California employers, take note.  Emergency legislation amending and clarifying certain provisions of the recently-effective Healthy Workplaces, Healthy Families Act was signed into law Monday (July 13) by Governor Brown, and went into effect immediately.  Among other changes, AB 304 amends the Act as follows:

  • Regarding accrual of sick leave:
    • Provides that an employer may use a different accrual method, other than providing one hour per every 30 hours worked, as long as the accrual is on a regular basis and an employee has at least 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period.
    • Provides that an employer may satisfy the accrual requirements of this section by providing 24 hours of paid sick leave that is available for use by the 120th calendar day of employment.
    • Clarifies that the “full amount of leave” that must be provided if an employer chooses to frontload leave means three days or 24 hours.
  • Regarding existing paid leave or paid time off (“PTO”) policies:
    • Specifies that an employer is not required to provide additional paid sick days if the employer has a PTO policy, the employer makes available (beginning July 1, 2015) an amount of leave that may be used for the same purposes and under the same conditions, and the policy satisfies one of the following options:
      • Satisfies the accrual, carry over, and use requirements of the law.
      • Provided PTO to a class of employees before January 1, 2015, pursuant to a policy that used an accrual method different than providing one hour per every 30 hours worked, provided that the accrual is on a regular basis so that an employee, including an employee hired into that class after January 1, 2015, has no less than one day or eight hours of accrued leave within three months, and the employee was eligible to earn at least three days or 24 hours within nine months.  If the employer decreases the accrual amount or rate for employees covered under the policy, it must comply with the sick leave law (i.e., either meet the accrual requirements or provide 24 hours of leave at the beginning of each year of employment, calendar year, or 12-month period).
  • Other changes:
    • Allows an employer with an unlimited paid sick leave or PTO policy to simply indicate the leave balance as “unlimited” on the itemized wage statement or written notice provided to the employee each pay period.
    • Clarifies how to calculate the rate of pay for paid sick leave provided to employees.
      • For nonexempt employees, employers now have two methods to choose from in calculating paid sick time:
        • Use the regular rate of pay for the workweek in which the employee uses paid sick time.
        • Divide the employee’s total wages, not including overtime pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. (Useful for employees who have varying rates of pay, are paid on a salaried basis, or are paid on a piecemeal or commission basis.)
      • For exempt employees, paid sick leave wages should be calculated in the same manner as wages for other forms of paid leave time.
    • Clarifies that the 30-day eligibility period applies to time worked “with the same employer.”
    • Clarifies that the reinstatement of paid sick leave upon rehiring is “subject to the use and accrual limitations set forth in this section” and confirms that an employer who cashes out sick leave/PTO upon termination of employment is not obligated to restore any sick leave/PTO upon rehiring.

Employers, particularly those intending to use existing PTO policies to comply with the Act, should review AB 304 carefully to ensure their policy is in compliance.