United States: California Enacts Mandatory Paid Sick Leave Law

On September 10, 2014, California Governor Jerry Brown signed into law Assembly Bill 1522, known as the Healthy Workplaces, Healthy Families Act of 2014. With a few exceptions, the new law requires all employers to provide employees performing work in California with paid sick leave, beginning on July 1, 2015.

"Employer" means any person or entity employing another person under any appointment or contract of hire. There is no exception for "small" employers.

Employees not covered by the new law are employees who are covered by a valid collective bargaining agreement (CBA) that:

  1. provides for the wages, hours of work and working conditions;
  2. provides for paid sick days or a paid leave or paid time off policy that allows the paid time off to be used as sick days;
  3. requires final and binding arbitration of disputes concerning paid sick time;
  4. provides for premium wages for all overtime hours worked; and
  5. provides a regular hourly rate of pay that is not less than 30 percent higher than the state minimum wage.

There are also specific exemptions for employees in the construction industry who are covered by a valid CBA, as well as for employees who are providers of in-home supportive services to aged, blind or disabled individuals who cannot perform the services themselves and who cannot remain in their places of residence without having such services performed for them. (A list of the services that may be considered in-home supportive services can be found at California Welfare and Institutions Code section 12300.)

Employers may have sick leave policies that provide employees with greater benefits than those mandated by the new law. This Alert focuses on the minimum requirements of the new law. An employer need not provide more paid sick time to its employees if its existing paid time off policy satisfies the accrual, carryover and use requirements of the new law, and provides no less than 24 hours of paid sick leave or "equivalent" paid time off (e.g., PTO) for use in a 12-month period.

Unless an exception applies, beginning on July 1, 2015, all employees working in California will begin accruing one hour of paid sick leave for every 30 hours worked, provided that such employee has worked in California for at least 30 or more days within one year of his or her commencement of employment. Employees who are exempt under the administrative, executive or professional exemptions are deemed to work 40 hours per week, unless their normal work week is less than 40 hours, in which case the exempt employee will accrue sick time based on that normal workweek. An employee who is employed as of July 1, 2015, but has not yet worked 30 or more days will not become eligible until he or she has done so. The new law requires that if accrued, 24 hours (or three days) of paid sick leave must carry over to the next calendar year. Employers may also limit total accrual of paid sick leave to 48 hours, or six days. Similar to vacation accrual caps that are permitted under California law, if an employee has accrued 48 hours of paid sick time and has not used any of it, he or she will not accrue any additional paid sick time until he or she uses some of the "banked" sick leave time. Employers may, at their election, set a higher "cap" on the number of hours or days of sick leave time that may be accrued. An employee who has accrued 48 hours of sick time and has not used any of it in a one-year period (see below for measurement of the one-year period) is entitled to carry over 24 hours of paid sick time.

The employer may set a reasonable minimum increment for the use of paid sick time. This increment cannot exceed two hours. Employees are entitled to use accrued sick time beginning on the 90th day of employment; thereafter, they are entitled to use sick time as it accrues. In short, it is permissible for an employer to require new employees to be employed for at least 90 days before using any accrued sick time.

As noted above, employers may limit total aggregate accrual of paid sick time to 48 hours (six days). They may also limit employees' use of paid sick leave to 24 hours, or three days, for each year of employment (measured by hire anniversary date), or during a calendar year or other 12-month period. The employer should decide which 12-month measure it will employ and this should be consistent for all employees.

The new law requires employers to provide a written notice at the time of hiring that includes discussion of employees' rights to accrue and use accrued sick leave, and that they may not be terminated or retaliated against for using or requesting the use of such paid sick time. The written notice also has to inform the employee of his or her right to file a complaint against any employer who retaliates. The employer is also obligated to notify employees in writing within seven calendar days of any changes to the information included in their original hiring notice, with a few exceptions (state or municipal employees, exempt employees and CBA employees). The new law also requires employers to provide covered employees with written notice each pay period stating the amount of paid sick leave or paid time off available. The written notice may be included on the employees' itemized wage statements or may be a separate writing, provided on pay dates.

The rate of pay for paid sick time will be the employee's hourly wage. If an employee had differing rates of pay during the 90-day period prior to his or her use of accrued sick leave, was paid by commission or piece rate or was a salaried nonexempt worker, then the rate of pay is calculated by dividing the employee's total wages, exclusive of overtime, by the total hours worked in the 90-day period.

In seeking to use accrued paid sick time, employees must request use of paid sick time orally or in writing and are required to provide reasonable advance notification when the need for the use of leave is foreseeable; otherwise, they are required to provide notice "as soon as practicable." Paid sick leave may be used for diagnosis, care or treatment of an existing health condition or preventive care for the employee or his or her family member. It may also be used for an employee who is the victim of domestic violence, sexual assault or stalking. Employers may not deny employees the right to use accrued sick days and may not otherwise discriminate against an employee for exercising the right to use accrued sick days. The statute does not contain any provision expressly permitting employers to deny use of accrued sick days for business reasons. While it is hoped that regulations allowing employers to insist upon medical verification of sick days used for "diagnosis, care, or treatment of an existing health condition" will be implemented prior to the July 2015 effective date of the statute, no such regulations are in place yet. If paid sick days were unlawfully withheld, the administrative penalty shall be the value of the sick days withheld multiplied by three, or $250, whichever is greater, but not exceeding $4,000 in aggregate penalties. If the violation results in other harm to the employee (or to a person who supported the employee), the administrative penalty shall also include a penalty of $50 per day that the violation occurred or continued, again with a $4,000 aggregate maximum administrative penalty.

The California Labor Commissioner will be developing a workplace poster that describes employees' paid sick leave rights. Employers are required to post the poster in a conspicuous place in each of their California workplaces. An employer who wilfully violates the posting requirement is subject to a civil penalty of up to $100 per each offense.

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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