CALIFORNIA S NEW SICK LEAVE LAW EMPLOYEE RIGHTS AND EMPLOYER OBLIGATIONS
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1 CALIFORNIA S NEW SICK LEAVE LAW EMPLOYEE RIGHTS AND EMPLOYER OBLIGATIONS Drafted By Robert Fried and Jonathan Judge with the law firm of Atkinson, Andelson, Loya, Ruud & Romo. The following outline discusses the basics of California s new paid sick leave law, alternative compliance rules, other (important) considerations, and pending legislation. I. THE BASICS Under the Healthy Families, Healthy Workplaces Act of 2014, sick leave must be provided to employees starting July 1, Employees may accrue sick leave at a rate of one hour for every 30 hours worked. Employers are permitted to provide more generous accrual rates, but are not permitted to impose less generous accrual rates. At the rate of one hour per 30 hours worked, a full-time employee would accrue 8.67 days or hours of sick leave in a year. However, employers may cap accrual at six days or 48 hours per year. Employees must also be permitted to carry over up to six days or 48 hours of sick leave to the following year. However, the employer may limit use of sick leave to three days or 24 hours per year. Accrual starts from the first day of employment, but employers may limit use until the 90th day of employment with the company. January 1, 2015 marks the start of the qualifying periods that determine which employees are eligible for paid sick leave. An employee qualifies for paid sick leave by working for an employer on or after January 1, 2015, for at least 30 days within a year in California, and by satisfying a 90-day waiting period. Both the requirement that an employee work 30 days in California to be eligible for leave and the 90-day waiting period for use of accrued leave must be calculated starting January 1, Employees who meet these eligibility requirements may begin using leave as soon as leave is accrued after July 1, II. ALTERNATIVE SICK LEAVE POLICIES As an alternative to accrual, employers may choose to front-load sick leave by providing the sick leave to employees at the beginning of the year. Employers who use the front-load method for paid sick leave need not permit carryover of unused leave from year-to-year. This should be made clear in the employer s sick leave policy. As an alternative to sick time, employers may rely on Paid Time Off ( PTO ) policies to meet the requirements of the new law. The PTO must either: Satisfy the accrual, carry over, and use requirements of the new law, or Atkinson, Andelson, Loya, Ruud & Romo 1
2 Provide no less than 24 hours or three days of PTO per year on a front-loaded basis. Employers using PTO to comply with the new law must consider that PTO is treated like vacation under California law. This means PTO must be paid out upon termination, and may not be subject to use-it-or-lose-it policies. III. USE OF LEAVE Paid sick leave may be used for the following purposes: Diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee s family member; or An employee who is a victim of domestic violence, sexual assault, or stalking. Sick leave may be used for family members, which include the following: Child; Parent or parent-in-law; Spouse; Registered domestic partner; Grandparent; Grandchild; or Sibling. Employers must provide paid sick leave upon the oral or written request of an employee. If the need for paid sick leave is foreseeable, the employee must provide reasonable advance notification to the employer. If the need for paid sick leave is unforeseeable, the employee must provide notice of the need for the leave as soon as practicable. The new law neither defines nor provides guidance as to what constitutes reasonable advance notification and notice as soon as practicable. An employee who is exempt from overtime requirements as an administrative, executive, or professional employee under a wage order of the Industrial Welfare Commission is deemed to work 40 hours per workweek for the purposes of the paid sick leave law, unless the employee s normal workweek is less than 40 hours (in which case the employee shall accrue paid sick days based upon that normal workweek). Employers may require that leave be taken in a minimum of two-hour increments. For example, Atkinson, Andelson, Loya, Ruud & Romo 2
3 an employer may require an employee who requests to leave work one hour early to attend a doctor s appointment actually take and use two hours of accrued leave. Employers may not impose minimum use increments greater than two hours (but may set minimums less than two hours). Employers are not required to compensate employees for accrued, unused sick leave at the time of termination. However, if an employee separates from employment and is rehired by the employer within one year from the date of separation, previously accrued and unused sick leave time must be reinstated to the employee. In addition, employers must credit employees for the time previously worked when calculating the 90-day waiting period. For example, if an employee quits his/her employment 60 days after starting work, and is rehired six months later, the employee would need only work 30 more days to satisfy the 90-day waiting period. The law does not require that previously accrued sick leave be restored to employees who return to the employer more than one year after their employment previously terminated. However, it is unclear whether an employee returning after more than one year must re-establish the 30-day eligibility requirement and complete the 90-day waiting period before being permitted to resume use of accrued leave. The purpose of the carryover rule is to ensure employees have a bank of accrued time at the beginning of a year, and either carryover or frontloading achieve that purpose. IV. OTHER KEY COMPONENTS Revised Wage Theft Prevention Act Notice Labor Code section was amended to require an employer, at the time of hire, provide the employee with written notice that an employee: May accrue and use sick leave; Has a right to request and use accrued paid sick leave; May not be terminated or retaliated against for using or requesting the use of accrued paid sick leave; and Has the right to file a complaint against an employer who retaliates. For employees hired prior to January 1, 2015, employers must provide amended Labor Code section notices within seven calendar days after the time of the changes i.e., no later than July 8, For employees hired on or after January 1, 2015, Labor Code section notices containing the new information must be provided to the employees at the time of hire. Posters Employers must display a poster describing their sick leave policy starting January 1, 2015 in a Atkinson, Andelson, Loya, Ruud & Romo 3
4 conspicuous place of each workplace maintained by the employer. The poster must contain the following information: A statement that employees are entitled to accrue, request, and use paid sick days; Information regarding the amount of sick days provided for by [the law]; Information regarding the terms of use of paid sick days; and A statement that retaliation or discrimination against an employee who requests paid sick days or uses paid sick days, or both, is prohibited and that an employee has the right under [the law] to file a complaint with the Labor Commissioner against an employer who retaliates or discriminates against the employee. The Labor Commissioner created sample posters containing the requisite information and the posters are available to employers. The Labor Commissioner has also created two English versions and Spanish and Vietnamese language versions of the poster; however, employers are not required by the statute to utilize Spanish and Vietnamese language posters. Template posters may be obtained from the Labor Commissioner website: New Reporting Requirement Employers must provide employees with written notice that sets forth the amount of sick leave available, or Paid Time Off ( PTO ) available if the employer provides PTO in lieu of sick leave, on either the employee s itemized wage statement (pay stubs) or in a separate writing provided on the designated pay date with the employee s payment of wages. New Recordkeeping Requirement Employers must keep, for at least three years, records documenting the hours worked, and paid sick time accrued and used by employees. Exceptions Only limited exceptions exist from the sick leave law: A complete exemption is available for certain construction collective bargaining agreements ( CBAs ): An employee in the construction industry covered by a valid CBA if the CBA expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours worked, and regular hourly pay of not less than 30 percent more than the state minimum wage rate, and the agreement either (A) was entered into before January 1, 2015, or (B) expressly waives the requirements of this article in clear and unambiguous terms. A limited exemption applies for other CBAs: Atkinson, Andelson, Loya, Ruud & Romo 4
5 An employee covered by a valid CBA if the CBA expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for paid sick days or a paid leave or paid time off policy that permits the use of sick days for those employees, final and binding arbitration of disputes concerning the application of its paid sick days provisions, premium wage rates for all overtime hours worked, and regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate. Exemptions also exist for flight deck or cabin crew members, and for providers of in-home support services. Employees who work less than 30 days in California in a year are also ineligible for sick leave. Pay For Sick Leave Sick leave generally is paid out at the employee s hourly wage. However, special rules apply for employees paid piece rate or commission, nonexempt salaried employees, or employees who had different rates of pay in the 90 days prior to taking sick leave. In such cases, sick leave will be paid at the rate of pay calculated by dividing the employee s total wages, not including overtime pay, by the employee s total hours worked in the full pay periods of the 90 days of employment prior to taking such sick leave. The Labor Commissioner, in an April 8, 2015 webinar, provided the following examples of the above formula: Piece Rate Employee Employee was paid a piece rate of $0.36 per square foot for 16,500 square feet during 400 hours of work in a 90 day period. He earned $5,940. His hourly rate for paid sick leave is: $5, hours = $14.85 per hour. Commission Paid Employee Employee is paid on commissions only. In a 90 day period, she worked 480 hours and earned $9,000. Her hourly rate for paid sick leave is: $ hours = $18.75 per hour. V. PENDING LEGISLATION Employers will want to monitor the following bills pending before the California Legislature: AB 11, which would revise the definition of employee under the sick leave law to include providers of in-home support services. AB 304, which would clean up a number of ambiguities in the sick leave law. If passed, as currently drafted, AB 304 would: Atkinson, Andelson, Loya, Ruud & Romo 5
6 o Require that the employee work for the same employer for 30 or more days within the previous 12 months in order to qualify for accrued sick leave. o Exclude a retired annuitant of a public entity from the definition of employee. o Authorize an employer to provide for employee sick leave accrual on a basis other than one hour for each 30 hours worked, provided that the accrual is on a regular basis and the employee will have 24 hours of accrued sick leave available by the 120th calendar day of employment. o Permit an employer who provides unlimited sick leave to its employees to satisfy notice requirements by indicating unlimited on the employee s itemized wage statement. o Provide that if the employee receives a different hourly rate when the accrued sick leave is taken, the rate of pay would be calculated in the same manner as the regular rate of pay for purposes of overtime. o Provide that an employer is not required to reinstate accrued paid time off to an employee, rehired within one year of separation from employment, that was paid out at the time of termination, resignation, or separation. o The itemized wage statement reporting requirement will be delayed for employers covered by Wage Order 11 (Broadcasting Industry) or 12 (Motion Picture Industry) of the Industrial Welfare Commission until January 21, o Provides that an employer is not obligated to inquire into or record the purposes for which an employee uses paid leave or paid time off. SB 579, which would require employers to permit employees to use paid sick leave to address a childcare or school emergency (in addition to other allowable uses) Atkinson, Andelson, Loya, Ruud & Romo 6
7 This AALRR presentation is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR presentation/publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process Atkinson, Andelson, Loya, Ruud & Romo 7
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