California’s Patchwork of Hazard Pay Laws Pose Challenges for Employers

June 2, 2021 - minute read

If you operate in California, you’re undoubtedly familiar with its unique labor law challenges. While California may be a great place to work, it creates complex, often costly compliance burdens for employers. This time, the issues are not the result of state-wide legislation, but local COVID-related hazard pay laws springing up across the Golden State.

To date, roughly 25 cities and counties have passed hazard pay ordinances, and dozens more are considering them. Interestingly, although the pandemic presented itself in early 2020, all of these laws were not passed until 2021. In fact, the most recent became effective just a few weeks ago.

While these ordinances feature many common elements, each is literally a law unto itself—which means that employers operating in multiple California jurisdictions need to stay on their toes.

CA Hazard Pay Laws: An Overview

In the past, hazard pay has been defined as a premium paid to workers exposed to particularly dangerous work conditions. However, in the early days of the COVID-19 pandemic, some employers elected to provide hazard pay—also called “hero pay”—to frontline workers facing a higher risk of exposure to COVID-19. Some local jurisdictions made similar short-term provisions for their first responders.

The California hazard pay laws are different. Generally speaking, they require that certain essential employers—namely groceries and drug stores—pay an additional $3 to $5 per hour to their workers, who are exposed to the public. Some ordinances also include other essential workers, such as security guards and maintenance staff. In San Francisco, contracted janitorial workers are covered, too.

Other common ordinance provisions include:

  • Prohibiting employer retaliation against workers who assert their right to hazard pay.
  • Providing credits to employers that offer voluntary hazard pay, so they don’t pay more than the mandated $3 to $5 per hour.
  • Requiring employers to post notice of the ordinance at their workplace.
  • Enforcement rights, not only for local enforcement officials but for workers, who may sue employers for violating the ordinance.
  • Certain record-keeping requirements. For example, in Irvine, employers are required to create payroll records that break out hazard pay as a separate item and retain them for two years.

However, the mandates vary in a number of respects including:

  • Exemptions - Some laws state that exempt managers are ineligible for hazard pay; others state that exempt workers are entitled to hazard pay, to the extent that they earn less than a certain amount per hour.
  • Duration – While many ordinances are only in effect for 90 or 120 days, others are more open-ended and are linked to other factors—such as the expiration of the public health emergency or until most workers are vaccinated.

A Heavy Cost for Employers

Unfortunately, the cost of hazard pay is footed entirely by the affected employers—there are no taxpayer funded offsets. That is why, when the city of Long Beach enacted its hazard pay ordinance, the Kroger grocery chain announced it was closing three area stores, claiming the law would add $20 million to its operating costs over a 120-day period.    

In addition, the California Grocers Association, which represents more than 300 retailers and 150 suppliers, has launched legal challenges against several of these cities, claiming they violate the National Labor Relations Act (NLRA) as well as constitutional equal protection clauses.

However, in at least one case, the court recently declined to issue the requested injunction. For the time being, impacted employers are on the hook, both for the hazard pay itself and the record-keeping involved.

Help Navigating California Employment Law

Admittedly, California is not the only place where hazard pay laws are vexing employers. For example, several local jurisdictions in the state of Washington, including Seattle and Burien, have enacted similar mandates. Just a few days ago, in the Chicago suburb of Evanston, the city council proposed a hazard pay law applying to larger retail employers.

However, when it comes to expanding employee rights and—correspondingly—employer obligations, California leads the way. Employers that operate here not only need to be particularly vigilant about compliance, but need particularly flexible HR software that can pace with rapidly-evolving wage and hour regulations.

We know this firsthand, because EPAY serves many customers operating in California. Our Compliance Think Tank takes great pains to stay abreast of the state’s shifting workplace legislation (see our California compliance blog library).

In addition, our truly flexible HCM software adapt to meet our customers’ evolving HR needs in ways others can’t—from wage and hour laws to hiring statutes to payroll record-keeping requirements. See for yourself.  

Filed Under: California