Santa Monica Adopts Minimum Wage and Sick Leave Ordinance for Hotel Workers

In January 2016, the Santa Monica, California City Council adopted a wide-reaching ordinance that raises the city’s minimum wage for hotel workers. The ordinance also imposes paid sick leave requirements on hotel employers that exceed those of the state’s paid sick leave statute. The city established a minimum wage working group to make further recommendations on the ordinance.  Absent the working group’s consensus on specific changes, the ordinance will take effect on July 1, 2016.

Minimum wage. Beginning on July 1, 2016, all hotel employers must pay $13.25 per hour to all hotel employees who work within the city’s geographic bounds. This minimum wage will increase to $15.37 per hour on July 1, 2017. Thereafter, the city will announce increases to the minimum wage for hotel workers based on the Consumer Price Index.

Notice and posting.  Employers must post in a conspicuous place a copy of the bulletin that the city of Santa Monica will provide that explains employees’ rights under the ordinance. Employers must post the bulletin in English, Spanish, and all other languages spoken by at least 5 percent of the workforce. Employers also must provide employees with the employer’s name, address, and telephone number. 

Record retention. Employers must maintain payroll records for three years.

Paid sick leave. Hotel employers must provide employees with 1 hour of paid sick leave for every 30 hours worked, up to a maximum of 72 hours for employers with 26 or more employees, and a maximum of 40 hours for employers with 25 or fewer employees. Employees may use their accrued leave beginning 90 days after employment, and employers need not pay out sick leave at separation.

Service charges. The ordinance defines a “service charge” as any separately charged amount for employee service or an amount that is described in such a way that a customer might reasonably believe that the amount is for those services and/or will be paid directly to employees. Examples include charges termed “table charge” and “service charge.”

The ordinance demands that employers pay  “service charges” directly to employees who provide the relevant services and not to those whose role primarily is supervisorial or managerial. The employer must pay service charge amounts collected for serving tables at banquets directly to the employees who waited on banquet guests, amounts collected for room service directly to those who delivered the food or /beverage, and amounts collected for porterage service directly to those the employees who carried the bags.

Surcharges. The ordinance defines “surcharges” as separately designated amounts that are intended for operational or business expenses or health benefits or that a customer could reasonably construe as such. The employer must use all health benefit surcharges to pay for employee health benefits.

Costs of compliance. The ordinance prohibits employers from reducing employees’ wages and benefits in order to offset the costs associated with the higher wages and benefits that the ordinance requires.

Presumption of retaliation. The ordinance prohibits retaliation against employees who exercise their rights under the ordinance. The ordinance presumes an employer retaliated against an employee if the employer takes an adverse action against the employee within 180 days of the employee exercising his or her rights under the ordinance. This presumption is rebuttable.

Remedies. The ordinance’s remedies include back pay, reinstatement, attorneys’ fees, and triple back wages as liquidated damages. An employee may bring either an administrative or civil action to enforce his or her rights under the ordinance.

Collective bargaining agreement waiver. A collective bargaining agreement may waive the ordinance’s protections, but only if it does so in clear and unambiguous terms. This means that the agreement expressly should state that it is waiving the ordinance’s protections.

Hardship waiver. Hotels can obtain one-year hardship waivers if they can show that the ordinance would force the hotel to shut down or go into bankruptcy unless it reduced its workforce by more than 20 percent or curtailed work hours by more than 30 percent.

The ordinance also includes a number of provisions regarding non-hotel workers, including new minimum wage requirements. These and other details on the ordinance can be found on our recent article, “Santa Monica Adopts Minimum Wage and Sick Leave Ordinance.”