San Francisco Employer Alert: New Ordinance Requires Paid Sick Leave

What’s all the buzz about?

On Nov. 7, 2006 San Francisco voters passed Proposition F, requiring all employers to provide paid sick leave for employees working in San Francisco. Proposition F’s sick leave entitlements are a broad expansion of employee leave rights that apply to virtually every employee working in the city, including part-time and temporary workers hired through agencies. The essential components of Proposition F, as well as a helpful checklist, are provided below.

When does the law take effect?

Proposition F goes into effect on Feb. 5, 2007. However, because the requirements of this new law may involve significant administrative and budgetary considerations, employers should evaluate their compliance obligations as soon as possible. Fortunately, the law has prospective effect only.

Which employers does the law impact?

Proposition F broadly defines “employer” to include any person, including corporate officers or executives, who directly or indirectly or through an agent or any other person, including through the services of a temporary services or staffing agency or similar entity, employs or exercises control over the wages, hours, or working conditions of an employee. For employers covered by this law, the provisions only apply to those employees who work in San Francisco.

Employers who are signatories to collective bargaining agreements are not required to apply the requirements of this new law to bargaining unit employees if the collective bargaining agreement expressly waives the law’s requirements in “clear and unambiguous terms.”

How much paid sick leave must be granted?

Proposition F’s sick leave accrual provisions mandate that for every 30 hours worked (after paid sick leave begins to accrue for an employee), the employee shall accrue one hour of paid sick leave. The law’s accrual caps vary depending on the number of employees working in the city for the company. Employers with fewer than 10 employees may cap the accrual at 40 hours of paid sick leave. Employers with more than 10 employees may only cap the accrual at 72 hours of paid sick leave. The law extends an invitation to employers to exceed these accrual requirements if they so choose.

Paid sick leave under the new law must accrue in one-hour increments. Additionally, accrued sick leave must carry over from year to year. That is, employers may not enforce “use it or lose it” policies. Upon an employee’s termination, resignation, retirement, or other separation from employment, the employer is not required to “cash out” the employee for accrued and unused sick leave.

Employees hired after Feb. 5, 2007 do not begin to accrue paid sick leave until after 90 days of employment. This provision is particularly significant for employers who utilize temporary employees.

When can an employee use paid sick leave?

Proposition F permits an employee to use all or any percentage of paid sick leave for an illness, injury or for the purpose of receiving medical care, treatment, or diagnosis. Employees may also use paid sick leave to aid or care for covered “persons” under the same circumstances. Covered persons may include a child, parent, legal guardian or ward, sibling, grandparent, grandchild, spouse, registered domestic partner, child of a registered domestic partner, or a “designated person.” The employee relationships covered by the new law may be the result of adoption, step-relationships and foster care relationships and need not be biological.

If an employee has no spouse or registered domestic partner, the employee may designate one person as to whom the employee may use paid sick leave to aid or care for the person. The employer must give the employee an opportunity to make this designation no later than 30 hours after paid sick leave begins to accrue. The employee has a window of 10 work days to make the designation. Thereafter, the employer must annually provide another 10-work day window of opportunity to make the designation or alter the previous designation. Although the law does not require the employer to document this designation process, some form of documentation should be incorporated into the employer’s policies and procedures.

Employers may require employees to provide “reasonable notification” of an absence from work for which sick leave will be used. The law also provides that an employer may take “reasonable measures” to verify an employee’s use of paid sick leave. Proposition F does not define the terms “reasonable notification” and “reasonable measures.” Further guidance regarding the meaning of these terms may be forthcoming.

Lastly, employers who enforce absence control policies may not count paid sick leave taken pursuant to this new law as an absence resulting in discipline, discharge, demotion, suspension, or any other adverse action. The law also prohibits employers from retaliating against an employee for exercising their paid sick leave rights.

What are the posting and record-keeping requirements?

Proposition F requires every employer to post a notice informing employees of their paid sick leave rights under the new law. The notice must be in English, Spanish, Chinese, and any language spoken by at least 5 percent of the employees at the workplace or job site . San Francisco’s Office of Labor Standards Enforcement will make these notices available by no later than Feb. 5, 2007. However, the agency recently reported they expect to make these notices available on their web site during the first or second week of January 2007. (www.sfgov.org/olse) Failure to post the notice may result in administrative penalties.

Employers are required to retain records documenting hours worked and paid sick leave taken by employees for a period of four years. If an employer fails to retain these records, it shall be presumed that the employer violated the law absent clear and convincing evidence establishing an alternate conclusion.

How will the new law be enforced?

Proposition F provides for administrative enforcement through the San Francisco Office of Labor Standards Enforcement, as well as private civil enforcement. Remedies may include penalties equal to three times the amount of sick pay denied any employee, additional administrative penalties, reinstatement, back pay, payment of any sick leave unlawfully withheld, interest, and attorney’s fees and costs.

What steps should employers take right now?

A critical first step for employers in San Francisco is to carefully evaluate current sick leave policies to determine whether they comply with the new law. Proposition F has broad implications that extend beyond employee leave protections encompassed by other state and federal laws. For this reason, employers should undertake a thorough review process and should do so as soon as possible. The following steps may be helpful.

• Determine whether current policies provide the required accrual rates. Employers should ensure that part-time and temporary employees are included.
  
  
• Determine whether current policies include the appropriate family members and “designated person” provisions in the new law.
  
  
• Determine whether current policies allow employees to carry over accrued but unused sick leave hours.
  
  
• Determine whether current policies allow employees to use 100 percent of their paid sick leave to care for a covered person.
  
  
• Determine whether collective bargaining agreements contain the necessary “clear and unambiguous” waiver provisions.
  
  
• Determine whether current policies provide sick leave accrual to new hires within 90 days of commencing employment.
  
  
• Determine whether current attendance, discipline or other policies contain provisions that violate the new law.
  
  
• Determine whether current record-keeping procedures satisfy the new law’s requirements for hours worked and sick leave used.