California Legislature Amends New Sick Leave Law
THE HEALTHY WORKPLACES, HEALTHY FAMILIES ACT OF 2014
California is now the second state in the nation to implement paid sick leave state-wide, passing “The Healthy Workplaces, Healthy Families Act of 2014”. (AB 1522; California Labor Code § 245 et seq.)
Here is what you need to know about this law (this memorandum has been updated to include the amendments to the law (AB 304) enacted on July 13, 2015):
The Basics
Beginning July 1, 2015, every employee, whether exempt or non-exempt, full-time or part-time, who works in California for at least 30 days within a year from the commencement of employment, will be entitled to accrue paid sick leave at the employee’s regular rate of pay. Note that this could mean that employers who have employees who live outside of California, but who travel into California to perform work for more than 30 days within a year, could be eligible for sick leave under this Act. The July 13, 2015, amendment clarifies that the employee must work for the same employer for at least 30 days within the previous 12 months to be eligible to accrue paid sick leave with that employer.
There is no small employer exemption.
There is no minimum number of employees requirement.
The following employees are exempt from this law: (1) employees covered by a valid collective bargaining agreement that expressly provides for the wages, hours, and working conditions and that also expressly provides for paid sick days and other requirements; (2) persons employed in the construction industry covered by a valid collective bargaining agreement that satisfies certain requirements; (3) a provider of in-home support services under specified parts of the Welfare and Institutions Code; and (4) persons employed by an airline as a flight deck or cabin crew member subject to certain provisions of the federal Railway Labor Act. The July 13, 2015 amendment also adds a retired annuitant of a public entity and a worker covered by the Railroad Unemployment Insurance Act to this list.
Providing Employees with Sick Leave Time
Employers can provide employees with paid sick leave by the accrual method or the lump sum method.
Accrual Method:
Sick leave accrues at a rate of not less than one hour per every 30 hours worked commencing on the first day of employment or the effective date of the new law (July 1, 2015), whichever is later. Exempt employees are deemed to work 40 hours per week, unless the employee normally works a workweek of less than 40 hours. The July 13, 2015, amendment permits employers to use a different accrual method so long as the accrual is on a regular basis and employees have at least 24 hours of accrued sick time or other paid time off no later than the 120th day of employment of each calendar year or other 12 month basis.
In addition, the July 13, 2015, amendment, includes a grandfather clause for employers that provided paid sick leave or paid time off/vacation before January 1, 2015, that used a different accrual method than permitted in the bullet point above. An employer’s accrual method will be grandfathered in provided that (a) the accrual is on a regular basis so that an employee (including one hired after January 1, 2015) has no less than one day or eight hours of accrued sick leave or paid time off within three months of employment each calendar year or 12 month period, and (b) the employee was eligible to earn at least 24 hours of sick leave or paid time off within nine months of employment. If an employer modifies the accrual method used in the policy that it had in place prior to January 1, 2015, it will need to comply with the new law, including the amendments.
Employer can choose to cap accrual at 48 hours (6 days) of sick leave per year.
An employer may limit an employee’s use of accrued paid sick days to three days or 24 hours per year of employment.
Accrued but unused sick days carry over to the following year, however, that carry-over is subject to the accrual cap (if the employer chooses to implement one.)
Lump Sum Method:
Employers can choose to provide paid leave of no less than 24 hours or three days, with no accrual or carry over required, if the full amount of leave is received by the employee in a lump sum at the beginning of the year. A “year” is the each year beginning with anniversary of employment, a calendar year or any other 12 month period.
Employers with paid sick leave or PTO policies do not need to change anything if their current policy:
Makes available an amount of leave that may be used for the same purposes as the new law (detailed below); and
Satisfies the accrual, carry over, and use requirements of the Act and California vacation and PTO pay requirements; or
Provides for no less than 24 hours (3 days) of paid sick leave, or equivalent paid leave or paid time off per year.
However, all employers must still comply with the record keeping and notice requirements (detailed below).
Usage and Pay
An employee may use accrued paid sick leave beginning on the 90th day of employment.
Sick leave may be used for the diagnosis, care, or treatment of an existing health condition, or preventive care (including annual physical or flu shots) for an employee or an employee’s family member. Family members include the employee’s parent, child, spouse, registered domestic partner, grandparent, grandchild, and sibling.
Sick leave may also be used for victims of domestic violence, sexual assault, or stalking.
For partial days i.e. using sick leave for a doctor’s appointment, an employer can require the employee to take at least two hours of leave, but otherwise the determination of how much time is needed is left to the employee.
Employers must permit the employee to use the paid sick leave upon an oral or written request.
If the need is foreseeable the employee must give reasonable advance notice, but where the need is unforeseeable the employee need only give notice as soon as practicable.
The law forbids requiring an employee to find a replacement as a condition for using leave.
Employees must be paid at their regular hourly rate. If the employee’s pay fluctuates – for example, pay on a commission or piece rate – the total compensation for the previous 90 days is divided by the number of hours worked to determine the rate of pay. The July 13, 2015, amendment provides an alternative to this method of determining the rate of pay for employees with fluctuating pay rates: First, for non-exempt employees, employers may use the same regular rate of pay used for overtime pay during the work week that the employee takes sick leave. Second, for exempt employees, employers can use the same rate used for other forms of paid leave.
An employer must provide payment for sick leave taken by an employee no later than the payday for the next regular payroll period after the sick leave was taken.
Notice and Record Keeping Requirements
Starting July 1, 2015, employers must show, on employee’s pay stub or a separate document issued the same day as the paycheck, how many days of sick leave the employee has available.
For employers in the broadcasting and motion picture industry, the July 13, 2015, amendment delays this requirement until January 21, 2016. The July 13, 2015 amendment allows employers who maintain unlimited sick leave policies to indicate “unlimited” on the relevant document. Employers are not required to inquire into or record the purpose for which the leave was taken.
The employer is obligated to post notice of the Act (can be found on the DLSE website.) This requirement went into effect on January 1, 2015.
All non-exempt employees must be provided an individualized Notice to Employee that includes paid sick leave information (can be found on the DLSE website.)
Termination of Employment
The employee is not entitled to compensation for unused sick leave days.
Compare to accrued but unused vacation days or PTO. Those are earned wages and compensation is required if they remain unused at end of employment.
However, if an employee leaves the employment, but returns within 12 months, the accrued, but unused, sick leave must be restored. In addition, the 90 day probationary period starts where the employee left off. This is something to keep in mind for seasonal employees.
Compliance Checklist
Display the poster.
Provide written notice to employees of sick leave rights at the time of their hire.
Make sure policies comply with AB 1522 and AB 304.
Allow eligible employees to use accrued paid sick leave upon reasonable request.
Provide pay stubs or comparable document on the same day as pay stub that details available sick leave hours.
Keep records for three years that show many sick leave hours employees have earned and used.
Train supervisors on the requirements of this new law and on the Cautions! below.
Caution!
Employers may not deny an employee the right to use accrued sick days, discharge, threaten to discharge, demote, suspend, or in any manner discriminate against an employee for using or attempting to use accrued sick days.
The Act provides for a variety of monetary and non-monetary remedies for violations of its various provisions.
The Act does not preempt local ordinances. This means employers in San Francisco, Oakland, Emeryville and San Diego – or employers whose employees perform the minimum required number of hours of work in those cities (San Francisco: 56 hours of work within a calendar year; Oakland: 2 hours per workweek) – which each have their own sick leave ordinances, will be required to provide sick leave that complies with both state and local laws.