At a city council meeting which began on November 3, 2021, and ended on November 4, 2021, the West Hollywood City Council voted to increase the minimum wage for hourly workers in West Hollywood.  In response to significant pressure from local businesses, the council made last minute changes to the ordinance to require a phased-in approach for some businesses.  Specifically, large businesses with 50 or more employees will be required to raise the minimum wage from the current $14.00 per hour to $15.50 on January 1, 2022, with further increases scheduled for July 1, 2022 at $16.50, January 1, 2023 at $17.50, and an estimated increase on July 1, 2023 to $18.77.  Smaller businesses with fewer than 50 employees will be required to raise the minimum wage from the current $13.00 per hour to $15.00 on January 1, 2022, with further increases scheduled for July 1, 2022 at $16.00, January 1, 2023 at $17.00, and an estimated increase on July 1, 2023 to $18.77.  Hotels in West Hollywood are required to raise their minimum wage from the current $14.00 per hour to $17.64 per hour on January 1, 2022, with further estimated increases on July 1, 2022 to $18.31 and on July 1, 2023 to $18.77.  Beginning in 2022 for hotels and 2023 for all other businesses, annual increases will be tied to the Consumer Price Index and announced by the city by no later than April 1^st with changes to take place on July 1^st. 

In addition, the ordinance requires that employers shall provide at least ninety-six (96) compensated hours off per year for sick leave, vacation, or personal necessity to full-time employees to be made available at the employee’s request.  Full-time employees are required to accrue at least 96/52 hours of compensated time off each week.  Employees that work less than forty (40) hours a week must receive the compensated time off in proportional increments.  Employees must be eligible to use accrued paid compensated time off after the first six (6) months of employment or consistent with company policies, whichever is sooner.  Unused accrued compensated time off must carry over until the time off reaches a maximum of one hundred ninety-two (192) hours, unless the employer’s established policy is more generous.  After an employee reaches the maximum accrued compensated time off, the employer must provide a cash payment once every thirty (30) days for accrued compensated time off over the maximum.  Employers may provide employees with the option of cashing out accrued compensated time off under the maximum, but cannot require an employee to cash out any accrued compensated time off. 

In addition to paid time off, West Hollywood employers are required to provide at least an additional eighty (80) hours of unpaid time off to care for the employee or his or her immediate family members once the paid time off has been exhausted.  Full-time employees must accrue at least 80/52 hours of uncompensated time off each week.  Employees that work less than forty (40) hours a week must receive the uncompensated time off in proportional increments.  As with paid time off, West Hollywood employees must be eligible to use accrued uncompensated time off after the first six months of employment or consistent with company policies, whichever is sooner.  Unused accrued uncompensated time off must carry over until the time off reaches a maximum of eighty (80) hours, unless the Employer’s established policy is more generous.  Use of paid or unpaid time off under the ordinance may not be counted as an absence that that may result in discipline, discharge, suspension, or any other adverse action.

West Hollywood employers will also be required to distribute all service charges to the non-managerial employee(s) who performed services for the customers from whom the service charges are collected.  Service charges must be paid to employees by no later than the next payroll period after they are collected, except that cash service charges must be paid to employees on the same day that the cash is collected.  All service charges must be disclosed to consumers with clear and conspicuous notice prior to the time that the customer makes a purchase or selection.  Employers are required to disclose in writing to employees a plan for the distribution of service charges.  Records regarding services charges must be maintained for at least three years.

The ordinance provides for the possibility of a one-year waiver from the application of the minimum wage component of the ordinance if an employer can demonstrate to the City Manager that compliance would force the employer to reduce its workforce by more than twenty percent (20%) or curtail its employees’ total hours by more than thirty percent (30%) in order to avoid a bankruptcy or shutdown.  The waiver requires an audit of the employer’s financial condition to be paid for by the employer.  An employer that applies for a waiver under this section must provide advance written notice to all employees of the application, and written notice to all employees of the City Manager’s determination within three business days.

Any failure by West Hollywood employers to adhere to the requirements of the ordinance carries stiff penalties.  Aggrieved employees may file a civil action and are entitled to recover back wages, the payment of any sick leave unlawfully withheld, penalties up to $100 for each worker per day, reinstatement, and reasonable attorneys’ fees and costs.  For willful violations, the amount of monies and penalties may be trebled.

Interestingly, the vast majority of those attending the hearing opposed the ordinance.  These individuals largely represented restaurants who argued that, since the majority of restaurant workers are already paid well above minimum wage as a result of tips, service charges, commissions, and bonuses, the increased minimum wage requirement for these persons did not meet the city’s goal of establishing a living wage.  Worse, the increase in costs for these businesses represents an unnecessary burden that could result in changes to service models that would eliminate jobs or, ultimately, in business closures.  The California Restaurant Association and others requested that the city establish that the minimum wage ordinance would not apply to workers whose total compensation reached a higher level than that required by the ordinance.  While the West Hollywood City Attorney indicated that such a model could work and merited study, the council rejected the proposal.

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