Last year California passed the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”), which requires employers to provide paid sick leave at a rate of one hour for every 30 hours worked starting on July 1, 2015. Recognizing some of the ambiguities of the Act, this month California passed Assembly Bill No. 304, which clarifies and amends certain aspects of the Act. The amendments of AB 304 took effect on July 13, 2015. California employers should make sure to review their practices and policies (yes, even those recently revised sick leave policies!), as AB 304 alleviates certain requirements of the Act.

The 30-Day Requirement

The Act provides that employees who work for 30 days or more in California are entitled to accrue paid sick days. Now, AB 304 has clarified that for an employee to qualify for accrued sick leave, she or he must work 30 days for the same employer.

Rate of Accrual

The Act required that employees accrue paid sick leave at a rate of one hour per 30 hours worked. AB 304 provides employers with a bit more flexibility. An employer may still choose to have paid sick leave accrue at a rate of one hour per 30 hours worked. However, AB 304 allows employers to use a different accrual method, provided that the accrual is on a regular basis, so that an employee has no less than 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. Additionally, an employer may satisfy the accrual requirements by providing not less than 24 hours (or three days) of paid sick leave to the employee to use at the completion of his or her 120th calendar day of employment.

Carrying Over Sick Leave

AB 304 does not change that paid sick days carry over to the following year of employment, but clarifies that the employer may limit an employee’s use of accrued paid sick days to 24 hours (or three days) in each year of employment, calendar year, or 12-month period. Further, the Act still provides that no carry over is required if the employer provides the employee the full amount of leave at the beginning of each year of employment, calendar year, or 12-month period.

Calculating Pay

The amendments clarify that for non-exempt employees, an employer may choose one of two methods of calculation. First, paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek. Second, paid sick leave may be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. For exempt employees, employers are to use the same rate used for other forms of paid leave (e.g., vacation).

Rehires

AB 304 clarifies that if an employee separates from an employer and is paid out his or her unused sick leave (which is not required), upon rehire, the employer is not required to reinstate accrued sick leave. However, if such sick leave is not paid out and the employee is rehired within one year, accrued and unused sick leave shall be reinstated.

Recordkeeping

Currently, employers are required to keep at least three years of records documenting the hours worked and paid sick days accrued and used by an employee. AB 304 clarifies that an employer is not required to inquire into or record the purpose for which an employee uses paid sick leave.

Unlimited Sick Leave

Under the Act, employers are required to provide an employee with written notice as to the amount of paid sick leave available. If an employer has decided to provide unlimited paid sick leave or unlimited time off, under AB 304, an employer is merely required to indicate “unlimited” on the employee’s wage statement.