Employer Services Advisory Bulletin
Employer
Alert: Final Guidelines Released for Complying with the San Francisco
Paid Sick Leave Ordinance
By Michelle
D. Fife and Stuart
W. Miller
[June 2007]
In December 2006, we issued an Employer
Alert explaining the requirements of Proposition F, the San
Francisco Paid Sick Leave Ordinance (PSLO). Beginning on Feb. 5,
2007 the PSLO requires all employers to provide paid sick leave
to virtually every employee who performs work in San Francisco,
including part-time and temporary workers hired through agencies.
Paid sick leave accrues at the rate of one hour for every 30 hours
worked. For employees working for an employer on or before Feb.
5, 2007, paid sick leave began to accrue on that date. For employees
hired after Feb. 5, 2007, paid sick leave begins to accrue 90 days
after the employee’s first day of work.
On June 4, 2007, the San Francisco Office of Labor
Standards Enforcement (OLSE) released final guidelines (“Rules”)
for the Paid Sick Leave Ordinance. The Rules complement “frequently
asked questions” (FAQs) issued by the OLSE. The eight Rules
and their corresponding FAQs are discussed below.
RULE 1: EMPLOYEE NOTIFICATION OF PAID SICK LEAVE USE
May employers require employees to provide
advance notification for use of paid sick leave?
An employer may require employees to give reasonable
notification of an absence from work for which paid sick leave is
or will be used; however, an employee need not explicitly request
the use of paid sick leave to have the absence covered by the PSLO.
The employer’s notification requirements must not be so onerous
that they deter employees from legitimate use of paid sick leave.
For example, an employer may reasonably require advance
notification of a pre-scheduled or foreseeable absence from work,
such as a doctor’s appointment or an ongoing injury or illness.
Policies or practices that require notification as soon as practicable
for an unforeseeable absence are generally considered reasonable.
It is generally also reasonable for an employer to require notification
of an unforeseeable absence two hours, or a time period less than
two hours, before the start of the employee’s work shift,
recognizing that there are emergency situations during which a two-hour
notification requirement would be unreasonable. Advanced notification
requirements of greater than two hours are presumptively unreasonable,
absent demonstration of a compelling justification for the longer
advance notice requirement.
RULE 2: EMPLOYER VERIFICATION OF PAID SICK LEAVE USE
May employers require a doctor’s note
or other verification of an employee’s use of paid sick leave?
Yes, an employer may take reasonable measures to verify
or document that an employee’s use of paid sick leave is lawful.
For example, while abiding by applicable federal,
state and local medical privacy laws, after an employee has used
paid sick leave, the employer may confirm that the employee’s
use of paid sick leave was for a proper reason and for a permitted
person.
Employers may require a doctor’s note or other
medical documentation for paid sick leave of more than three consecutive
work days (whether full or partial days). Requiring such verification
for paid sick leave of three or fewer consecutive work days is deemed
unreasonable. In a case of suspected sick leave abuse, an employer
may reasonably review the employee’s sick leave use with heightened
scrutiny.
An employer may require a doctor’s note or other
documentation for the use of paid sick leave to attend a medical
appointment, or if there is a clear instance or pattern of sick
leave abuse, even if the use of paid sick leave was for three consecutive
work days or less.
RULE 3: OTHER EMPLOYER REQUIREMENTS PERTAINING TO THE AMOUNT
OF PAID SICK LEAVE TAKEN
Can an employer require its employees to use
paid sick leave in one hour increments?
Yes, but an employer may also allow employees to use
paid sick leave in less than one-hour increments.
Can an employer require an employee to take
off a full day to use accrued paid sick leave?
Generally, a requirement that an employee take off
more hours than requested to receive medical care, treatment or
diagnosis would be unreasonable. However, an employer may require
an employee to use more hours of paid sick leave than the employee
needs or requests if the employer can verify that it had to pay
for a replacement employee for the longer period of time.
RULE 4: BREAKS-IN-SERVICE
When do employees begin to accrue paid sick
leave?
All employees working for an employer on or before
Feb. 5, 2007 began to accrue paid sick leave on that date. Employees
hired after Feb. 5, 2007 begin accruing paid sick leave 90 calendar
days after their first day of work.
Are employers required to pay employees for
unused paid sick leave when they quit, retire, or are fired?
No. However, if employers use Paid Time Off (PTO)
or vacation pay to comply with the PSLO, they need to comply with
other applicable laws that require the payout of PTO or vacation
pay upon separation from employment.
An employee who worked for an employer before Feb.
5, 2007, was separated from employment before that date and is rehired
after Feb. 5, 2007, must complete the 90-day eligibility period
before accruing paid sick leave. For employees who began work after
Feb. 5, 2007, were separated from employment before becoming eligible
to accrue paid sick leave and are rehired by the same employer within
one year of separation, the earlier period of employment counts
towards the 90-day eligibility period. An employee who separates
from employment after beginning to accrue paid sick leave and is
rehired within one year is not subject to the 90-day eligibility
period, but the employer is not required to reinstate the employee’s
previously accrued paid sick leave hours.
RULE 5: RATE OF PAY – PIECE RATE AND COMMISSIONED
EMPLOYEES
What is the sick leave rate of pay for employees
who are paid an annual salary rather than an hourly wage?
The sick leave rate of pay for employees who are
paid an hourly wage is the employee’s hourly wage. However,
when an employee is paid an annual salary rather than an hourly
wage, the sick leave rate of pay is determined as follows: first,
divide the annual salary by 52 to get the weekly salary. Then, divide
the weekly salary by the number of hours the employee is regularly
scheduled to work to determine the hourly pay rate. For employees
who are not exempt from the overtime requirements of the federal
Fair Labor Standards Act and California law, the weekly salary must
be divided by 40 or fewer hours, even if the non-exempt employee
regularly works more than 40 hours per week. For exempt employees,
the weekly salary should be divided by 40 hours, unless there is
evidence that the exempt employee’s regular work week is less
than 40 hours. In such instances, the weekly salary should be divided
by the number of hours worked during a regular work week.
Should tips be included when calculating
the sick leave rate of pay for tipped employees?
No. The sick leave rate of pay is based only on compensation
paid by the employer.
When must employees be paid for sick leave?
Generally, sick leave must be paid no later than the
payday for the next regular payroll period after the sick leave
was taken by the employee. However, if the employer has a reasonable
verification requirement, it is not obligated to pay sick leave
until the employee has complied with the verification requirement.
What is the sick leave rate of pay for employees
paid by a piece rate or commission?
For those employees, the sick leave rate of pay is
calculated by dividing the employee’s total earnings in base
wages and commissions or piece rates for the prior calendar year
by the total hours worked as a commissioned or piece rate employee
during the prior calendar year. If the employee does not have a
prior calendar year’s work history, divide the employee’s
total earnings in base wages and commissions or piece rate since
the employee’s date of hire by the total hours worked as a
commissioned or piece rate employee since that date. For commissioned
or piece rate employees who are exempt, base the sick leave rate
of pay on a 40-hour work week absent evidence that the employee’s
regular work week is less than 40 hours. Alternatively, employers
who keep records of hours worked by exempt employees may calculate
the employee’s sick leave rate of pay based on actual hours
worked.
In these calculations, the employer is not required
to pay a sick leave rate of pay greater than two times the San Francisco
minimum wage.
RULE 6: ALTERNATIVE AND LIMITED SAN FRANCISCO WORK SCHEDULES
If an employer is based outside of San Francisco
but has employees who perform work in San Francisco, do the employees
accrue paid sick leave for hours worked in San Francisco?
Yes. All employees who work in San Francisco, including
on a part-time or temporary basis, accrue paid sick leave for those
hours worked in the city, regardless of where their employer is
located. However, employees who work in San Francisco on an occasional
basis or only to attend or present at conventions or conferences
are not covered by the ordinance if they do so for fewer than 56
hours within a calendar year.
Employees who live in San Francisco and perform work
for an employer from home, including telecommuting, are covered
by the PSLO for all hours that they perform work from home, so long
as they perform 56 or more hours of work in San Francisco within
a calendar year.
Employees who work outside of San Francisco and who
travel through San Francisco, but do not stop in the city as a purpose
of their work, are not covered by the PSLO. However, employees who
travel through San Francisco, and stop in San Francisco as a purpose
of their work (e.g., to make pickups or deliveries), are covered
by the PSLO for all hours worked in San Francisco, including travel
within the city to and from the work site, so long as the employee
performs 56 or more hours of work in San Francisco within a calendar
year.
RULE 7: SMALL BUSINESS DEFINITION: FLUCTUATING BUSINESS
SIZE
How does an employer determine whether it
qualifies as a small business (less than 10 employees) if its number
of employees fluctuates throughout the year?
A “small business” is an employer for
which fewer than 10 persons, including part-time and temporary employees,
work for compensation during a given week. Under the PSLO, small
businesses in San Francisco may cap the accrual of sick leave hours
at 40 hours of paid sick leave per employee, while employers with
10 or more employees may cap sick leave accrual at 72 hours per
employee. (When an employee uses some of the capped sick leave,
the employee resumes accruing sick leave, up to the cap.) In situations
in which the number of employees fluctuates above and below 10 per
week over the course of a year, the OLSE calculates business size
for the current calendar year based upon the average number of persons
who worked for compensation per week during the preceding calendar
year. For new employers, the OLSE calculates business size for the
current calendar year based upon the average number of persons per
week who worked for compensation for the first 90 days after its
first employee began work.
RULE 8: ACCRUAL OF PAID SICK LEAVE – EXEMPT EMPLOYEES
Does sick leave accrue on overtime hours worked?
Paid sick leave accrues on all hours worked, including
overtime hours worked, for non-exempt employees. However, paid sick
leave accrues for exempt employees based on a 40-hour work week,
absent evidence that the exempt employee’s regular work week
is less than 40 hours. If there is evidence that the exempt employee’s
regular work week is less than 40 hours, paid sick leave accrues
based upon that regular work week.
EMPLOYERS’ TO DO LIST:
What steps should employers take right now?
It is critical that employers re-evaluate their current
sick leave policies and how they classify their employees to be
certain that they comply with the PSLO and its Rules.
- Review policies regarding notification and verification of
paid sick leave use.
- Determine whether current policies provide the required accrual
rates for new hires and employees with breaks in service.
- Calculate the proper sick leave rate of pay for employees who
are paid an annual salary, rather than an hourly wage.
- Determine when current policies require that employees be paid
for sick leave.
- Calculate the proper sick leave rate of pay for employees who
are paid in whole or part by a piece rate or commission.
- If your company is based outside of San Francisco, determine
whether you have employees who work in San Francisco on a part-time
or temporary basis who are covered by the PSLO.
- Determine whether your business qualifies as a “small
business.”
- Determine which employees accrue sick leave hours for overtime
hours worked.
For further information regarding
the San Francisco Paid Sick Leave Ordinance and the Rules implementing
it, please contact:
Davis Wright Tremaine
has employment and labor lawyers in Alaska, Oregon, Washington state,
California and Washington, D.C. We represent many clients nationally.
For a specific referral for a DWT employment and labor attorney
in your state, please contact the above attorney. Thank you.
This advisory is a publication of the Employer Services Department of Davis Wright Tremaine LLP. Our purpose in publishing this advisory is to inform our clients and friends of recent developments in employment law. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may be given only in response to inquiries regarding particular situations.
Copyright © 2007, Davis Wright Tremaine LLP.
return to Advisory Bulletins main page
|
