HIGHLIGHTS:

  • On July 1, 2015, California’s Healthy Workplaces, Healthy Families Act of 2014 takes effect requiring that employers provide at least three paid sick days per year to employees.
  • Employers must comply with notice and record-keeping requirements. The law will be enforced by the California Labor Commissioner who can impose administrative penalties and liquidated damages or seek other appropriate relief.
  • While most employers have paid sick leave policies in place, their policies may not satisfy the accrual or use requirements, so they should still review them for compliance.

On July 1, 2015, California’s Healthy Workplaces, Healthy Families Act of 2014 takes effect. Given the fast-approaching deadline for compliance, this is a reminder about the new law and its requirements. The highlights of the new law are as follows:

  • Employees receive three paid sick days per year, either under an “accrual and carry-over” method by which they accrue paid leave hours based on hours worked up to a maximum of six days per year, or by an “award” method which grants three days of paid sick leave at the start of each year.
  • Employers must provide notice to employees of this benefit: (i) by posting a notice at the workplace; (ii) by providing information about available paid sick leave on the paystub or other writing that is issued on the same payday, and electronic paystub information will likely comply with the requirements; and (iii) for non-exempt employees, by issuing a Labor Code section 2810.5 notice.
  • There are expanded uses for paid sick leave, including to care for a family member and for leave associated with victims of domestic violence.
  • The law will be enforced by the California Labor Commissioner who can impose administrative penalties and liquidated damages or seek other appropriate relief such as reinstatement and back pay for violations of the law.

Both Non-Exempt and Exempt Employees Get at Least Three Paid Sick Days Per Year

The law requires that California employers provide at least three paid sick days per year to non-exempt and exempt employees. Any employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the start of their employment is entitled to paid sick leave, and will be entitled to use the leave after 90 days of employment.

There are two ways an employer may provide the sick days required by this law.

1. “Accrual and Carry-Over” Method

The first way is an “accrual and carry-over” method by which an employee accrues paid sick time per hours worked. For non-exempt employees, the accrual rate is one hour per every 30 hours of work. For purposes of accrual, exempt employees are deemed to work 40 hours per week. Accrued paid sick days must carry over to the following year, though accrued paid sick leave can be capped at 48 hours, or six days.

2. “Award” Method

The second way to comply is by an “award” method by which the employer grants three days of paid sick leave at the start of each year (based on calendar or some other 12-month term selected by the employer). An employee’s use of accrued paid sick days may be limited to 24 hours or three days in each year of employment. When the need for sick leave is foreseeable, the employee must give reasonable advance notice and in cases when it is not foreseeable, the employee must give notice as soon as practicable.

Expanded Uses for Paid Sick Leave

The law expands the uses for paid sick leave and employer policies should reflect these permitted uses. These expanded uses include leave for diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee’s family member; or time off required for victims of domestic violence. While most employers have paid sick leave policies already in place, their policies may not satisfy the accrual or use requirements, so they should still review for compliance.

Written Notice Must Be Provided

Employers must provide employees with written notice of their available paid sick leave or paid time off (PTO). This information can be reported on the regular paystub or in a separate notice which is provided on the same designated pay date. Based on current information from the California Division of Labor Standards Enforcement, electronic paystubs or other electronic posting will meet the notice requirement, provided that the information is posted on the regular pay date. Records reflecting paid sick leave must be kept for at least three years.

Requirements for Unused Paid Sick Leave

Unused paid sick leave is not paid out upon separation from employment, due to any reason, such as termination, resignation, retirement, or other separation. This is in contrast to California vacation or PTO.

The law prohibits an employer from denying an employee the right to use accrued sick days and from taking adverse action against an employees (such as discharge, demotions, or suspension), for exercising their rights under the new law. The California Labor Commissioner is empowered to enforce the new law and can impose monetary penalties, including liquidated damages for non-compliance.

The new paid sick leave law presents numerous challenges for compliance both as to the practical implementation of the law’s requirements as well as policy changes. It is expected that the California Labor Commissioner’s office will provide continued advice from on these compliance issues.

For additional information about the new California laws:

See Holland & Knight's alert, "New California Labor and Employment Laws for 2015," Dec. 30, 2014.

The California Division of Labor Standards Enforcement (DLSE) has issued updated guidance in the form of a new FAQ section for the law and a “Facts and Resources” presentation.