Effective immediately, California’s Healthy Workplace Healthy Families Act of 2014 (AB 1522) (the “Act”) was amended to afford more discretion to employers. As we previously advised in our June 2015 article, as of July 1, 2015, the Act requires employers to provide employees paid sick leave (“PSL”) at their regular rate of pay.

Now, Governor Brown’s amendments, as codified in Assembly Bill No. 304 (the “Amendment”), are in effect. An employer must know and understand the Amendment to ensure that it is providing employees with only the PSL required under California law.

Amendment – Qualified Employees Must Work for Same Employer for 30 Days

First, the Act required employers to provide unpaid sick leave to an employee who has worked for at least 30 days. The Amendment clarifies that an employee must work for the same employer for 30 days to qualify for the PSL.

Amendment – Employers May Calculate PSL in Any Way That Totals 24 Hours

Further, the original Act required employers to provide one hour of PSL for every 30 hours worked. Now, the Amendment allows employers to provide PSL on a different accrual basis, of their choice, as long as the employer’s preferred accrual method provides the employee with 24 hours of PSL by the employee’s 120th calendar day of employment. For example, an employer may require its employees to accrue PSL on a weekly basis, monthly basis, or per pay period.

Amendment – Employers May Calculate Employee’s “Regular Rate of Pay” Under Additional Methods

Prior to the Amendment, the Act required employers to calculate an employee’s regular rate of pay by dividing the employee’s total wages by the employee’s total hours worked in the preceding 90 days of employment. Thus, this rate of pay may fluctuate based on an employee’s commission rates, or different pay rates. This method excludes accounting for overtime premium pay.

Under the Amendment, an employer has two additional options to calculate an employee’s rate of pay for PSL purposes. For exempt employees, the employer may calculate the employee's rate of pay in the same manner it calculates wages for the employee's other forms of paid leave time, such as vacation time. For non-exempt employees, the employer may calculate the employee’s wages based upon how much he or she earned during the work week in which the employee uses the PSL.

Amendment – Employers Do Not Have to Reinstate PSL to Re-Hired Employees Who Were Previously Paid Out

Next, the Act required employers to reinstate unused PSL to employees who separated from their employment, but returned within one year. Now, the Amendment clarifies that an employer is not required to reinstate accrued PSL to a previously-departed employee if the employer paid the employee for all of his or her PSL at the time he or she separated from employment.

Amendment – Employers Not Required to Provide Additional Time Off if Company Policy is Sufficient

Also, before the Amendment, the Act required employers to provide additional paid sick days if the employer’s paid leave policy did not satisfy the Act’s accrual, carry over, or use requirements. Under the Amendment, employers are not required to provide additional PSL if it either (1) has a policy that satisfies the Act’s minimum requirements (as stated in the Act); or (2) has a policy that was effective January 1, 2015 that provided PSL or paid time off to an employee on a regular basis at no less than one day or eight hours for every three months of employment, and the employee was eligible to earn at least three days or 24 hours of PSL within nine months.

Amendment – Employers Need Only Notify Employee of “Unlimited” Time Off Pursuant to Company Policy

Previously, the Act required employers to provide its employees, every pay period, with written notice of his or her available PSL that the employee accrued to date. However, the Amendment allows employers to note “unlimited” on the employees’ itemized wage statement, but only if the employer provides unlimited sick leave to its employees. Therefore, this Amendment only applies to employers who provide unlimited PSL.

Amendment – Employers Are Not Required to Record Why an Employee Takes Time Off

The Amendment also does not require an employer to record the reasons why an employee takes time off. Thus, an employer may be able to combine an employee’s used PTO and PSL into one group for record keeping purposes. However, employers are still required to keep records for three years documenting the hours worked, and the number of PSL hours accrued and used.

Amendment – Employer Has Discretion to Define “Employment Year”

Finally, throughout the Act, there is reference to the “employment year” or “year in employment” for purposes of an employer’s obligations to track, limit, and allow an employee to use PSL. The Amendment gives the employer discretion to choose how it wants to define the “employment year”—so long as it accounts for no more than a 12-month time period. For instance, the “employment year” may be the employees’ anniversary date, calendar year, or other 12-month period.

While the Amendment may afford your company with flexibility in how PSL is administered, it is still crucial that your company remains strictly compliant with the Act as amended. Moving forward, it is always prudent to review your company’s policies and procedures to ensure that you are in compliance. Do not hesitate to contact counsel at Gordon & Rees for further clarification.