Seyfarth Synopsis: On October 1, 2017, after more than a year of waiting, the Berkeley, CA paid sick leave ordinance goes into effect. The ordinance provides extraordinarily generous paid sick leave benefits to employees beyond those provided by the California statewide paid sick leave law.

A little over a year ago, on August 31, 2016, the City of Berkeley, California enacted the “Paid Sick Leave Ordinance.” Berkeley will be the eighth California city with such an ordinance.[1] Because California’s statewide paid sick leave law does not supersede local ordinances, employers must reckon with both the state and local laws, and follow the one that most favors employees. With the October 1 effective date fast approaching, employers with employees in Berkeley should take steps now to ensure their policies and practices comply with the impending law.

Below is a detailed summary of the Berkeley Ordinance and the obligations it imposes. Among its most significant provisions are these: (i) there is no permissible cap on how much earned paid sick leave employees can use in a year, (ii) there is a 72-hour accrual cap (likely a “point-in-time” cap) for large employers, and (iii) employees without a spouse or registered domestic partner can designate an individual as to whom the employee will be eligible to take paid sick leave.

Which Employers Are Covered by the Ordinance?

The Ordinance covers all employers with at least one eligible employee working in Berkeley, and broadly defines “employers” to include anyone who—whether directly or through a staffing agency—exercises control over the wages, hours, or working conditions of any employee.

Covered employers need not provide additional earned sick leave if they provide employees with paid leave that meets or exceeds the Ordinance’s minimum standards. And Ordinance requirements may be waived in a bona fide collective bargaining agreement if the waiver appears in clear terms.

Which Employees are Covered by the Ordinance?

The Ordinance broadly defines covered employee as an individual who performs at least two hours of work within the geographic boundaries of the City of Berkeley in a calendar week and who qualifies as an individual entitled to minimum wage under the California minimum wage law.

How Much Sick Leave Can Employees Accrue?

Employees accrue one hour of paid sick leave for every 30 hours worked. Employees will begin accruing earned sick leave on the later of the Ordinance’s effective date (Oct. 1, 2017) or the employee’s commencement of employment, and can begin using accrued paid sick leave 90 calendar days thereafter.

The cap on accruals depends on how many employees the employer has. For employers with at least 25 employees working in a given week,[2] the cap on accrual is 72 hours. For employers with fewer than 25 employees working in a given week, the cap is 48 hours. While not explicitly stated in the Ordinance, it is likely that this accrual cap is a “point-in-time” or “rolling” cap, meaning that accruals cease whenever an employee’s bank of accrued, unused paid sick leave reaches 72 (or 48) hours and begin again when the employee uses sick leave.

How Much Sick Leave Can Employees Carry Over?

The amount of earned, unused paid sick leave that an employee is entitled to carry over to the next calendar year is the same as the caps on accrual: 72 hours for employers with at least 25 employees and 48 hours for employers with fewer than 25 employees.

While the Ordinance is silent on whether employers can adopt a frontloading program to avoid accrual and year-end carryover obligations, the city’s paid sick leave FAQs provide some relevant information. The FAQs state that employers can provide a lump sum of paid sick leave at the start of each year of employment. But employees must be entitled to accrue additional paid sick leave if they work enough hours to accrue the amount that was initially allocated upfront. In other words, Berkeley employers can “advance” paid sick leave accrual to their employees, but cannot adopt a frontloading system that wholly avoids accrual and removes year-end carryover of unused time.

How Much Sick Leave Can Employees Use in a Year?

The Berkeley FAQs state that employers can establish an initial one hour minimum increment of using paid sick leave. Thereafter, employees must be permitted to use paid sick leave in 15-minute increments. Both of these standards are more generous for employees (and more onerous for employers) than those under the California statewide paid sick leave law.

For employers with at least 25 employees, there is no cap on the number of accrued hours that an employee may use in a benefit year. But employers with fewer than 25 employees may limit an employee’s annual use of paid sick days to 48 hours. The interplay between unlimited paid sick leave usage and a 72-hour “point-in-time” accrual cap could mean that Berkeley employees working for employers with at least 25 employees could use more than three weeks of paid sick leave in a single benefit year.

Under What Circumstances May Employees Use Sick Leave?

After working for an employer for 90 calendar days, Berkeley employees can use paid sick leave earned under the Ordinance for any of the following reasons:

  • when the employee is ill or injured,
  • for the purpose of the employee’s receiving medical care, treatment, or diagnosis (as specified more fully in California Labor Code section 233(b)(4)), or
  • to aid or care for a covered family member who is ill or injured or receiving medical care, treatment, or diagnosis.

A “covered family member” means a child, parent, legal guardian or ward, sibling, grandparent, grandchild, spouse or registered domestic partner. A “child” includes a child of a domestic partner and a child of a person standing in loco parentis. Child, parent, sibling, grandparent, and grandchild relationships include biological relationships as well as adoptive, step, and foster care relationships.

An employee who has no spouse or registered domestic partner can designate one person as to whom the employee may use paid sick leave, to aid or care for that person. Employers must notify the employee of this right to designate by the time that the employee has worked 30 hours after paid sick leave begins to accrue. The employee then has 10 workdays to make the designation. Thereafter, the opportunity to make such a designation, including the opportunity to change a designation previously made, must be extended on an annual basis, giving employees 10 workdays to designate.

Although the California statewide paid sick leave law allows a covered employee to use paid sick leave for reasons related to domestic violence, sexual assault, or stalking, the Berkeley ordinance does not. But because Berkeley employers must comply with both the Ordinance and state law, Berkeley employees will be able to use accrued paid sick leave for these additional purposes as well.

What Notice Must Employees Provide When Using Sick Leave?

If the need for paid sick leave is foreseeable (e.g., scheduled doctor’s appointments), then the employee must provide the employer with reasonable advance notice. But if the need for leave is unforeseeable (e.g., sudden illness), then the employee must provide notice of the need for the leave as soon as practicable.

What Documents Can Employers Ask Employees to Provide When Using Sick Leave?

Employers may take only reasonable measures to verify or document that an employee’s use of paid sick leave is lawful. Moreover, employers may not require employees to incur expenses that exceed $15 in order to prove their eligibility for paid sick leave.

Is an Employer Required to Pay Unused Time upon Employment Separation?

No. Employers are not required to cash out an employee’s accrued sick leave balance upon separation from employment. But the Berkeley FAQs state that if an employee separates from employment and returns to the employer within 12 months, then previously accrued, unused paid sick leave shall be restored.

Employer Notice Requirements

Employers must report the number of hours of paid sick leave accrued to date in any records they provide to employees at the end of each pay period.

Employers also must post in a conspicuous place at the workplace a notice published by the City, to inform employees of their paid sick leave rights under the Ordinance. The notice must be posted in any language spoken by at least 5% of the employees at the workplace or job site.

If employees do not have a regular physical location where they perform their work, the employer must provide a copy of the City notice to the employees when they are hired or assigned to complete work within the City of Berkeley.

Records Maintenance Requirements

Employers must retain payroll records pertaining to all employees for a period of four years. These records must include the amount of hours worked, wages paid, and paid sick leave accrued.

What Employers Cannot Do

Employers must not:

  • require, as a condition of taking paid sick leave, that the employee secure a replacement worker to cover the hours the employee will miss on paid sick leave,
  • interfere with, restrain, or deny the exercise of—or the attempt to exercise—any right provided under the Ordinance, or
  • discriminate in any manner or take any adverse action against any person in retaliation for exercising rights protected under the Ordinance.

Remedies and Penalties

Administrative fines range from $500 for failing to (a) post the notice, (b) maintain payroll records or allow the City access to those records, or (c) provide a wage statement to $1,000 for each employee against whom retaliatory action was taken. Repeat offenders may be subject to additional fines.

The Ordinance also gives employees a private right of action, entitling them to sue for back wages, civil penalties, reinstatement, injunctive relief, and, of course, attorney’s fees. The City itself may recover administrative costs of enforcement, reasonable attorney’s fees and any civil penalties, and may order an employer to post a notice of non-compliance.

What Should Employers Do Now?

With the Ordinance’s effective date looming, Berkeley employers should take steps now, including the following, to achieve compliance:

  • Review existing sick leave policies and either implement new policies or revise existing policies to satisfy the Ordinance.
  • Post the required notices in all applicable languages.
  • Prepare notices in all applicable languages to provide to employees at the time of hire or once the Ordinance is implemented, as required.
  • Review policies on attendance, anti-retaliation, conduct, and discipline.
  • Train supervisory and managerial employees, as well as HR, on the new requirements.
  • Ensure that payroll records adequately reflect accrual and use of paid sick leave.

With the paid sick leave landscape continuing to expand and grow in complexity, companies should reach out to their Seyfarth contact for solutions and recommendations on addressing compliance with this law and sick leave requirements generally. To stay up-to-date on Paid Sick Leave developments, click here to sign up for Seyfarth’s Paid Sick Leave mailing list.

[1] Berkeley joins Emeryville, Long Beach, Los Angeles, Oakland, San Diego, San Francisco, and Santa Monica as California cities with paid sick leave ordinances. The Long Beach ordinance establishes paid sick leave for certain hotel employers. Los Angeles has two paid sick leave ordinances, one of which—the Los Angeles Citywide Hotel Worker Minimum Wage Ordinance—applies only to certain hotel employers.

[2] The Ordinance determines the size of an employer by counting all persons performing work for compensation on a full-time, part-time, or temporary basis, including individuals made available to work through the services of a temporary services or staffing agency or similar entity.