United States: California Employers May Get Ill Over California’s New Mandatory Paid Sick Leave Law

Last Updated: September 18 2014
Article by Brandon T. Willenberg

The collective sobbing you may have recently heard from the west coast of the United States was that of California employers in response to Governor Jerry Brown's September 10, 2014 signing of AB 1522 – California's new paid sick leave law called the Healthy Workplaces, Healthy Families Act of 2014. California employers already have myriad employment laws to track, comply with and administer. And given the sheer volume and complexity of California's employment laws, strict compliance is often challenging enough for employers. The new paid sick leave law will add to that challenge.

The new paid sick leave law will go into effect on July 1, 2015. Employers, with at least one employee who works more than 30 days in a year in California, must provide up to 24 hours of paid sick leave in a calendar year to current and new employees. Employees, including part-time and temporary, who work more than 30 days in a year are entitled to earn sick leave. However, the new law excludes certain types of employees:

  1. An employee covered by a valid collective bargaining agreement if the agreement expressly provides for paid sick days or a paid leave or paid time off policy that permits the use of sick days for those employees;
  2. An employee in the construction industry covered by a valid collective bargaining agreement if the agreement expressly provides, in part, for regular hourly pay of not less than 30 percent more than the state minimum wage rate;
  3. A provider of in-home supportive services; and
  4. An individual employed by an air carrier as a flight deck or cabin crew member.

But there's more, much more. The following are some of the key provisions and requirements under the new law:

  • An employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the commencement of employment is entitled to paid sick days.
  • An employee accrues paid sick days at the rate of one hour per every 30 hours worked.
  • Exempt employees accrue sick days based on the lesser of their normal work schedule or a 40-hour workweek.
  • An employee can use accrued paid sick days after being employed for 90 days, after which day the employee may use paid sick days as they are accrued.
  • Accrued paid sick days carry over to the following year of employment, but an employer can limit an employee's use of paid sick days to 24 hours or three days in each year of employment. However, no accrual or carry over is required if the full amount of leave is received at the beginning of each year. An employer is not required to provide additional paid sick days if the employer has a paid leave policy or paid time off policy that makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in the new law, and the policy does either of the following: (1) Satisfies the accrual, carry over, and use requirements of this section, and (2) Provides no less than 24 hours or three days of paid sick leave, or equivalent paid leave or paid time off, for employee use for each year of employment or calendar year or 12-month basis.
  • An employer can cap the sick day accrual at 48 hours or 6 days, provided that it does not otherwise limit the employee's rights to accrue and use paid sick leave.
  • An employer is not required to provide compensation to an employee for accrued, unused paid sick days upon termination, resignation, retirement, or other separation from employment. However, if an employee separates from an employer and is rehired by the employer within one year from the date of separation, previously accrued and unused paid sick days must be reinstated. The employee is then entitled to use those previously accrued and unused paid sick days and to accrue additional paid sick days upon rehiring.
  • An employer may lend paid sick days to an employee in advance of accrual, at the employer's discretion and with proper documentation.
  • An employer must provide written notice to an employee that sets forth the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave. This notice can be provided on an itemized wage statement or in a separate written notice provided to the employee with his/her wage statement.
  • An employee may determine how much paid sick leave he or she needs to use, provided that an employer may set a reasonable minimum increment, not to exceed two hours, for the use of paid sick leave.
  • The rate of pay is the employee's hourly wage. If the employee in the 90 days of employment before taking accrued sick leave had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee, then the rate of pay will be calculated by dividing the employee's total wages, not including overtime premium pay, by the employee's total hours worked in the full pay periods of the prior 90 days of employment.
  • If the need for paid sick leave is foreseeable, the employee must provide reasonable advance notification. If the need for paid sick leave is unforeseeable, the employee must provide notice of the need for the leave as soon as practicable.
  • 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.
  • An employer must display a poster in a "conspicuous place" containing information about the accrual and use of sick days. Good news here though, the Labor Commissioner is supposed to create a poster containing this information and make it available to employers. OK, so maybe not good news, but I'm just trying to find the silver lining in all of this.

And for you out of state employers, with only a few employees in California, who might be thinking "this law can't possibly apply to me all the way over here in [INSERT THE NAME OF THE STATE, OTHER THAN CALIFORNIA, WHERE YOUR MAIN BUSINESS OPERATIONS ARE]," think again. If you have employees in California, then this new law is going to apply to your California employees as well.

Note that I said, these are "some" of the key provisions. There is a lot more going on in the law, which we encourage you to read. You should also then review your sick leave and/or PTO policies, including with your trusted employment counsel, to determine if and how to revise them to be in compliance by next year. In local jurisdictions, which already have paid sick leave ordinances like San Francisco, you should also consider how this new law squares with those ordinances – yet another compliance challenge.

Speaking of compliance challenges, this new law also provides a good reminder to CA employers and even those employers based in other states, but with CA-based employees, that California's employment laws are often times unique and more comprehensive and complex than similar federal laws or other states' laws. For example, non-compete restrictions are void under California law, California has its own FMLA law called the California Family Rights Act, and California's Pregnancy Disability Leave Law, just to name a few, and thus even more reason to review your employment agreements, employee handbooks, and policies to make sure you are in compliance with California law.

Well, at least the weather in California is great, right?

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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