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	EMPLOYMENT LAW UPDATE: Compliance With Los Angeles Living Wage Ordinance Thrown Into Question Employment/Labor  In Aguiar v. Superior Court (Cintas Corporation), issued January 20, 2009, a California appellate court has opened the floodgates to class actions by employees of businesses who had contracts with the City of Los Angeles covered by the City’s Living Wage Ordinance (LWO) between July 2003 and August 2006. During that time period, Regulation 5, which implemented the LWO, contained a limitation on employee coverage, i.e., if an employee of a private contract worked at least 20 hours during the month on a city service contract, the employee had to be paid the appropriate wages and benefits mandated by the LWO for each hour worked on the subject agreement. If, however, the employee worked less than 20 hours per month on a city service contract, the employee was not eligible for any LWO wages or benefits. The appellate court concluded that both the 20-hour eligibility limitation, and the limitation requiring LWO-level wages to be paid only for hours actually worked on a covered contract, were inconsistent with the LWO. The appellate court did not stop there – it invalidated Regulation 5 in its entirety! The end result is a decision that could retroactively determine that a covered employer was in violation of the LWO if it did not pay full LWO wages to any employee who provided the smallest scintilla of service on a covered contract during a month, and further that the violation extends to all hours worked by that employee during that month (despite the fact that the employee spent almost no time working on the covered contract). This throws the myriad of employers who relied in good faith on the provisions of Regulation 5 into a potential whirlwind of litigation. Furthermore, because the statute of limitations on wage claims arising during the time Regulation 5 was in effect is running, the resulting litigation is likely to be filed quickly. This unforeseen litigation and the resulting costs and potential liability are particularly troublesome for affected employers at a time when many are struggling with an already-weakened demand for their services and increased costs of doing business in California. By retroactively invalidating Regulation 5, furthermore, the appellate court effectively eliminated the ability of covered employers to build in the increased costs into their City contracts in advance. It thus places the full onus of compliance on the contractor, and leaves the contractor with the uncertainty of trying to retroactively wrest the additional costs from a City that is facing its own monumental revenue shortfall. Employers who have service contracts covered by the LWO should review how they assign work in order to minimize on-going violations. For example, a contractor could limit its obligations under the LWO by assigning covered work to a smaller subset of its employees. ******* If you would like to discuss how the Alert might affect you or your business, please contact Teresa R. Tracy at (310) 821-9000, x717 or the attorney with whom you regularly work. This Alert is published as a service to our clients and friends. It is intended for informational purposes only and is not intended to constitute advertising, solicitation or legal advice. ©2009 Berger Kahn, A Law Corporation. All Rights Reserved. Back
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