OVERVIEW

The Los Angeles City Council has taken initial steps to delay implementation of the City’s planned $30/hour minimum wage for hotel and airport workers, originally slated to take effect by 2028 (link).
In a closely divided vote, the Council advanced a proposal to push the timeline to 2030, although additional action is required before any delay becomes final.

The move comes amid significant political and economic pressure tied to a business-backed ballot initiative that could have broader fiscal consequences for the city. A referendum process can pause or force voter approval of wage ordinances, potentially pushing the issue to a citywide vote.

KEY DEVELOPMENT

The wage delay is directly tied to a referendum-driven negotiating dynamic.

• A coalition of airlines and hotel industry groups has qualified a ballot measure that would repeal Los Angeles’ gross receipts tax, a major revenue source for the City.

• City officials have warned repeal could cost approximately $860 million annually, triggering severe cuts to municipal services.

Thus, the Council is considering delaying the wage increase as a “placeholder” to facilitate negotiations and potentially avoid the referendum proceeding.

REASONS FOR THE DISPUTE

Industry stakeholders—including major airlines and hotel associations—have articulated several consistent concerns with respect to the wage increase. They argue that the dramatic increase in labor costs would potentially force reductions in staffing and lead to higher prices, as well as increasing the use of automation, permanently eliminating jobs. They also assert that the higher costs might result in inadequate staffing for big events like the World Cup and the 2028 Olympics. Hospitality and travel sector employers argue that they are still recovering from the impact of COVID-19, including uneven tourism demand, and that the higher costs could make Los Angeles less competitive with other markets and discourage future hotel development and other capital investment.

Labor organizations and worker advocates strongly oppose the delay, arguing that the wage increase is necessary to address cost-of-living pressures and income inequality in Los Angeles.

WHAT HAPPENS NEXT

• The proposed delay in the wage increase requires additional City Council approval before becoming effective.
• Negotiations among labor, business groups, and city officials are ongoing.
• Depending on developments, the issue could ultimately be decided by voters in a future election if referendum mechanisms remain in play.

EMPLOYER TAKEAWAYS

Employers operating in or doing business with Los Angeles hotel or airport sectors should:

• Monitor closely for final Council action on the delay.
• Track developments related to the business-backed ballot initiative.

• Prepare for continued uncertainty, including at least three possibilities:

  -Delayed implementation of the wage increase,

  -Reinstatement of the wage increase, or

  -A voter-driven outcome that may otherwise affect the city’s finances.

• Evaluate labor cost scenarios under both proposed timelines for the wage increase (2028 vs. 2030).

Stokes Wagner will continue to monitor updates and will provide additional updates as they become available. If you have any questions, do not hesitate to contact a Stokes Wagner attorney.

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THIS DOCUMENT PROVIDES A GENERAL SUMMARY AND IS FOR INFORMATIONAL/EDUCATIONAL PURPOSES ONLY. IT IS NOT INTENDED TO BE COMPREHENSIVE, NOR DOES IT CONSTITUTE LEGAL ADVICE. PLEASE CONSULT WITH COUNSEL BEFORE TAKING OR REFRAINING FROM TAKING ANY ACTION.