Why it matters

California's Healthy Workplaces, Healthy Families Act just took effect on July 1 but Governor Jerry Brown has already signed into law tweaks to the statute. The bill established that employers must provide three paid sick days per year for employees that have worked in the state for at least 30 days in a calendar year, regardless of whether they are full- or part-time workers. The new legislation provided clarification on some of the questions raised by the Act, such as whether the 30 days of work required must be for the same employer to trigger paid sick leave. Adjustments were also made to provisions on the rate of pay, with employers provided with an option on how to pay sick days for nonexempt employees as well as methods of how to accrue paid leave—in lieu of the strict 1 hour per 30 hours worked accrual, employers now have the choice to use other accrual methods within certain parameters. Employers should familiarize themselves with the changes, which offer a modicum of flexibility and breathing room on certain issues.

Detailed discussion

Last year, California joined a small but growing number of jurisdictions when it enacted paid sick leave for an estimated 6.5 million workers in the state with the Healthy Workplaces, Healthy Families Act.

Signed into law by Governor Jerry Brown last September, the Act applies to employees that have worked in the state for at least 30 days in a calendar year, allowing workers to accrue one hour of sick leave for every 30 hours worked, with sick days available to be used beginning on an employee's ninetieth day of employment.

Limited categories of employees are exempt from the law (those covered by a collective bargaining agreement, for example) which permits the use of leave for an employee's own health conditions or those of covered family members. The Act also sets forth various requirements for requesting and designating leave, accrual, and administrative tasks for employers, including posting, notice, and recordkeeping mandates.

However, questions remained. Sen. Lorena Gonzalez (D-San Diego), the Act's sponsor, drafted an amendment in Assembly Bill 304, signed into law by Gov. Brown on July 13. No substantive changes were made to the Act, but the updates include clarifications and modifications that took immediate effect.

  • Qualifying for leave. A.B. 304 clarified that an employee must work for the same employer for 30 or more days to qualify for the accrued sick leave.
  • Accrual. The amendment authorized employers to provide accrual on a basis other than the strict 1 per 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, employers may use their own method of accrual.
  • Use of leave. As originally enacted, the Act entitled an employee to use accrued paid sick days beginning on the ninetieth day of employment and permits an employer to limit an employee's use of paid sick days to 24 hours or three days in each year of employment. Under the amendment, employers have the option to limit employees' use not just to the 24 hours and three days in each year of employment, but also within a calendar year or a 12-month period.
  • Safe harbor. If an employer already had a paid sick leave or paid time off policy in existence that satisfies the accrual, carryover, and use requirements set forth by the Act as of January 1, 2015, then the employer is not required to provide additional paid sick days, the amendment clarified.
  • Balance of accrued leave. Employers are required to provide employees with the balance of their available paid sick leave or paid time off on a pay stub or other document distributed on payday. Employers that provide unlimited time off and have been uncertain how to satisfy this requirement were provided with an option in the amendment: indicate "unlimited" on the wage statement.
  • Reinstatement of accrued leave. What if an employee is rehired within one year of separation from employment and the employer already paid out accrued leave at the time of termination, resignation, or separation? A.B. 304 explained that employers are not required to reinstate the accrued paid time off.
  • Calculating sick pay. For those employees that are paid different hourly rates, paid by commission, paid by piece rates, or are nonexempt employees earning a salary, the Healthy Workplace, Healthy Families Act mandated that employers provide sick pay at an average pay rate for the employee's prior 90 days. However, the amendment changed this formula, offering two options for employers. First, employers can calculate the average rate of pay by taking the total compensation earned during the workweek and dividing by the total hours worked. Alternatively, employers can determine a nonexempt employee's rate by dividing the employee's total wages by the total hours worked in the prior 90 days of employment. The paid sick time for exempt employees can be calculated in the same way as other forms of paid leave time.
  • Recordkeeping. For a three-year period, employers are required to keep records documenting the hours worked by each employee, the paid sick days accrued, and paid sick days used, making the records available to the Labor Commissioner upon request. In response to concerns about privacy, A.B. 304 states that employers are "not obligated" to inquire into or record the purposes for which an employee uses sick leave or paid time off.

To read Assembly Bill 304, click here.