California Paid Sick Leave Law

If you are an employer in California and have at least 1 employee...you need to know the following about California's new Paid Sick Leave Law that kicked in January 1, 2015.

Summary. On September 10, 2014, Governor Jerry Brown signed the Healthy Workplaces, Healthy Families Act of 2014. Although the new law, and all of its provisions take effect January 1, 2015, the Act requires California employers to provide employees with one hour of paid sick leave for every 30 hours worked starting on July 1, 2015. The qualifying periods that determine employee eligibility and the employee notice required by Labor Code 2810.5 are effective January 1, 2015.

• ACTION ITEM (JANUARY 1): Identify and prepare for eligibility periods for employees.
  
• ACTION ITEM (JANUARY 1): Provide notice to employees of their rights for paid sick leave.
  
• ACTION ITEM: Schedule the right to accrue and use sick leave under the new law for July 1, 2015.
  

Leave Year Measurement: The 12 month period begins July 1, 2015 for those employed on that date, and may be tracked by anniversary date for those hired after July 1, 2015. Nothing in the FAQs precludes an employer from switching to a calendar year after the first partial year of employment. But beware that if an employer does switch to a calendar year method, then it still must grant the full three days (or 24 hours) of sick leave during the first partial year of employment.

Qualifying Reasons: An employee or family member’s “preventive care or care of an existing health condition, or for specified purposes if the employee is a victim of domestic violence, sexual assault or stalking. Family members include the employee’s parent, child, spouse, registered domestic partner, grandparent, grandchild, and sibling.” Preventive care would include annual physicals or flu shots.

• SUMMARY: The employee and their parent, child, registered domestic partner, grandparent, grandchild, and sibling are all included for taking paid time off.
  

Entitlement to Use Leave: Qualified employees are entitled to use paid sick leave under the law when they have accrued enough paid sick leave time to use for one of the stated purposes of the law. As noted, accrual does not begin until July 1, 2015.

How Much? Starting July 1, employees will earn at least one hour of paid leave for every 30 hours worked, which would work out to a little more than eight days a year for someone who works full time (if an employer chooses not impose a cap of 48 hours (six days) as permitted by the law). But employers can impose a limit of 24 hours (three days) on the amount of annual paid sick leave that an employee can take.

• SUMMARY: Employers selecting the accrual method can cap the annual accrual at 48 hours and limit the number of hours of annual sick leave the employee can take to 24 hours.
  

Who is required to offer Paid Sick Leave? Any employer who employs a temporary, part or full time, or per diem employee in California for 30 or more days in a year (with exception of providers of publicly funded In-Home Supportive Services...see Who is Covered).

Who is covered? Those who work “for an employer on or after January 1, 2015, for at least 30 days within a year in California and by satisfying a 90 day employment period (which works like a probationary period) before an employee can actually take any sick leave.” This 30 days period does not have to be consecutive. Employees who work fewer than 30 days in a year are not eligible for paid sick leave under the new law. Employees who are employed for fewer than 90 days are not entitled to take paid sick leave.  All California employees are covered by the new law, including part-time, per diem, and temporary employees, even those employed by staffing agencies. This means, as the Labor Commissioner notes, “whoever is the employer or joint employer is required to provide paid sick leave to qualifying employees.”  The only exceptions are providers of publicly funded In-Home Supportive Services (IHSS) (though Assembly Member Gonzales yesterday introduced AB-11 to remove this exception); employees covered by collective bargaining agreements with specified provisions; and individuals employed by an air carrier as a flight deck or cabin crew member, if they receive compensated time off at least equivalent to the requirements of the new law.

• SUMMARY: Part-time, per diem, temporary and full time employees who would at least 30 days within a year in California must accrue or be granted the paid sick leave. Employees employed less than 90 days are not eligible to take paid sick leave.
  

Rate of Pay: The employee’s regular hourly rate. Rates of pay for employees with fluctuating pay (e.g., commission or piece rate) are calculated by dividing total compensation for the previous 90 days by the number of hours worked.

• SUMMARY: If an employee earns a commission, the amount earned in the period must be added to the hourly wages earned to determine the rate of pay for paid sick leave. For example: If any employee earns $10 per hour AND works 100 hours AND earns total commission during that period of $1,500, then ($1,000 + $1,500) divided by 100 = $2,500/100 = $25 per hour.
  

Timing of Payment: No later than the payday for the next regular payroll period after the sick leave was taken; but an employer can adjust the pay for the same payroll period in which the leave was taken if it wishes. For example, if the employee did not clock in for a shift and therefore was not paid for it but utilized paid sick leave, then the employer would have to pay not later than the following pay period and account for it in the wage stub or separate itemized wage statement for that following regular pay period.

Two Options for Employers. Employers have 2 options when determining how they will approach paid sick leave provided. These include Accrual and Lump Sum Grant Methods.

Accrual Method. Starting July 1, employees will earn at least one hour of paid leave for every 30 hours worked, which would work out to a little more than eight days a year for someone who works full time. Employers selecting this option: 

• May cap an employee’s total sick leave accrual at a maximum 48 hours or 6 days.
  
• May limit an employee’s use of paid sick days to 24 hours or 3 days in each year of employment.
  
• Must carry over all unused sick leave that the employee accrued under the statute w to the following year of employment. 
  
• Must provide employees hired within 12 months of their termination to regain their previously unused, accrued sick leave bank.
  

Lump Sum Grant Method. The full amount of accrued leave (no less than 24 hours or three days) must be available to a Qualified Employee at the beginning of the 12 month period. This would seem to mean that for Qualified Employees, as of July 1, the full 3 days/24 hours must be available for their use. For employers wishing to avoid the administrative burden of tracking accruals and carryover:

• The statute permits employers to provide the full allotment of sick leave (3 work days/24 hours) at the beginning of each year. 

Employers with Unlimited Time Off and PTO Plans? Not anymore. At least not when it comes to CA Paid Sick Leave. According to the Labor Commissioner, the new law requires that employers separately track sick leave accrual and use (and, it follows, comply with all other notice and posting requirements of the law).

• SUMMARY: If you have a PTO or unlimited time off plan and want to retain them, a potential option is to carve out 24 hours that are only to be used as paid sick leave and track them according to the requirements. Also be sure to draft verbiage into your policy that reflects this procedure. Otherwise, it will likely be better to have separate vacation and sick policies.

Paid Sick Leave and Termination. Unless offered by the employer, paid sick leave is not compensatory, thus does not have to be paid out at termination of employment. Sick leave that is attached to a PTO plan will continue to be treated as compensation, thus all accrued and unused PTO at termination being paid to the employee. 

The Wage Theft Prevention Act of 2011 will now require notices to include new language advising employees of their right to accrue and use paid sick-leave, be free from retaliation, and file a complaint for violations of the law. The Labor Commissioner will make available compliance notices under this section.

• ACTION ITEM: Update your sick leave policy including this verbiage and distribute to all employees. Be sure to have employees sign a Receipt of Acknowledgement.
  

Under Labor Code section 226, employers must provide employees with information detailing the amount of paid sick leave available on either the employee's itemized wage statement or in a separate writing provided on the designated pay date with the employee's payment of wages. Employers must display a poster notifying employees of their paid sick-leave rights. Willful violation of the posting requirements subjects the employer to a penalty of not more than $100 per offense.

• ACTION ITEM: Include the number of hours used and available on the paychecks.
  
• ACTION ITEM: Obtain and display a poster notifying employees of their paid sick leave rights.
  

Labor Code section 247.5 will require employers to retain, for at least three years, records documenting the hours worked, paid sick days accrued and paid sick days used by each employee. These records may be inspected by an employee or the Labor Commissioner.

• ACTION ITEM: Retain a record of paid sick days accrued/granted and used for every employee for a period of no less than 3 years.