On November 8, over 63% of San Jose voters approved a first-of-its-kind ordinance that requires San Jose employers to offer additional hours of work to qualified existing employees before hiring new employees, subcontractors, or temporary workers.

The new ordinance requires employers to use a transparent and nondiscriminatory method of distributing the additional hours. However, it does not require employers to offer additional work if it would result in an employee working overtime or at other premium rates.

Who Is Affected?

All employers conducting business in the City of San Jose that have 36 or more employees are subject to the new law with regard to employees in San Jose. A business is considered an “employer” for purposes of the ordinance if it employs or exercises control over the wages, hours, or working conditions of any employee—including through a temporary employment agency, staffing agency, or similar entity.

Employers with 35 or fewer employees are exempt from the new requirement. However, an employer’s total number of employees is calculated on the basis of the combined number of employees at every location owned by the non-franchised chain or the franchisee, regardless of whether such employees are located in San Jose.

CBA Waiver

The requirements of the ordinance can be waived in a bona fide collective bargaining agreement if the waiver is explicitly, clearly, and unambiguously provided in the agreement.^[1]

Hardship Exemption

An employer may apply for a hardship exemption to the San Jose Office of Equality Assurance (OEA) if it demonstrates

• that it “has undertaken in good faith all reasonable steps to comply”; and

• “full and immediate compliance would be impracticable, impossible or futile.” 

The OEA may grant a hardship exemption for up to 12 months, which may be extended in 12-month increments if an employer demonstrates that “despite the [e]mployer’s best efforts to come into compliance, hardship conditions continue to exist.”

Compliance and Enforcement

Employers must display, in all applicable places of employment, a poster that describes the law.^[2] Employers must also retain records for any new hire and proof that the hours scheduled for the new hire were first offered to existing employees.

Penalties

Initial violations will not result in a fine or administrative proceeding. However, subsequent violations may result in fines of up to $50 per day per employee, administrative proceedings that may result in up to $2,500 per day per ongoing violation, and up to $100,000 for any related series of violations, not including administrative costs.

Effective Date

The ordinance will take effect on the 90th day after the San Jose Registrar of Voters certifies the approved ordinance. The Registrar plans to certify the ordinance on December 8, 2016. Therefore, the ordinance will likely take effect on March 8, 2017.

_{[1] Welfare-to-Work program participants may also waive coverage by filing a written statement with their employer.}

_{[2] The OEA has not yet published the required poster, but it will eventually be available on the OEA’s website.}