California Paid Sick Leave is Here

This term, the California Legislature enacted the Healthy Workplaces/Healthy Families Act of 2014 (AB 1522), which requires employers to provide paid sick leave at a rate of one hour for every 30 hours worked starting on July 1, 2015. The Labor Commissioner also just published a mandatory new hire form and model poster for employers to use in connection with the new law, both of which must be implemented beginning on January 1, 2015. California employers should review and update their posters, new hire paperwork, policies, handbooks, payroll systems, and record-keeping systems to ensure compliance with the new law’s requirements.

Broad Scope

Paid sick leave may be used to care for oneself and certain family members (including children, grandchildren, spouses, domestic partners, parents, grandparents, and siblings). It applies to all employers; there are no exceptions for small employers or nonprofits. It also applies to almost all employees, irrespective of whether they are full-time or part-time, exempt or non-exempt, employed privately or by the government, or seasonal workers. There are only a few excepted employees, such as employees subject to certain CBAs, certain in-home support service providers, and certain airline employees. The law even applies to out-of-state residents if they work 30 or more days per year in California.

Policy Rationale

The stated policy reasons for the law include allowing employees to care for sick children or elderly family members, reducing the spread of illness in the workplace, shortening recovery time, protecting the jobs of low income workers, and enabling domestic violence victims to seek treatment. The law is also intended to decrease health care costs, improve public health, and protect employees from losing their jobs while using sick days.

Accrual

Paid sick leave begins to accrue either on July 1, 2015 or the date of hire, whichever is later; probationary periods are not permitted. Employees must accrue paid sick leave at a rate of at least 1 hour for every 30 hours worked (which is the equivalent of about 8.6 days per year for full-time employees). However, employers may choose to set an accrual cap at 48 hours (6 days) per year. Any accrued paid sick leave must carry over from year to year, unless the employer automatically grants its employees 24 hours (3 days) of paid leave every year. Employers may lend paid sick leave in advance in their discretion. Employers may also satisfy the requirements of the statute by providing employees with three (3) days of paid sick leave in a bank for their use at the beginning of each twelve-month period.

Permitted Limitations on Use

The law treats accrual and use differently. Although employees begin to accrue paid sick leave immediately, employers may prevent employees from using their paid sick leave until the 90th day of employment. Employers may also cap the use of paid sick leave to 24 hours (3 days) per year. In other words, although a full-time employee could theoretically accrue a maximum of up to 8.6 paid sick days per year (or 6 days if the employer sets an accrual cap), the employer may cap the employee’s use of that time to 3 days per year. Employers may also establish minimum usage blocks of up to 2 hours.

Termination

Unlike accrued vacation or PTO time, employers need not compensate employees for any unused paid sick leave at the time of termination. However, if an employee is rehired within one year of his termination, his previously accrued paid sick leave must be reinstated.

Required Notice, Posting, and Record Keeping

The law includes various other requirements in terms of notice, posting, and record keeping. For example, employers must keep records documenting the hours worked and paid sick days accrued and used by each employee for at least three years and provide accrual information on paystubs. Additionally, effective January 1, the new law requires that Wage Theft Prevention Act notices, which must be provided to hourly employees at the time of hiring, include a description of the paid sick leave law. The new law also requires employers to display posters regarding the new law in each workplace beginning on January 1.

Discrimination and Retaliation Prohibited

The law prohibits discrimination and retaliation against employees for using or requesting to use paid sick leave. More significantly, it creates a rebuttable presumption of retaliation if the employee is subjected to an adverse employment action within 30 days of certain protected activities, such as opposing a practice protected by the law.

Liability

The law calls on the Labor Commissioner for enforcement. Although it does not expressly create a private cause of action for employees, violations of the new law might be used to support a claim for wrongful termination or retaliation. Relief available for violations includes reinstatement, backpay, payment of withheld sick time, and penalties of up to $4,000.

Next Steps for Employers

In light of the foregoing, by January 1, 2015, employers with employees who work 30 days or more per year in California need to:

  1. evaluate whether to adopt the Labor Commissioner’s template poster — available here  — or create a separate poster; 
  2. display the poster in a conspicuous place in each workplace by January 1, 2015; and 
  3. update their new hire paperwork for hourly non-exempt employees to include the revised Section 2810.5 form — available here — by January 1, 2015.

Additionally, prior to July 1, 2015, those same employers need to take several steps to ensure their materials and policies are up to date:

  1. either draft a separate paid sick leave policy, or review and revise their existing paid time off or paid leave policy, to comply with the law’s requirements on probationary periods, accrual, carry over, and use; 
  2. update their payroll systems; and 
  3. update their record-keeping systems.

The California Labor Commissioner recently published a FAQ’s page to clarify certain provisions of the new law. See here.