Employers other than public entities and hotels will soon have to pay any nonexempt employee who works at least two hours “in a particular week” in Santa Monica more than the statewide minimum wage of $10 per hour.1 That’s because Santa Monica’s new minimum wage ordinance raises the minimum wage for those two hours of Santa Monica work to $10.50 per hour by as early as July 1, 2017. That 50-cent difference might not sound like much, but if an employer unlawfully fails to pay the new minimum wage, he might end up paying the employee penalties high enough to put the employee’s kids through college.
- I. Who Gets the Santa Monica Minimum Wage?
- II. Who’s Exempt from the Santa Monica Minimum Wage?
- III. When Do the Santa Monica Minimum Wage Rates Take Effect?
- IV. What Can a Santa Monica Employee Get If His Employer Fails to Pay Him Minimum Wage?
I. Who Gets the Santa Monica Minimum Wage?
The ordinance entitles any non-government or non-hotel employee to the new minimum wage if: (1) he works at least two hours “in a particular week” in Santa Monica; and (2) California law otherwise entitles him to the minimum wage, i.e., he’s non-exempt.2 Notably, the ordinance refers to work “in a particular week,” not “per week.” Thus, the ordinance can entitle more than just Santa Monica-based employees to the Santa Monica minimum wage. For example, a Los Angeles-based plumber’s apprentice who spends at least two hours in a particular week fixing a Santa Monica homeowner’s toilet can get the Santa Monica minimum wage.
But the ordinance isn’t clear about whether a “week” is a “workweek” or a “calendar week.” California law defines a “workweek” as “any seven consecutive days starting with the same calendar day each week” or “seven…consecutive 24-hour periods.”3 If a “week” means a “workweek,” an employee can work in Santa Monica for one hour on Tuesday and one hour in Santa Monica on Wednesday, but if his workweek starts on Wednesday and ends the following Tuesday, he hasn’t worked “two hours” in a “workweek.” If, on the other hand, a “week” is a “calendar week,” the employee has worked two hours in a “particular week.”
II. Who’s Exempt from the Santa Monica Minimum Wage?
A. Learners Are Exempt for Their First 480 Hours or Six Months on the Job
Even if an employee works eight hours a day in Santa Monica, he won’t necessarily earn the citywide minimum wage. The ordinance creates a limited exemption for a “learner” – an employee in an occupation in which he has no previous “similar or related experience.”4 California law allows an employer to pay a learner 85% of the minimum wage, rounded to nearest nickel, during his first 160 hours of employment.5 The Santa Monica ordinance, however, allows employers to pay a learner 85% of the citywide minimum wage during his first 480 hours or first six months of employment, whichever is sooner.6
Santa Monica’s “learner” exemption conflicts with state law – at least temporarily. The statewide minimum wage is $10 per hour. Thus, an employer can pay a learner $8.50 per hour only for his first 160 hours. The Santa Monica ordinance, however, lets an employer pay a learner 85% of the citywide minimum wage ($8.90 per hour) for his first 480 hours or first six months. Thus, an employer who pays $8.90 per hour after the first 160 hours will violate California law. Only after July 1, 2018, when the citywide minimum wage rises to $12 per hour, will payment of 85% of the citywide minimum wage after the first 160 hours be lawful.
B. The “Hardest to Employ” Are Exempt for Their First 18 Months on the Job
Similarly, the ordinance creates a limited “sober living” exemption, presumably to protect the Ocean Park Community Center, CLARE Foundation, and other nonprofits. The ordinance permits an employer to pay anyone “an hourly wage that is below the minimum wage” (presumably as low as 85% of the citywide minimum wage if he’s a learner but 100% of the statewide minimum wage if he’s a non-learner) during the first 18 months of that person’s employment if: (1) the employer is a “transitional employer”; (2) the employee is working in a “transitional job”; and (3) the employee is among the “hardest to employ.”7
The ordinance explains that a “transitional employer” is a nonprofit that hires the “long-term unemployed” to do “transitional jobs” – short-term, wage-paying, subsidized jobs for employees to work, develop skills, and receive supportive services to help them overcome “barriers” to employment and transition to unsubsidized competitive employment.8 But a transitional employee still isn’t exempt unless he’s among the “hardest to employ”: someone who: (1) has been unemployed for an “extended period of time” and (2) faces “considerable” barriers to re-entering the “mainstream” workforce.9
III. When Do the Santa Monica Minimum Wage Rates Take Effect?
The ordinance creates two effective dates for payment of the new minimum wage. Employers with at least 26 employees who work at least two hours in a particular week must pay them $10.50 per hour by July 1, 2016; $12 per hour by July 1, 2017; $13.25 per hour by July 1, 2018; $14.25 per hour by July 1, 2019; and $15 per hour by July 1, 2020. For employers with no more than 25 such employees, however, the ordinance defers payment of the new minimum wage rates by a year. Thus, such employers don’t have to begin paying $10.50 per hour until July 1, 2017, $12 per hour until July 1, 2018, and so on.
But a non-profit corporation with 26 or more employees can apply for the deferral rate schedule if the corporation can prove any of the following: (1) its CEO earns a salary that, when calculated on an hourly basis, is less than five times the lowest wage that the corporation pays; (2) the corporation is a “transitional employer”; (3) the corporation “serves” as a child care provider; or (4) the corporation’s funds are primarily grants or reimbursements from the City of Santa Monica or any county, state, or federal agency.10 Thus, such employers don’t have to begin paying the new minimum wage until July 1, 2018.
IV. What Can a Santa Monica Employee Get If His Employer Fails to Pay Him Minimum Wage?
If an employer unlawfully fails to pay the Santa Monica minimum wage, his failure will cost him an arm and a leg. The ordinance entitles an aggrieved employee to: (1) all back wages that the employer withheld; (2) penalties in the amount of $100 for each day that the employer withheld the minimum wage; and (3) reasonable attorney’s fees.11 The $100 penalty might sound like a pittance, but if the employer pays an employee the statewide minimum wage ($10 per hour) instead of the Santa Monica minimum wage ($10.50 per hour) for a year, he’ll owe that employee $365,000 in penalties ($100 x 365).
But the penalties really pile up if the employer fails to pay the Santa Monica minimum wage on purpose. The ordinance trebles the “amount of the monies and penalties” that the employer must pay if the employer “willfully” fails to pay.12 That means the $365,000 in penalties will become $1,095,000 – and all because the employer wanted to avoid paying an extra 50 cents an hour. But the employee doesn’t have to prove that the employer acted with a “deliberate evil purpose to defraud” him of wages that the employer knew to be due.13 The only thing the employee has to prove is that the employer intentionally failed or refused to pay.14
SMMC §§4.62.010(c), 4.62.015(a)-(d). ↩
SMMC §4.62.010(c). ↩
IWC Wage Orders §2. ↩
SMMC §4.62.010(e). ↩
Lab. Code §1192; IWC Wage Orders §4(A). ↩
SMMC §4.62.010(e). ↩
SMMC §4.62.035(a). ↩
SMMC §§4.62.010(j), 4.62.010(k). ↩
SMMC §4.62.010(e). ↩
SMMC §4.62.020. ↩
SMMC §4.62.110(b). ↩
Barnhill v. Robert Saunders & Co., 125 Cal.App.3d 1, 7-8 (1981). ↩
Id. at 7. ↩