As of today, July 1, Santa Monica has one of the country’s strongest minimum wage laws.
Santa Monica’s rules are now officially on the books and the impact on workers will be similar to the rules in Los Angeles City and the County. The minimum wage will begin at $10.50 an hour this year and increase to $15 an hour by 2020. Santa Monica’s rules differ in a few ways, including requiring more sick leave than the state minimum, exempting union contracts from the minimum wage and providing restrictions on the use of service charges.
Economic Development Manager Jason Harris said the City has been fielding questions from businesses in advance of July 1 with a few areas rising to the top.
The most common question from employers relates to size.
Companies with more than 25 employees are subject to the new wage as of today. Companies with 25 employees will be subject to the law in July. According to Harris the rules define an employee as anyone who works more than 2 hours a week, meaning it covers both full-time and part-time employees. However, the law only counts employees working in the City of Santa Monica.
An employer with operations outside the city is not required to count those employees against the 25-employee limit.
Employers have also asked for clarifications on the overlapping rules issued by the state, county and city. Harris said whichever law provides the most benefits to workers is the one companies should follow and in Santa Monica, the local rules are more robust.
Santa Monica workers will accrue 40 hours (larger businesses) or 32 hours (smaller businesses) of sick leave starting Jan. 1, 2017. Employees can use this paid leave consistent with state law.
Service charges must be distributed among employees and the rules specifically allow back-of-house workers (such as dishwashers and cooks) to receive a share. Service charges must be made clear to both employees and customers with clear signage. The minimum wage laws do not cover fees and business that use fees can continue to do so.
First-time workers can be paid 85 percent of the minimum wage for the first 160 hours of employment, and the City has contracted with Los Angeles for enforcement services.
“We’re taking [the Los Angeles] approach and will begin with education, followed by, if we find violations, it’s a warning and education but if there’s mal-intent, if there’s repeated violations, they’re penalties and there are pretty stiff penalties in the law,” said Harris.
He said the intent is not to criminalize businesses, but the law will be enforced to ensure workers receive fair pay for work.
Local hotel operations have several caveats under the law. Union hotels are exempt from paying the minimum wage if the union has voluntarily forgone the wage as part of a collective bargaining agreement. Hotel contracts that do include the minimum wage will actually pay more than other industries. Santa Monica is setting a hotel living wage that matches the wages paid by Los Angeles. In those cases, hotel employees will be paid $13.25 on July 1 and at least $15.37 next year (Los Angeles has yet to calculate its 2017 wage level).
Harris said Santa Monica benefits from a strong wage ordinance because in an already competitive labor market, the best employees are likely to seek out work in the places with the strongest worker protections.
“It’s already competitive for businesses to retain the best employees and this ups the ante, as it were,” he said. “Our employment environment is going to be more favorable and we’ll naturally attract the best employees.”
Minimum wage increases were the subject of intense debate in recent years. Some local business groups questioned some provisions of the local rules and out-of-town interest groups tried to oppose the measure. However, the rules now have the support within the business community.
“This new law demonstrates the city’s commitment to improving the health and social welfare of all those working here, while continuing to ensure that Santa Monica is a great place to own and operate a business,” Laurel Rosen, president of the Santa Monica Chamber of Commerce, said in a statement.
Harris said education will be the key to successful implementation. The City has created a website to answer frequently asked questions, employers can email firstname.lastname@example.org and there will be an in-person outreach campaign to educate workers.
“We’re open for questions,” he said. “We have a website, an email address; folks can email us with questions or comments. We’ll be rolling out a substantial outreach campaign that will have people out and about spreading information and answering questions. We’re looking forward to trying to address some of the income inequality that exists in the country and this area.”