City of Los Angeles Updates Paid Sick Leave Rules and FAQs

by Littler
Contact

On March 14, 2017, with little to no fanfare, the City of Los Angeles Office of Wage Standards (OWS) revised its rules implementing the Minimum Wage Ordinance (MWO), which includes mandatory paid sick leave requirements. OWS also revised its frequently asked questions (FAQs). The revised FAQs provide that an employer’s business size is based on covered employees, i.e., individuals who perform at least two hours of work in a particular week within the City of Los Angeles and are entitled to the state minimum wage. Also, the revised FAQs specify that employers can use different sick leave methods for different employee classes, e.g., accrual-based system for part-time employees and frontloading for full-time employees. Per the revised FAQs, at the end of each year, employers—at their discretion—can pay out accrued but unused sick leave that exceeds the 72-hour overall cap. Finally, relevant revised regulations address frontloading by small employers, calculating an employee’s regular rate when sick leave is used, and using existing paid time off benefits to comply with the law.

Pro-Rated Frontloading for Small Businesses in 2017: The MWO’s paid sick leave provisions applied to employers with 26 or more covered employees on July 1, 2016, and will apply to employers with 25 or fewer covered employees on July 1, 2017. As it did for large employers when the law originally became operative, for 2017 only, OWS will allow small employers to frontload 24 hours for the period spanning July 1 through December 31, 2017. However, for 2018 and subsequent years, the full 48 hours must be provided for frontloading to be used.

For existing businesses that operated before January 1, 2016, determining whether they have 26 or more employees or 25 or fewer employees is based on the average number of covered employees in 2015. For employers that began business on or after January 1, 2016, business size is based on the number of covered employees during the first pay period.

Sick Leave Rate of Pay: The MWO’s only pay-related requirement is that an employee using sick leave be paid at the least the city’s minimum wage. The revised rules, however, require employers to use either of the following calculation methods: 1) Calculate in the same manner as the regular rate of pay for the workweek in which sick time is used (regardless of whether overtime is worked that workweek); or 2) Divide total wages—excluding overtime premium pay—by total hours worked in the full pay periods of the prior 90 days of employment. This is the same calculation method state law requires for all employees except bona fide executive, administrative, or professional employees (which OWS contends are not covered by the MWO).

Using Existing Benefits to Comply with MWO: The MWO states that employers with a paid leave or paid time off policy that provides 48 hours of compensated time off do not have to provide additional paid sick leave. The revised rules clarify that paid time off includes, but is not limited to, vacation, sick, paid time off, floating holiday, holiday, or personal days.

Under the MWO, OWS may allow an employer to maintain a paid leave policy that does not meet all the law’s requirements if the policy is overall more generous to employees. OWS has published a new form for employers to use to request a determination that their policy qualifies for this limited exemption. The revised rules state that a determination will be based on the totality of the circumstances, including a combination of the following benefits:

Group 1

Group 2

Group 3

Required benefits:

At least one of these benefits must be provided, but providing only one may be insufficient, depending on the benefit’s value:

These benefits will also be considered:

Access to a combined paid and/or unpaid sick leave totaling 48 hours per year that can be taken with no adverse action

  • Employer pays more than twice the city minimum wage
  • Employer offers paid compensated time off such as holidays, paid vacation days, etc.
  • Employers pay into a trust fund to benefit employees
  • Employer offers a health benefit at no cost to the employee
  • Employer offers a retirement package
  • Employer offers flexible schedules
  • Deferred Compensation Package including residuals

Paid Sick Leave Maximum Bank:  The revised regulations confirm hard accrual caps are prohibited if employers use an accrual-based instead of a frontloading system. A maximum bank operates as a temporary cap on accrual—employees stop accruing once their leave bank contains a specific number of unused hours (in Los Angeles, employers can set the maximum amount at 72 hours). Whatever amount is in the bank at the end of the year must be carried over to the following year. Employees only resume accruing leave after they use the bank’s already-accrued leave.

Next steps

The revised regulations and FAQs clarify important issues. For employers with operations and/or employees in the City of Los Angeles, they clarify that business size determinations are based on covered employees only. By aligning pay calculation requirements with state law, the city has made compliance less stressful for employers subject to both the state and local paid sick leave law. Also, for those small employers, the pro-rated frontloading option makes complying with both laws less administratively burdensome.  Finally, the regulations clarify that a maximum bank of 72 hours is permissible.  Employers may want to review existing leave policy to confirm that no changes are required or would be desirable.  

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Littler | Attorney Advertising

Written by:

Littler
Contact
more
less

Littler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.