Are You Ready for the San Jose Minimum Wage Ordinance?
The San Jose Minimum Wage Ordinance goes into effect on March 11, 2013. Passed by voters during the last election, the new ordinance requires employers doing business in San Jose to pay a minimum of $10.00 per hour for any employee that works at 2 hours per week in San Jose.
At first glance it might seem that the law only applies to businesses physically located in San Jose, but that is not accurate. The ordinance defines an employer as:
any person, including corporate officers or executives, as defined by Section 19 of the California Labor Code, who directly or indirectly through any other person, including through the services of a temporary employment agency, staffing agency or similar entity, employes or exercises control over the wages, hours or working conditions of any Employee and who is either subject to the Business License Tax Chapter 4.76 of the Municipal Code or maintains a facility in the City.”
The City’s perspective is that anyone carrying on or conducting business in San Jose is subject to the Business License Tax. Even if your business is located outside of San Jose if you provide goods or services in San Jose you are an “employer” under the SJMWO.
Not all employees working in San Jose are covered by the SJMWO. Employees who are not otherwise entitled to payment of minimum wage under California minimum wage laws (e.g., outside salespersons, certain family members of the employer, etc.) are not “employees” under the SJMWO. Additionally, the employee must work in San Jose at least 2 hours per week.
In addition to paying the increased minimum wage, employers subject to the SJMWO must post the SJMWO poster in a conspicuous place. You can download copies of the SJMWO poster here.
The City has developed a list of FAQ’s that they hope to post on their website soon. Unfortunately, there were a few errors in the FAQ’s that require revision, so we don’t know when the FAQ’s will be posted.
The City has, or soon will, set up an enforcement mechanism for complaints regarding violations. One of the benefits of the enforcement/complaint process is the ability to resolve the matter through early mediation or conciliation. One of the drawbacks is that complaints do not need to be filed with the City agency and nothing prohibits an employee from pursuing a claim with the City and in court.
As with many wage and hour statutes and regulations, an employee suing an employer for a violation of the SJMWO is entitled to recover his/her attorneys’ fees, but a successful employer is not able to recoup its attorneys’ fees even if the employer proves there was no violation. The City hopes that its administrative process will allow the parties to resolve cases early without extensive litigation and that the attorneys’ fees, therefore, will not be a significant issue in resolving a case. I’ll hold my opinion until I see the results.
One of the concerns is that an employer who has a posting violation, for example, may be subject to a $50.00 per day per employee penalty (plus attorneys’ fees), if the employer fails to have the required posting in a conspicuous place. The penalty begins from the date of the violation and continues until the violation ceases. For example, if you have 5 employees that each travel to San Jose at least 2 hours per week and you fail to have the correct poster, you could face over $90,000.00 in penalties.
Employers are also required to maintain payroll records, and to allow the City access to such records, for 4 years.
Of course, employers may not discriminate in any manner or take adverse action against any person in retaliation for exercising any of the rights under the SJMWO.
Failing to understand and comply with the SJMWO may have devastating effects on your business. Every employer and every employee should become familiar with the SJMWO so they can understand their rights, remedies, and responsibilities.
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