California Healthy Workplace Healthy Family Act of 2014

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1 Presented by J. Gregory Grisham, Esq Leitner, Williams, Dooley & Napolitan, PLLC

2 References 1. California Department of Industrial Relations website and related materials (slides 2-25) 2. CalSHRM Legislative Report July 2015 (slides 26-44)

3 An employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the beginning of employment, is entitled to paid sick leave. Employees, including part-time and temporary employees, will earn at least one hour of paid leave for every 30 hours worked. Accrual begins on the first day of employment or July 1, 2015, whichever is later. The Law took effect on January 1, 2015.

4 Exceptions: Employees covered by qualifying collective bargaining agreements, In-Home Supportive Services providers, and certain employees of air carriers are not covered by this law. An employer may limit the amount of paid sick leave an employee can use in one year to 24 hours or three days. Accrued paid sick leave may be carried over to the next year, but it may be capped at 48 hours or six days.

5 Usage: An employee may use accrued paid sick days beginning on the 90th day of employment (works like a probationary period): An employee may request paid sick days in writing or verbally. An employee cannot be required to find a replacement as a condition for using paid sick days. {con&nued}

6 An employee can take paid leave for employee s own or a family member for the diagnosis, care or treatment of an existing health condition or preventive care or for specified purposes for an employee who is a victim of domestic violence, sexual assault or stalking. Family members include the employee s parent, child, spouse, registered domestic partner, grandparent, grandchild, and sibling.

7 Employer Obligations: There are several things employers must do to comply with the Healthy Workplace Healthy Family Act of 2014 (AB 1522). Display poster on paid sick leave (Spanish) (Vietnamese) where employees can read it easily. Provide written notice to employees with sick leave rights (Spanish) (Vietnamese) at the time of hire... [continued]

8 Provide for accrual of one hour for every 30 hours worked and allow use of at least 24 hours or 3 days or provide at least 24 hours or 3 days at the beginning of a 12 month period of paid sick leave for each eligible employee to use per year. Ex. An employee who works 40 hours per week accrues 1.33 hours per week Allow eligible employees to use accrued paid sick leave upon reasonable request.. {continued}

9 Show how many days of sick leave an employee has available on a pay stub or a document issued the same day as a paycheck. Keep records showing how many hours have been earned and used for three years. Must be paid at the employee s hourly rate. If an employee is paid commission or piece rate, then divide total compensation for previous 90 calendar days by number of hours worked and pay this rate.

10 Retaliation or discrimination against an employee who requests or uses paid sick days is prohibited. An employee may file a complaint with the Labor Commissioner against an employer who retaliates or discriminates against the employee for exercising these rights or other rights protected under the Labor Code.

11 The Law applies to temporary, parttime and full-time employees. The Employer may lend paid sick days to an employee in advance of accrual. Employer can provide 24 hours or 3 days at the beginning of each calendar year, anniversary date or twelve months basis.

12 Six Steps to Successful Compliance Display poster on paid sick leave where employees can read it easily. Document policy and share with staff. Provide written notice to individual employee at the time of hire with paid sick leave information. Provide for accrual of one hour of sick leave for 30 hours of work for each eligible employee to use. Allow eligible employees to use accrued paid sick leave upon request or notification.

13 Show how many hours of sick leave an employee has available. This must be on a pay stub or a document issued the same day as a paycheck. Keep records showing how many hours have been earned and used for three years.

14 PTO Plans Employers may offer more time and usage than provided in Paid Sick Leave provision but not less. PTO policy must be in writing. PTO plans will be found compliant if they provide both the same hours for usage AND for the same purposes as outlined in Paid Sick Leave provision.

15 Compliance with Local Laws Employer will comply with both the local and California laws. Employer will have to provide the more generous provision or benefit to an employee, where they differ between local and state laws. Ex. City and County of San Francisco.

16 Separation An employer is not required to pay out accrued, unused paid sick days at the time of termination, resignation or retirement. If an employee is rehired within one year, previously accrued and unused paid sick days shall be reinstated. If employer has a separate PTO plan, a final payout of PTO is due at separation.

17 Anti-Retaliation Prohibits an employer from denying an employee the right to use paid sick leave, discharging, threatening to discharge, demoting, suspending or in any manner discriminating against an employee

18 There is a REBUTTABLE presumption of unlawful retaliation if the employer acts in a manner described above within 30 days of the employee s request for leave or other protected activity.

19 Remedies If an employer takes any of the prohibited actions, the employee may be awarded Reinstatement (if termination) Lost wages (if suspended or terminated) Removal of any disciplinary action from personnel file A civil penalty of up to $10,000 per violation Employer may also be required to post a notice to all employees about the retaliation.

20 Basis for Claim Against Employers who: Unlawfully withhold payment for use of accrued sick days Fail to provide a statement of accrual of sick leave Fail to accurately track accrued sick leave Require an employee to use a full day or half day absence for any use of sick leave. However, an employer may require a minimum of 2 hours for each use of paid sick leave

21 Deny payment for sick leave if the employee fails to provide prior notice for an unforeseen illness Require the worker requesting sick leave to find a replacement to cover his scheduled shift or assignment Deny sick leave due to a failure to provide details

22 Administrative Penalties An employee need only assert that the sick leave was for a covered purpose in general terms An employee may recover An administrative penalty equal to the paid sick leave x 3 or $250 whichever is greater, but in no case greater than an aggregate penalty of $4,000. The administrative penalty may also include a sum of $50 per day for each day the violation occurred or continued.

23 Administrative Penalty Example: Employee earns $12.50 per hour and works 8 hours per day for $100 per day Employee was denied 3 days of accrued sick leave Penalty is 3 times the accrued sick leave $100 per day for 3 days x 3 = $900 Because this amount is greater than $250, employee is awarded $900 Employee is also entitled to $50 per day until the violation is corrected.

24 Temporary employees of a staffing agency are covered by the new law. Therefore, whoever is the employer or joint employer is required to provide paid sick leave to qualifying employees.

25 Employee Notice Employers must permit the employee to use the paid sick leave upon an oral or written request, and the law forbids requiring an employee to find a replacement as a condition for using leave. If the need is foreseeable the employee must give reasonable advance notice, but where the need is unforeseeable the employee need only give notice as soon as practicable.

26 Pay Period The new law requires that an employer 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. This does not prevent an employer from making the adjustment in the pay for the same payroll period in which the leave was taken, but it permits an employer to delay the adjustment until the next payroll.

27 Summary of 2015 Amendments-AB 304 Exemptions AB 304 creates a fifth exception (Labor Code section 245.5(a)(5)) for certain public sector employees who are a recipient of a retirement allowance and employed without reinstatement into his or her respective retirement system.

28 AB 304 also amends the exemption for construction industry employees covered by a CBA (Labor Code section 245.5(a)(2)) to remove the onsite work referenced in the initial definition of employee in the construction industry. This change is intended to clarify that employees in the construction industry for purposes of this exemption means an employee performing work.

29 Same Employer While Labor Code section 246(a) initially provided that an employee need only work thirty (30) or more days in California to be eligible, it did not specify whether this work must be performed for the same employer, or perhaps for prior employers, or some combination. As amended by AB 304, section 246 now specifies the employee must work 30 or more days for the same employer to be eligible.

30 Additional Accrual Options The Healthy Families Act required a fairly rigid accrual method that did not necessarily correspond with the accrual methods employers used for providing paid sick leave in their pre-existing policies. The Healthy Families Act required nonexempt employees to accrue paid sick leave at the rate of one hour for every thirty hours worked, even though employers might have used another rate or an alternative method (i.e., per pay period rather than hours). In response to these concerns, AB 304 amends Labor Code section 246(b) to enumerate two additional accrual methods.

31 First, an employer may now utilize a different accrual method, provided the accrual is on a regular basis so that the employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment, or each calendar year, or each 12-month basis. Alternatively, an employer may satisfy the accrual requirements by providing not less than 24 hours or three days of paid sick leave that is available to the employee to use by completion of his or her 120th calendar day of employment. The second new option means employers will not need to track hours worked for accrual purposes if they simply provide the statutorily-required minimum paid sick leave (24 hours/3 days) by the end of the fourth month of employment.

32 Definitions Clarified Labor Code section 246(d) initially provided that no accrual or carryover is required if the employer provides the full amount of leave at the beginning of each year, but it did not specify how each year is determined nor did it contain the language in other subsections allowing an employer to use a calendar year, year of employment or 12-month basis. AB 304 cures this discrepancy and specifies that no accrual or carryover is required if the employer provides the full amount of leave at the beginning of each calendar year, year of employment or 12-month basis. It also specifies that full amount of leave means three days or 24 hours.

33 Grandfather Provision for Pre-2015 PTO Plans As amended, section 246(e)(2) approves PTO policies that provided paid time off to a class of employees before January 1, 2015 under an accrual method other than the one hour for 30 hours worked if the accrual is on a regular basis such that the employee (including employees hired into the class after January 1, 2015) has no less than one day/8 hours of accrued time off within three months of employment of each calendar year or each 12-month period, and the employee is eligible to earn at least three days/24 hours of paid time off within nine months of employment.

34 However, this new subsection also provides that if the employer subsequently modifies the pre- January 1, 2015 PTO policy, the modified policy must comply with any of the four accrual methods in subsection (b) or provide the full amount of PTO at the beginning of each year of employment, calendar year, or 12-month period. It also states that this section will not prohibit the employer from increasing the accrual amount or rate for a class of employees covered by this section.

35 As a practical matter, this new subsection means employers with PTO policies prior to January 1, 2015 need not ensure the entire amount of statutorily-required paid time off be provided at the beginning of each year provided the grandfathered PTO plan meets the newlyidentified requirements (eight hours by 90 days, and 24 hours by nine months), but once any changes are made to the grandfathered PTO plans, they must either satisfy an alternative accrual method or provide the entire PTO amount at the beginning of each year.

36 Reinstating Sick Leave for Returning Employees As initially enacted, Labor Code section 246(f)(2) stated an employer need not pay out unused sick time upon separation but must reinstate any prior balances if rehired within one year. In response to questions of whether reinstatement would be required if the previously accrued balance had been paid regardless, AB 304 clarifies an employer need not reinstate accrued sick leave that was previously paid out upon cessation of employment.

37 Since section 246(f)(2) initially stated that rehired employees would be entitled to use previously accrued paid sick days and to begin accruing additional sick time, it was ambiguous whether a rehired employee could being using the previously accrued hours even if they had already exceeded the usage or accrual limits. AB 304 amends this subsection to clarify that a reinstated employee s rights are subject to the use and accrual limitations of section 246.

38 As a practical matter, this means the employee would still have to satisfy any remaining portion of the 90-day employment period before usage, and could not exceed the usage (24 hours) or accrual amounts (48 hours) for the year in which the employee (provided the employer has a written policy establishing such usage and accrual limits).

39 Notice for Unlimited Leave Labor Code section 246(h) requires employers to provide written notice to employees of available paid sick leave balances, either through the itemized wage statements required under Labor Code section 226 or a separate writing provided on the designated pay date. Responding to employer concerns about how to track balances and provide these notices if the employer provides unlimited paid sick time, AB 304 specifies an employer may satisfy this notice obligation by indicating unlimited on the notice or wage statement.

40 Delay for Motion Picture and Broadcast Industry For employers covered by Wage Orders 11 and 12 of the Industrial Welfare Commission (i.e., motion picture and broadcasting industries), AB 304 delays the requirement to provide wage statements or other written notices identifying sick leave balances until January 21, AB 304 s legislative history indicates this industryspecific amendment is needed because employers in these industries commonly use different third-party payroll companies for each production.

41 Calculating Pay Rates The Healthy Families Act initially stated that paid sick leave shall be paid at the employee s hourly wage, but then articulated a very confusing formula for determining this rate if the employee has received different hourly rates in the preceding 90 days before paid sick leave is used. AB 304 substantially amends Labor Code section 246(k) to delete this formula, and identifies guidelines for paying paid sick leave, including distinguishing between exempt and non-exempt employees.

42 As amended, paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.

43 For non-exempt employees, the employer may choose between two options. First, the employer may calculate paid sick leave in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, regardless of whether the employees actually works overtime in that workweek. Alternatively, the employer may calculate paid sick leave by dividing the employee s total wages, not including overtime premium pay, but the employee s total hours worked in the full pay periods of the prior 90 days of employment.

44 A Duty to Maintain Records, but No Duty to Inquire Section requires employers to maintain for at least three years records documenting the hours worked and paid sick leave days accrued and used by the employee. In response to employer concerns this might require employers to inquire about whether a PTO-related day is due to sickness (as opposed to any other purpose), thus undercutting an administrative benefit of PTO plans, AB 304 adds language providing that an employer is not obligated to inquire into or record the purpose for which an employee uses paid leave or paid time off.

45 Severability AB 304 adds language specifying the Healthy Families Act s provisions are severable, such that if any are deemed invalid they will not affect the other provisions

46 QUESTIONS?????? J. Gregory Grisham Leitner, Williams, Dooley & Napolitan, PLLC 414 Union St., Suite 1900 Bank of America Plaza Nashville Tennessee

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