United States: Amendment To California's Sick Leave Law: The Healthy Workplaces, Healthy Families Act Of 2014

Keywords: emergency amendment, sick leave law

Governor Jerry Brown has signed an emergency amendment to California's new sick pay law, codified in Labor Code sections 245 et seq., to clarify and modify a number of the requirements of the law. The bill went into effect immediately upon Governor Brown's signature on July 14, 2015, as an urgency statute.

Under the amendment, as of July 1, 2015, employers must provide paid sick leave to all employees who work in California for the same employer for 30 or more days within one year from commencing employment. Exempt and nonexempt employees are covered, unless their employment is governed by a collective bargaining agreement or one of a few exceptions.

Purposes For Which Sick Leave Can Be Used

Under the law, employees may use paid sick leave for:

  • The diagnosis, care or treatment of an existing health condition of, or preventative care for:

    • An employee or
    • An employee's family member, which includes spouses, parents, in-laws, registered domestic partners, grandparents, grandchildren, siblings and children (including biological, adopted, foster children, stepchildren, legal wards, or children to whom the employee stands in loco parentis); and/or
  • Seeking relief from domestic violence, sexual assault or stalking, including medical attention and psychological counseling.

The law does not require employees to provide employers with medical verification to take sick leave. Instead, sick leave must be provided upon oral or written request of the employee. If the need for leave is foreseeable, the employee must give reasonable advance notice; where the need is not foreseeable, the employee need only give notice as soon as practicable.

Three Ways To Provide Sick Leave

There are three alternative ways in which employers can comply with the requirements of the law.

The Accrual Method

  • Accrual Requirements:

    • Employees must be permitted to accrue paid sick leave at a rate of no less than one hour per 30 hours worked (including overtime), beginning at the commencement of employment or on July 1, 2015, whichever is later. (An exempt employee is deemed to work 40 hours per workweek, unless the employee's normal workweek is less than 40 hours, in which case the employee may accrue paid sick days based upon his or her normal workweek.)

      The requirement works out to a little more than eight days of sick leave per year for employees who work full time (i.e., 40 hours per week).
    • Alternatively, employers may use a different accrual rate, provided that employees accrue paid sick leave on a regular basis and have no less than 24 hours, or three days, of accrued sick leave or paid time off available for use by the 120th calendar day of employment, each calendar year or in each 12-month period.

      This alternative approach enacted by the amendment relieves employers of the obligation to track the employee's actual hours worked in order to accrue sick leave, so long as the employee accrues 24 hours of leave by the 120th day of employment, each calendar year or each 12-month period.
  • Cap on Accrual: Employers may cap an employee's total sick leave accrual at 48 hours or six days at any one time, provided that an employee's right to accrue and use paid sick leave are not otherwise limited. Employees who do not work a typical eight-hour day are to be afforded the more generous of the two options. Thus, an employee who typically only works six hours per day gets to take up to 24 hours (four days on their schedule) of sick leave per year, while an employee who works 10- hour days may take only three days (30 hours) per year.
  • Carry-Over of Accrued Sick Leave: Accrued unused sick days must carry over to the following year of employment, though the total amount of accrued sick days can be capped, as described in subsection b. above.
  • Use of Sick Leave: Employees are entitled to use accrued sick leave beginning on the 90th day of employment. However, the amount of paid sick leave employees can use in each year of employment, calendar year or 12- month period can be limited by employers to 24 hours or three days; employers may also set a reasonable minimum increment not to exceed two hours for the use of paid sick leave.
  • Pay-Out Upon Termination: Employers are not required to pay out any accrued, unused sick leave upon an employee's termination, resignation, retirement or other separation from employment. However, if an employee separates from employment and is rehired by the employer within one year from the date of separation, the previously accrued and unused sick leave must be reinstated.

The "Up Front" Method

The second option for providing paid sick leave is the "front loading" method in which the employer provides employees with at least three days, or 24 hours, of sick leave or paid time off (i.e., the full amount of leave) at the beginning of each year of employment, calendar year or 12- month period. Under the "up front" method, no accrual or carry over of the sick leave is required because the full amount of leave is received at the beginning of each year. For initial hires, the employer can require the employee to wait to use the sick leave beginning on the 90th day employment.

The Employer PTO Or Paid Leave Policy

Employers that have paid time off (PTO) or paid leave policies are not required to provide additional sick leave, as long as the employer's existing (or newly created) policy makes available an amount of leave that may be used for the same purposes and under the same conditions as the required sick leave, and the policy satisfies one of the following conditions:

  • The accrual, carry over and use requirements of the statute.
  • The employer's policy provided paid sick leave or paid time off to a class of employees before January 1, 2015, pursuant to which employees accrued, on a regular basis, no less than one day or eight hours of sick leave or paid time off within three months of employment of each calendar year, or each 12-month period, and the employee was eligible to earn at least three days, or 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 it had in place prior to January 1, 2015, the employer must comply with any accrual method described above or provide the three days, or 24 hours, of paid sick days or paid time off to employees at the beginning of each year of employment, calendar year or 12-month period.

However, if the employer uses a PTO or paid leave policy to satisfy the requirements of the Sick Leave Law, the employer is usually required to pay out any accrued PTO or paid leave upon termination of employment. The amendment to the statute clarifies that an employer is not required to reinstate accrued paid time off to an employee who was paid out at the time of termination, resignation or separation of employment and is rehired within one year of his or her date of separation from employment.

Other Requirements

Rate Of Pay

Employers may calculate the rate at which paid sick leave must be paid using the methods set forth below.

  • For nonexempt employees, paid sick time may be calculated either:

    • in the same manner as the employee's regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek (i.e., the total compensation earned during the workweek divided by the total hours worked during that workweek) or
    • by dividing the employee's total wages, not including overtime premium pay, in the full pay periods of the prior 90 days of employment, by the number of hours worked during that period.
  • For exempt employees, paid sick time is calculated in the same manner as the employer calculates wages for other forms of paid leave time (such as PTO or vacation).

Timing For Payment

Sick leavemust be paid no later than the payday for the payroll period following when the leave was taken.

Notice Requirements

Beginning on January 1, 2015, employers must satisfy certain notice requirements relating to the new paid sick leave entitlement. These requirements apply to all employees, except certain public employees, employees exempt from overtime laws and those covered by certain collective bargaining agreements.

  • Posting Requirements: Employers must display a poster, in a conspicuous place at the workplace, containing the following information regarding the employer's sick pay policy: (i) an employee is entitled to accrue, request and use paid sick days; (ii) the amount of sick days provided; (iii) the terms of use of paid sick days; (iv) retaliation or discrimination against an employee who requests paid sick leave is prohibited; and (v) the employee has the right to file a complaint against an employer who retaliates.
  • Notices to Employees: In addition, upon hiring or within seven days of any change to the employers' sick leave policy, employers must provide employees with an individualized "Notice to Employee" that includes the relevant information regarding the employer's paid sick leave policy.

Documentation Of Sick Leave Days

The employer must notify employees of the amount of paid sick leave an employer provides, or of the amount of paid days off provided in lieu of sick leave, on either the employee's itemized wage statement or in a separate writing provided to employees on paydays. If an employer provides unlimited paid sick leave or paid time off to employees, the employer may indicate on the notice or itemized wage statement that the employee's entitlement is "unlimited."

Record Keeping Requirements

Employers must retain records of each employee's hours worked and paid sick days accrued for three years, and they must also make those records available for inspection by the employee if requested.

If the employer fails to maintain adequate records, the new law presumes that the employee is entitled to the maximum number of hours accruable under the Act unless the employer can show otherwise by "clear and convincing evidence."

Retaliation

Employers may not retaliate or discriminate against employees who (i) exercise the right to use paid sick leave, (ii) cooperate in an investigation or prosecution of an alleged violation of the Act or (iii) oppose a policy or practice prohibited by the Act.

Originally published July 29, 2015

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© Copyright 2015. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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