Are You Ready For California’s Paid Sick Leave Law?

indexNearly a year after its enactment, the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”) is poised to go into full effect on July 1, 2015. It has many very detailed requirements which will require many employers to adopt new, or modify existing, policies and procedures. It is important for every employer to understand its obligations and to take the necessary steps, before July 1, to be in compliance with this sweeping new law. This article will highlight the key steps to meet the requirements of the paid sick leave law.

Which Employers Are Covered?

Almost all employers will be obligated to provide paid sick leave. There is no minimum number of employees – an employer with one employee is required to provide paid sick leave.

Which Employees Are Covered?

Again, almost all employees are eligible for paid sick leave, including full-time, part-time, seasonal and exempt employees. To be eligible an employee must work at least 30 days in a year in California.

A big exception of interest to the construction industry is employees covered by a collective bargaining agreement (“CBA”). The Act excludes employees covered by a CBA that expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime, a regular hourly rate of not less than 30 percent more than the state minimum wage, and

  • paid sick days (with final and binding arbitration for any disputes regarding paid sick days),
  • or (for construction industry only) was entered into before January 1, 2015, or
  • expressly waives the requirements of the Act in clear and unambiguous terms.

Keep in mind that employees not covered by the CBA are eligible for paid sick leave.

What Are Employees Entitled To Receive?

Employees accrue one (1) hour for every 30 hours worked, beginning at the start of employment or July 1, 2015, whichever is later. Generally, exempt employees are deemed to work a 40 hour per week schedule for accrual purposes.

Maximum required accrual is 24 hours (3 days) in a year. In some circumstances, accrued unused sick leave may be carried over to a following year. Maximum overall required accrual is limited to 48 hours (6 days).

When Can Employees Use Paid Sick Leave?

Eligible employees begin accruing sick leave immediately but are not entitled to take paid sick leave until after 90 days of employment.

For What Can Paid Sick Leave Be Used?

This is one of the broader aspects of the Act. Aside from the obvious time off because the employee is sick, paid sick leave may also be used for preventive care. Paid sick leave may also be used for preventive care, diagnosis, care, or treatment of a “family member’s” existing health condition. A “family member” is (1) child (broadly defined), (2) parent (broadly defined), (3) spouse, (4) registered domestic partner, (5) grandparent, (6) grandchild, or (7) sibling. The employer shall also provide paid sick days for an employee who is a victim of domestic violence, sexual assault, or stalking.

Can Employers Limit Sick Leave Use?

Yes. An employer can limit employees to a maximum of 24 hours (3 days) per year.
Employers can require employees to take paid sick leave in minimum increments not to exceed 2 hours.

Other Rules For Use

Paid sick leave must be provided upon an employee’s oral or written request. If the need for paid sick leave is foreseeable, an employee must provide “reasonable” advance notice. If not, the employee must provide notice “as soon as practicable.”

An employer cannot require an employee to find a replacement worker for the time off.

An employer can lend paid sick days to employees in advance of accrual. According to the law this is “at the employer’s discretion, and with proper documentation.” That means you don’t have to. Just be consistent; if you are willing to let one employee lend, be willing to let others lend too.

Paying For Sick Leave

Generally, sick leave must be paid at the employee’s hourly rate no later than the payday for the next regular payroll period after the sick leave was taken.

For employees who are not paid hourly on a single rate of pay (i.e., commission & piece rate, varying hourly rates or nonexempt salaried), the hourly rate is calculated by “dividing the employees total , not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.”

Exempt employee “hourly rate” is calculated by dividing weekly pay by 40 hours. Note that, if an exempt employee works any time in a day, the employee must be paid for the full day. However, if the exempt employee takes several hours off during the day for a paid sick leave-qualifying purpose, the employer can charge that time against the exempt employee’s accrued sick leave.

How To Keep Track Of Employee Paid Sick Leave

The Act allows alternative methods.

Statutory Mandated Accrual Method:

This involves keeping track of each employee’s individual hours, accrual and usage. Both regular hours and overtime hours count as one hour for purposes of accrual of sick leave. Different employees will have different anniversary dates for annual usage cap purposes because employees begin accruing sick leave from their first day of work.

Lump-Sum Method:

Under this method, the employer grants the full amount of leave (three days or 24 hours) at the “beginning of each year” under an employer’s policy. This is much less of an administrative burden since the employer does not have to track individual accrual and carry over. Under this method, there is no carryover of unused sick leave from one year to the next. Each employee has 24 hours (3 days) per year – use it or lose it.

One possible problem with this lump-sum method is that the Act does not define which “year” is to be used for calculation: date of hire, calendar year, date the benefit begins to accrue by law (July 1), or something else.

What If I Already Provide Paid Sick Leave?

The Act sets a minimum. Employers are free to provide more paid sick leave that this minimum. However, an employer with an existing policy needs to examine it carefully to be sure that it complies fully with the Act’s requirements. For example, many existing paid sick leave plans provide for accrual at a slower rate that the Act’s one hour for 30 hours worked. Also, many plans do not allow accrual to begin with the first hour worked. Additionally, many plans do not provide paid sick leave benefits for part-time or temporary employees. Finally, many existing sick leave policies do not permit the leave to be used for all the purposes listed in the Act.

Posting And Notice Requirements

The employer must have a required poster advising employees of their sick leave rights  posted in a conspicuous location. The 8 ½ x 11 poster can be downloaded from the Labor Commissioner website from this page: http://www.dir.ca.gov/dlse/ab1522.html. Employers must also provide new hires with a notice, often referred to as a “wage theft” notice, which now includes paid sick leave information. This notice is available online at the same link. Spanish and Vietnamese versions are also available.

Payroll Requirements

Either the wage statement or a separate written notice that accompanies each employee’s pay check must now include a statement of amount of paid sick leave available to the employee each pay period. Employers should be careful to update internal payroll practices or to confirm that their payroll vendor will be in full compliance as of July 1.

Record-Keeping

Employers must keep records documenting hours worked, paid sick leave accrued and paid sick leave used by each employee for a minimum of 3 years. Failure to have those records means that it will be presumed that the employee is entitled to the maximum number of hours accruable under the Act, unless the employer proves otherwise by clear and convincing evidence.

Retaliation Protections And Enforcement

Retaliation for taking sick leave is prohibited. Also, unlawful retaliation is presumed (unless the employer proves otherwise) if an employer takes an adverse employment action (including denying the right to use sick days) within 30 days of an employee (1) filing a complaint with the Labor Commissioner or in court alleging violations of the Act; (2) cooperating with an investigation or prosecution of an alleged violation of the Act; or (3) opposing a policy, practice or act that is prohibited by the Act.

Substantial penalties, on top of reinstatement, back pay, and payment of sick days unlawfully withheld, may be imposed for retaliation.

What Happens To Accrued Paid Sick Leave At Termination Of Employment?

Unlike vacation, the employer does not have to pay the terminating employee for any unused accrued sick leave. However, if the employer uses a PTO system to cover both vacation and sick leave, then all unused accrued PTO must be paid to the employee at termination at the employee’s current rate of pay.

Conclusion

This overview covers the primary features of the act. As with any new law, there are ambiguities and possible conflicts with other existing laws. For example, San Francisco paid sick leave ordinance provides for a larger accrual of sick leave but allows use for a smaller scope of reasons. Each employer’s situation is different and employers should consult with their legal counsel to ensure that they are in full compliance.

Contact James Parton at (415) 258-9700 ext. 203 or jparton@partonsell.com if you have any questions about this important change in California law.

Nearly a year after its enactment, the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”) is poised to go into full effect on July 1, 2015. It has many very detailed requirements which will require many employers to adopt new, or modify existing, policies and procedures. It is important for every employer to understand […]