During the last few weeks of 2024, the Los Angeles City Council approved an increase to the minimum wage rate for airport and hotel workers in Los Angeles. While the City Council’s motion is largely related to employment law matters, an increase in healthcare benefit payments to $8.35 per hour (with annual adjustments) for such workers was also included and approved. This article provides a high-level overview of the healthcare benefit payment requirement that may impact employer plan sponsors.
Compliance Snapshot
- Action by the LA City Council provides updates to the Los Angeles’ Living Wage Ordinance (LWO) and Citywide Hotel Worker Minimum Wage Ordinance (HWMO), impacting annual adjustments to both minimum wage and healthcare spend requirements.
- When finalized, healthcare benefit payments of $8.35 per hour will be required for airport and hotel workers in Los Angeles. It is anticipated this will be effective beginning July 1, 2025; however, the updates have not yet been written into law.
The ordinances will cover employees at LA hotels with 60 or more rooms, as well as airport workers. Of note, the LWO currently requires a healthcare benefit payment of $5.95 per hour; this change would result in a $2.40 per hour increase, if finalized. On the other hand, the HWMO was initially drafted to require a $1.25 healthcare benefit payment, with this change causing a substantial increase of $7.10 per hour. The latest motion by the City Council also provides that future healthcare benefit increases (beginning on July 1, 2026, and annually thereafter), may be “adjusted by the percentage equal to the percentage increase, if any, in the California Department of Managed Healthcare’s Large Group Aggregate Rates report, as measured from January to December of the preceding year.”
Without further guidance regarding the healthcare benefit payment requirement, it appears that if an employer’s healthcare spend is less than the $8.35 per hour requirement, the difference is to be paid to the employees’ hourly wages. Further, the LWO provides “health benefits include health coverage, dental, vision, mental health and disability income…retirement benefits, accidental death and dismemberment insurance, life insurance and other benefits that do not provide medical or health related coverage will not be credited toward the cost of providing employees with health benefits.”
Employer Takeaways
Importantly, the City Council’s motion now requires the City Attorney to draft ordinance language that is consistent with the terms of the motion. As of the date of this blog, finalized legislation has not yet been published. Employers with airport or hotel employees in LA should keep a watchful eye on these developments. Sequoia will continue to monitor actions related to the healthcare benefit payments and provide updates, as applicable, related to any implementation guidance.
Additional Resources
Connect with a Sequoia consultant to learn how Sequoia’s compliance services are integrated in our benefits services and tailored solutions. And if you’re already a Sequoia client, stay on top of your employer obligations with your Compliance Checklist that highlights important compliance dates, action items, and resources.
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog. © 2025 Sequoia Consulting Group. All Rights Reserved.
