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Update: Los Angeles City Council Moves to Amend Minimum Wage for Hotel and Airport Workers with Carve Outs and Add-Ons

Bulls, Bears, and Blockchain™ – December 19, 2024

On Wednesday, December 11, the Los Angeles City Council approved a motion to amend the Living Wage Ordinance, which regulates wages for airport workers, and the Hotel Worker Minimum Wage Ordinance, which regulates wages for hotel workers, to raise the minimum wage for airport and hotel workers to $22.50 per hour by July 1, 2025, with annual increases to $30 per hour by 2028. The motion to amend was a general statement of terms approved by the City Council. The City Attorney is now tasked with drafting specific ordinance language that is consistent with the approved amendments to the Living Wage Ordinance and the Hotel Worker Minimum Wage Ordinance.

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This motion to amend contains a few important terms that the hospitality industry should track closely:

Healthcare Benefits Rates. This may have the biggest financial impact on hotel employers. Applicable hotel and airport employers will be required to provide airport and hotel workers a minimum healthcare benefits payment at the rate of $8.35 per hour starting on July 1, 2025. In theory, the value of an employer healthcare benefits is reduced to a per-hour dollar value, and then the difference below the $8.35 threshold is paid out in an additional wage supplement. There is currently no established minimum healthcare benefits rate for hotel workers in the city of Los Angeles.

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A Carve-Out for Restaurant, Spa and Retail Tenants? Restaurants, spas and retail businesses that lease space in a hotel may be carved out from these minimum wage requirements. Specifically, the city’s legal staff plan to report back to the City Council within 45 days with legislative language that defines what those lease carve-outs should look like.

Limitations on Subcontracted Housekeeping Services. The motion instructs the chief legislative analyst, with the assistance of the City Attorney, to report within 60 days on potential policies to limit subcontracting for hotel housekeeping. This report should include data and information regarding the recent New York City ordinance approved last month that prohibits new subcontracts for hotel housekeeping services under the guise of guest and employee “safety.” This is the first time the controversial New York City law has been proposed outside of that city.

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We will monitor the City Attorney’s actions and provide updates to the implementation of the amendments. Given the established timelines, we expect the City Council to have proposed legislation for discussion starting in late January 2025.

Please find a link to the approved motion <a href="https://clkrep.lacity.org/onlinedocs/2014/14-1371-S13_misc_12-11-24.pdf" target="_blank" rel="noreferrer noopener">here</a>.

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