California Governor Jerry Brown has signed a bill intended to cure some of the ambiguities in the state’s new paid sick leave law that have been a headache for employers.
The Healthy Workplaces, Healthy Families Act of 2014 (AB 1522) took full effect on July 1, 2015 and requires employers of any size to provide paid sick leave, but employers have had many questions about some of its provisions. Under the law as originally passed, there are detailed accrual, carryover, and use requirements, and the effect on employers with existing sick leave and PTO policies is not always clear. AB 304 amends AB 1522 in an effort to provide some clarity. The amendments go into effect immediately. Following is a summary of the key amendments:
Unlimited sick time. California Labor Code Section 246(h) requires employers to provide employees with written notice of the amount of paid sick leave available either on a wage statement or in a separate writing provided on the designated pay date. AB 304 amends Section 246(h) to allow employers with unlimited paid sick leave or PTO policies to satisfy this notice requirement by indicating on the itemized wage statement or written notice that the balance is “unlimited.”
Accrual method. Section 246(b) requires that employees accrue paid sick leave at a rate of not less than one hour for every 30 hours worked. The amendment allows an employer 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 PTO by the 120th calendar day of employment or other 12-month basis.
Delayed implementation for some industries of notice requirements. Implementation of the Section 246(h) notice requirements described above is delayed until Jan. 21, 2016, for employers covered by Wage Order 11 (the broadcasting industry) and Wage Order 12 (the motion picture industry).
Same employer. Under Section 246(a), the paid sick leave law applied to employees who worked in California for 30 or more days within a year of the commencement of employment. AB 304 clarifies that the employee must work for the same employer for 30 days within a year from the start of employment.
Calculating paid sick leave. AB 304 clarifies how an employer may calculate paid sick leave. For nonexempt employees, there are two methods: 1) 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, or 2) 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, paid sick time is calculated in the same manner as the employer calculates wages for other forms of paid leave time.
Grandfather clause. AB 304 adds another option for complying with the Section 246(e) provision that employers who already have a sick leave or PTO policy in effect need not provide additional sick leave if their current policy makes available an amount of leave that may be used for the same purposes and under the same conditions as AB 1522 otherwise requires. The first option provides that the existing sick leave or PTO policy must satisfy the accrual, carryover, and use requirements of AB 1522. The second option, provided by the amendment, grandfathers in policies that were in effect prior to Jan. 1, 2015, that use an accrual method different from one hour per 30 hours worked, provided that the accrual method is on a regular basis so that an employee has no less than one day or eight hours of accrued sick leave or PTO within three months of employment each year. If an employer modifies the accrual method used in such a grandfathered policy, the policy would lose its grandfathered status.
Reinstating sick time. Section 246(f)(2) requires an employer to reinstate previously accrued sick leave for an employee rehired within one year of the date of separation. AB 304 clarifies that an employer is not required to reinstate accrued paid sick time to an employee if the sick leave was paid out to the employee at the time of separation. The amendment also clarifies that the rehired employee is entitled to use previously accrued and unused paid sick days subject to the use and accrual limitations in AB 1522. This is significant because under Section 246(i), an employer has no obligation to allow an employee’s total accrual of paid sick leave to exceed 48 hours or six days.
Recordkeeping. AB 304 clarifies that an employer is not obligated to inquire into or record the purposes for which an employee uses paid sick leave or PTO.