The City of Los Angeles has enacted Ordinance No. 188944, amending the City’s Hotel Worker Minimum Wage Ordinance (CHMWO) and related wage provisions. The amendment, tied to Council File 25‑1466, modifies compensation requirements for covered hotel workers, including adjustments to health benefit payments and the schedule of future wage increases. Key compensation changes taking effect beginning July 1, 2026.
Revised Health Benefit Payment Requirements
A central change under Ordinance 188944 is the establishment of a new minimum hourly health benefit payment for hotel workers. Beginning July 1, 2026, covered hotel employers must:
- Provide health benefits valued at no less than $4.25 per hour; or
- Pay the difference as additional hourly wages if the value of benefits provided is below that threshold; or
- Pay the full $4.25 per hour as wages if no health benefits are offered.
This requirement creates a hybrid wage‑and‑benefits obligation, ensuring that workers receive a minimum level of compensation regardless of whether benefits are provided in kind or substituted in cash.
Adjusted Wage Increase Schedule
The ordinance also revises the timeline and structure of scheduled minimum wage increases for covered hotel workers. While prior versions of the ordinance contemplated a faster progression toward higher wage thresholds, the amendment introduces a more gradual phase‑in schedule over several years.
Under the revised framework:
- Minimum wage increases continue beginning July 1, 2026, with additional incremental increases in subsequent years;
- The timeline to reach a significantly higher wage threshold (including previously planned $30/hour levels) has been extended, delaying full implementation into later years; and
- Future increases will continue to be adjusted based on Consumer Price Index (CPI)‑based calculations once the maximum threshold is reached.
These changes provide additional transition time for employers while maintaining the long‑term trajectory of increased compensation for hotel workers.
Compliance and Payroll Implications
The revised framework requires employers to carefully evaluate both benefits design and payroll practices. Employers must:
- Calculate the hourly value of health benefit contributions to ensure compliance with the minimum threshold;
- Adjust payroll systems to provide wage supplementation where benefits fall short; and
- Track annual wage changes under the revised multi‑year increase schedule.
Failure to properly account for the interaction between wages and benefits may result in underpayment exposure under the ordinance.
Employer Takeaway
With changes taking effect beginning July 1, 2026, Ordinance 188944 introduces more nuanced compensation requirements for hotel employers in Los Angeles. While the amendment slows the timeline for reaching higher wage thresholds, it simultaneously imposes clear, enforceable health benefit minimums that may increase immediate payroll costs. Covered employers should review benefit plans, confirm compliance with the $4.25 per hour requirement, and plan for ongoing wage increases under the revised schedule. Early coordination between HR, payroll, and benefits teams will be critical to ensuring compliance and avoiding wage‑and‑hour liability under the amended ordinance.