Leave.  The second part of Prop I addresses paid sick leave and presents more complex changes to existing law. If approved, this measure will apply within the City of San Diego and require that employees accrue one hour of paid sick leave for every 30 hours worked. Earned sick leave will begin to accrue at the start of employment and an employee is entitled to begin using earned sick leave on the 90th calendar day of employment. Employers may limit an employee’s use of sick leave to 40 hours per year; however, unused sick leave must carry over each year. Employers are not required to pay an employee for any unused earned sick leave upon termination, retirement or resignation.  However, if an employee separates from an employer and returns within 6 months of separation, previously accrued sick leave must be reinstated and the employee will be entitled to use it immediately.
  • Comparison with Existing California Law. The California state sick leave law (“Healthy Workplaces, Healthy Families Act of 2014”) went into effect on July 1, 2015, and it differs from the San Diego ordinance in a few significant ways. Under California state law, an employee also accrues paid sick leave at a rate of one hour per 30 hours worked. However, employers can choose to calculate this rate by any other formula they choose, so long as accrual is on a regular basis so that an employee has no less than 24 hours of sick leave by the 120th calendar day of employment. There is no similar alternate accrual method in the San Diego ordinance. California state law also differs from Prop I in that an employer can limit an employee’s use of accrued paid sick days to 24 hours (3 days) during each year of employment.  The San Diego ordinance allows the use of up to 40 hours of sick leave per year.  Under state law, an employer may limit the amount of carry over to 48 hours (6 days), and no carry over is required if the employer provides the full amount of leave (at least 24 hours) at the beginning of each year.  There is no similar limitation on the number of hours that can be carried over from year to year in the San Diego sick leave ordinance.

Generally speaking, when the laws of different jurisdictions conflict, California employers must comply with the law that treats employees most favorably.  In this instance, it appears that San Diego’s minimum wage and paid sick leave provisions are more favorable to employees than current state law. If Prop I is approved on June 7, employers within the City of San Diego should immediately review their minimum wage and paid sick leave practices to ensure that they conform to the new city requirements.  If you have any questions about how Prop I impacts your business, it is advisable to contact an employment law attorney for help.

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