On July 8, 2022, Mayor Eric Garcetti signed the Healthcare Workers Minimum Wage Ordinance.  The ordinance imposes on covered employers a minimum wage of $25.00 for qualifying healthcare workers who work in the City of Los Angeles.   

Who is Covered: The ordinance applies to an employer who employs or exercises control over healthcare workers within the City of Los Angeles.

An “employer” is any person, such as an individual, corporation, partnership, LP, LLP, LLC, business trust, estate, trust, association, joint venture, agency, instrumentality, or any other legal or commercial entity, whether domestic or foreign, including a corporate officer or executive who directly or indirectly or through any other person (i.e., through a temporary service, staffing agency) employs or exercises control over the wages, hours, or working conditions of any employee.

To qualify as a healthcare worker covered by the ordinance, the individual must: (1) be employed to work at or by a covered healthcare facility (as defined in the ordinance); and (2) provide patient care, healthcare services, or services supporting the provision of healthcare.  Under the first prong, a healthcare worker is employed to work at a covered healthcare facility only if that individual’s primary work assignment is physically located at one or more such facilities.  By way of example, the ordinance notes that delivery workers primarily outside a covered healthcare facility would not be healthcare workers unless they are employed by the facility.

The ordinance provides several examples of healthcare workers including a clinician, professional, non-professional, nurse, certified nursing assistant, aide, technician, maintenance worker, janitorial or housekeeping staff person, groundskeeper, guard, food service worker, laundry worker, pharmacist, nonmanagerial administrative worker, and business office clerical worker.  Managers and supervisors are specifically exempt from the ordinance as healthcare workers.

What is Required: On August 13, 2022, covered employers must ensure that each qualifying healthcare worker it employs, or over whom it exercises control over, is paid a minimum wage of $25.00 per hour.  On January 1, 2024, and annually afterwards, the minimum wage will increase based on the annual increase in the cost of living. 

The ordinance defines minimum wage as compensation for labor, whether this amount is fixed or calculated by the standard of time, task, piece, commission, or other calculation.  Minimum wage does not include bonuses, shift differentials, premium pay, reimbursement/allowances for work equipment or other expenses, meal/lodging credits, tips, gratuities, or the cost of benefits (i.e., medical, dental, retirement, or similar benefits).

Employers are prohibited from funding the required minimum wage increases by: (1) reducing healthcare workers’ premium pay or shift differentials; (2) reducing healthcare workers’ vacation, healthcare, or other non-wage benefits; (3) reducing healthcare workers’ hours of work; (4) laying off healthcare workers; or (5) increasing charges to healthcare workers for parking or work-related materials or equipment.  An employer is in violation of this ordinance if the minimum wage requirements are a substantial motivating factor for the employer to take any of these prohibited actions unless the employer can prove that it would have taken the same action at the time that it did regardless of the ordinance.   

Effective Date: The ordinance goes into effect on August 13, 2022.

One-Year Waiver: To avoid reduction in employment or work hours for healthcare workers, a court may grant an employer a one-year waiver from the minimum wage requirements. The employer, however, must demonstrate by substantial evidence that complying with the ordinance would raise substantial doubt about the employer’s ability to continue as a going concern under generally accepted accounting standards. This evidence must include documentation of the employer’s financial condition along with the condition of any parent or affiliated entity, and evidence of actual or potential direct financial impact of complying with the ordinance. Even if the court grants a one-year waiver, the employer must nevertheless comply with the requirements set forth under federal, state, or local laws, including other applicable laws regarding minimum wage.