On July 28, 2014 the City of San Diego issued a Press Release from the office of the Council President, Todd Gloria, announcing an increase in the City’s minimum wage and providing sick leave for worker’s within the City. Press Release, San Diego Increases Minimum Wage by Veto Proof Majority, dated July 28, 2014. On September 16, 2014, Betsy Ann Kenner “submitted a referendary petition against the Ordinance,” and the City Clerk accepted the petition automatically suspending the Ordinance. City of San Diego Implimenting Ordinance Number O-________ (New Series).

On June 7, 2016, the voters in the City of San Diego approved the Earned Sick Leave and Minimum Wage Ordinance (the “ESLMWO”) City of San Diego Proposition I. As a result of that approval, effective July 11, 2016 every employer “must pay to each employee who performs at least two (2) hours of work within the geographic boundaries of San Diego, wages not less than $10.50 per hour and provide paid sick leave.” Minimum Wage Program, City of San Diego, Office of the City Treasurer, Jul. 14, 2016. On January 1, 2017 the wage will increase to $11.50 per hour and “[s]tarting January 1, 2019, the minimum wage will increase by an amount corresponding to the prior year’s increase, if any, in the cost of living, as defined by the Consumer Price Index. ¶ If the California (currently, $10 per hour) or federal (currently, $7.25 per hour) minimum wage exceeds the minimum wage set by the Ordinance, the minimum wage will be increased to the higher of the California or federal minimum wage.” San Diego Earned Sick Leave and Minimum Wage Ordinance Approved by Popular Vote, Filla, Groff, Allen and Norlund, Jackson-Lewis, Jun. 9, 2016.

While the Ordinance exempts independent contractors, there is no exception for small businesses under the ESLMWO, and only three classes of employees are exempt:

• Those authorized to be employed at less than the minimum wage under a special license issued under California Labor Code sections 1191 or 1191.5
• Those under a publicly subsidized summer or short-term youth employment program, such as the San Diego County Urban Corps Program
• Student employees, camp counselors, or program counselors of an organized camp as defined in California Labor Code section 1182.4

See Earned Sick Leave and Minimum Wage Ordinance Frequently Asked Questions (FAQS), , City of San Diego, 2016

In addition to raising the minimum wage in the City of San Diego, the Ordinance also requires employers to provide one hour of sick leave for every 30 hours worked by the employee with no limit on the amount of sick that may be accrued by the employee. Although the employer may limit the use of sick leave to 40 hours in a consecutive 12 month period, the employer cannot limit the amount of accrued sick leave and any unused sick leave must be “carried over” to the next year. Earned Sick Leave and Minimum Wage Ordinance Frequently Asked Questions (FAQS), , City of San Diego, 2016.

As a result of the passage of the ESLMWO, every employer within the boundaries of the City of San Diego should immediately review their wage and sick leave policies to ensure compliance with the new Ordinance. “An employer who violates the notice and posting requirements [of the ESLMWO] is subject to a civil penalty of $100 for each employee who was not given appropriate notice under the Ordinance, up to a maximum civil penalty of $2,000. An employer who violates any other requirement of the Ordinance is subject to a civil penalty of up to $1,000 per violation for each violation.” San Diego Earned Sick Leave and Minimum Wage Ordinance Approved by Popular Vote, Filla, Groff, Allen and Norlund, Jackson-Lewis, Jun. 9, 2016

Each business and business entity is unique. To understand the different options and which direction will be best for your situation, you need to consult with an experienced corporate attorney. Michael Leonard, Esq. of San Diego Corporate Law, named “Best of the Bar” by the San Diego Business Journal in 2016, has the expertise to guide you through everything from forming your business, to creating buy-sell agreements, to executing contracts, and anything in between. To schedule a consultation to discuss any business-related matter, please contact Mr. Leonard by visiting San Diego Corporate Law or by telephone at (858) 483‑9200.