Seyfarth Synopsis: June 7, 2018, when the city’s new Paid Sick Leave rules take effect, marks the latest chapter in the City by the Bay’s long history of imposing local employment standards that exceed state requirements. Here’s what you need to know before this latest San Francisco peculiarity begins.

On May 7, 2018, after considering public input on proposed rules to the City’s Paid Sick Leave Ordinance (PSLO), the San Francisco Office of Labor Standards Enforcement (OLSE) published new rules interpreting the PSLO, which is the granddaddy of municipal paid sick leave (PSL) mandates. The OLSE enacted its original interpretative PSL rules in May 2007. More recently, on January 1, 2017, the OLSE amended the PSLO. Now, nearly 18 months later, updated rules will take effect on June 7, 2018. Highlights of some key aspects follow.

Joint Employers

The PSLO broadly defines “Employer” as “any person…who directly or indirectly…employs or exercises control over the wages, hours, or working conditions of an employee.”

The new rules state that if an employee is jointly employed, and at least one employer is covered by the PSLO, each employer must comply with the PSLO. The rules follow California law to determine if an employee is jointly employed. The OLSE notes, by way of example, that joint employment can occur when an employer uses a temporary staffing agency, leasing agency, or professional employer organization. The new rules further state that a “controlled group of corporations” (as defined by the IRS Code), is considered to be a single employer under the PSLO. Employees of unincorporated businesses also are counted as working for one employer if the business satisfies the IRS’s “controlled group of corporations” definition.

Documentation

Under the PSLO, an employer may only take reasonable measures to verify or document an employee’s use of PSL. As stated in the OLSE’s original PSL rules, employers generally can require employees to provide reasonable documentation justifying their use of PSL for absences of more than three consecutive full or partial workdays. The new rules further explain that employer policies requiring a doctor’s note or other documentation when employees use PSL (a) to attend a medical appointment, or (b) in situations of a pattern or clear instance of abuse will be presumptively reasonable even if the use of PSL was for three consecutive workdays or less.

Rate of Pay

The new rules also provide guidance on calculating employees’ rate of pay for used sick leave and generally track the California statewide standards. Like the CA law, San Francisco’s new PSL rules require different rate of pay calculations for exempt and non-exempt employees. Although the PSLO does not define “regular rate of pay” or “exempt employee,” the new rules defer to the California Division of Labor Standards Enforcement for calculating an employee’s regular rate of pay, and state that an employee’s exempt or non-exempt status is based on whether the employee is exempt from overtime pay under the FLSA and California law. If an individual is exempt, and no other forms of paid leave are provided, the employee must be paid his or her salary without any deduction for sick time taken. However, the time taken can be applied against the employee’s sick leave balance.

Rehired Employees and Breaks in Service

Under the PSLO, employees are entitled to use accrued PSL beginning on the 90th day of employment. For rehired employees, if an employee separates from the employer and is rehired by the same employer within one year, all previously accrued, unused PSL must be reinstated.

In instances where an employee separates from an employer before the 90th day of employment and is rehired within one year, the new rules clarify that the original period of employment is counted toward satisfying the 90-day usage waiting period. For example, if an employee separates from an employer after working for 45 days, and then one month later is rehired, the employee must work another 45 days before the employer needs to permit the employee to use his or her accrued PSL.

Unionized Workforces

The new rules make clear that many PSL practices or policies that have been deemed reasonable in a bona fide collective bargaining agreement (“CBA”) remain so, even if the CBA does not explicitly waive or reference the corresponding PSLO section. This can include practices or policies about notification, verification, increments of time in which paid sick leave must be taken, and sick leave pay rate.

The Upshot

In its introduction to the new rules, the OLSE stated that it was guided by the need to provide clear direction to employers and employees about the PSLO. While these new rules clarify certain gray areas under the PSLO, it remains to be seen whether they will result in further clarification or modifications to the OLSE’s interpretation of the Ordinance.