California Enacts Mandatory Paid Sick Leave Law

IMPORTANT NOTE

On July 13, 2015, California Governor Jerry Brown signed into law urgency legislation amending the Healthy Workplaces, Healthy Families Act of 2014. The new amendments took effect as of July 13, 2015. The amendments clarify several key aspects of the law, including eligibility requirements, methods for satisfying the accrual requirements, limits to the use of paid sick leave, the calculation of sick pay, and recordkeeping requirements. 

Employers are urged to consult our advisory discussing these amendments which can be found here. Given the complexity of the law and these amendments, prudent employers should also continue to seek guidance from counsel to ensure they are in compliance.

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California Governor Jerry Brown has signed into law the Healthy Workplaces, Healthy Families Act of 2014, which requires employers to provide almost all California employees with three paid sick days per year. Although many cities already have such laws, California is only the second state (joining Connecticut) to enact a state-wide requirement. The law will become effective on Jan. 1, 2015, with accrual implementation set to begin on July 1, 2015, but employers should begin preparing to comply.

Recommended Action to Take In Advance of The Effective Date

• Review and be prepared to revise, if necessary, existing paid sick leave or PTO policies and procedures to ensure that they meet the requirements of the Act (remembering that California’s “kin care,” family leave (“CFRA”), and pregnancy disability laws all remain in effect and unchanged by the Act—and remembering that PTO is considered to be either all vacation or all sick leave, whichever is more advantageous to the employee under the circumstances). 
• Review and be prepared to revise, if necessary, attendance guidelines and discipline policies in order to avoid retaliating against employees who take time off under the Act. (This will be especially challenging for employers wanting to maintain existing sick leave or PTO policies, and employers wanting to apply existing attendance rules to time that is taken off other than under the Act.)


• Prepare to comply with notice, posting, and record-keeping obligations.


• Ensure that employee benefits and payroll systems are ready to calculate, track, and detail accrual and use of paid sick time.


• Review the Wage Theft Prevention Notice, and be prepared to revise it to reflect the requirements of the Act.


• Be prepared to ensure that itemized wage statements (pay stubs), or some other form of written notice, will be provided properly. (This is a good opportunity to verify that wage statements comply with all of the other requirements of California law.)


• Train supervisory and managerial employees, as well as HR and payroll personnel, on the requirements of the Act.

Summary of The Act

• Covered Employers: All employers regardless of size or status, who employ at least one employee who works more than 30 days in a year in California.


• Covered Employees: Any employee who works more than 30 days in a year in California, including part-time, temporary, and seasonal employees, with the exception of: (a) employees covered by a collective bargaining agreement that provides paid leave and meets other minimum requirements; (b) on-site construction employees covered by a collective bargaining agreement that meets certain requirements; (c) most in-home supportive service employees; and (d) airline flight deck and cabin crew employees covered by the Railway Labor Act provided that they receive compensated time off meeting certain requirements.


• Accrual Rate: Beginning on July 1, 2015, or on their 30th day of employment in California (whichever comes first), covered employees accrue 1 hour of paid sick time for every 30 hours worked. Exempt employees accrue sick time based on the employee’s normal work week or a 40-hour work week, whichever is less.


• Accrual Cap: The accrual of paid sick time can be capped at 48 hours (6 days). 


• Use of Sick Time: Employers can restrict the use of accrued paid sick time to (a) following the 90th day of employment for new hires; and (b) 24 hours (3 days) per year. Employees must be allowed to use accrued sick time in increments as small as 2 hours.


• No Pay Out: There is no requirement that employers pay out unused sick time on termination.


• Permissible Uses: Employees may use accrued paid sick time for their own illness or preventive care, or for the illness or preventive care of a “family member.” Employees who are victims of domestic violence, sexual assault, or stalking can use paid sick time to seek aid, treatment or assistance related thereto.


• Eligible Family Members: “Family member” is broadly defined: (a) children—biological, adopted, or foster child, stepchild, legal ward, or a child to whom the employee stands in loco parentis, regardless of age; (b) spouse or registered domestic partner; (c) grandparents or grandchildren; (5) siblings; and (6) parents—biological, adoptive, or foster parent or stepparent, legal guardian of the employee or the employee’s spouse or registered domestic partner, or a person who stood in loco parentis to the employee when the employee was a minor child.


• No Retaliation or Discrimination: Employees cannot be disciplined, or threatened with discipline (such as by including these absences in an attendance policy that could lead to discipline) for using the paid sick leave provided by the Act. In addition, there is a rebuttable presumption of retaliation when an employee suffers adverse action within 30 days of opposing a policy, practice or act of the employer that the employee considers unlawful under the Act, or the employee files a complaint with the Labor Commissioner or cooperates in an investigation.


• Pay Stub Requirement: Employers must convey to each eligible employee on each pay stub, or in a writing that accompanies each pay check, the total paid sick leave hours available to him or her.


• Enforcement: The Act can be enforced either by the Labor Commissioner or by private litigation under the Private Attorney General Act. Employees can be granted reinstatement, back pay, and attorneys’ fees, in addition to civil penalties up to $4,000 per employee.


• Additional Requirements:
  • The Labor Commissioner will create a notice that employers will be required to post.
  
  
  • Employers must include detailed information about paid sick leave under the Act in the Wage Theft Prevention Notice that California law requires be provided to all newly hired non-exempt employees not covered by a collective bargaining agreement.
  
  
  • Employers must keep records for three years. 
  
  
  • Employers cannot require employees who take paid sick leave under the Act to find a replacement worker.
  
  
  • Employees who separate and are rehired within one year (for example, seasonal employees) must have their accrued sick pay restored and immediately available for use.
  
  
  • For employees with fluctuating hourly wages, a weighted average calculation of pay over 90 days is required.
  
  
  • Employees can be required to provide notice of use of sick days if foreseeable and if not foreseeable, as soon as practicable.
  
  
• Unanswered Questions: There are several questions about the Act that are not yet answered. It is hoped that guidance will be forthcoming in the coming months.
  • For purposes of accrual (1 hour of sick leave for every 30 hours worked), do overtime hours count?
  
  
  • Does an employee’s eligibility for coverage under the Act begin after the employee has actually worked on 30 days or after 30 days of employment?
  
  
  • Can existing employees use paid sick leave as soon as it accrues or do they need to wait until 90 days after July 1, 2015? 
  
  
  • For purposes of both employer coverage under the Act (30 days in a year worked in California), and employee use of paid sick leave (capped at 24 hours in a year), is “year” a calendar year, an employment year, or a year beginning every July 1?
  
  
  • What proof can the employer require that paid sick leave was used for a proper purpose?
  
  
  • Regarding the notice employees can be required to provide of their use of paid sick leave, what notice is “practicable”? Will employers be able to apply even-handed policies requiring a certain amount of notice?

DWT Guidance

The full text of the Act can be read here. For guidance on complying with Act, please contact any of our California employment lawyers.