While employers are not required to provide paid sick leave to their California employees, those that do provide such a benefit are required to abide by the provisions of Labor Code sections 233 and 234. Labor Code section 233 mandates that employers who provide a paid sick leave benefit must allow employees to use one-half of their annual accrued paid sick leave to care for an ill family member (parent, child, spouse or registered domestic partner). This provision of the Labor Code is commonly called "kin care" leave. In addition, Labor Code section 234 prohibits employers from disciplining or terminating employees because they use "kin care" leave.

Until recently, it was unclear how or whether the "kin care" provision of the Labor Code applied to paid sick leave policies that did not place a limit on the number of paid sick days employees can take each year. On February 18, 2010, the California Supreme Court, in McCarther et al. v. Pacific Telesis Group et al., reversing a ruling by the California Court of Appeal, held that Labor Code section 233 does not apply to employers who have sick leave policies that provide an unlimited amount of paid leave.

Question Presented to the Supreme Court

Plaintiffs Kimberly McCarther and Juan Huerta sued various divisions of SBC Communications Inc., for violation of Labor Code sections 233 and 234. In McCarther, the plaintiffs were covered by a collective bargaining agreement ("CBA") which, as a practical matter, allowed employees an unlimited number of compensated days off for their own illness. The CBA sick leave provision stated: "[a]ll employees with at least one (1) year of service shall be paid for sickness absence beginning with the first scheduled working day of absence. Sickness absence payments shall be limited to a maximum of five (5) days in the seven-day period."

Once the employee returned from sick leave, this provision allowed employees to take an additional five consecutive sick days in the next seven-day period, and so on. As such, since the employees could essentially take as many paid sick days as they wanted for their own illness, it follows that Labor Code section 233 would require that the employer allow an unlimited amount of paid sick leave for "kin care." The only constraints placed upon employees in the use of paid sick leave was defendants' attendance management policy, which provided that employees who used excessive sick leave (as defined in the CBA) were subject to discipline and termination.

At the trial court level, defendants' motion for summary judgment was granted. The trial court held that the sick leave provision was not governed by Labor Code section 233, because under the CBA, "employees do not earn, vest or accrue any particular number of paid sick days in a year" and "employees do not have a ‘bank' of paid sick days that they accrue in increments over a period of time." Plaintiffs appealed. The Court of Appeal reversed, holding that the sick leave provision was governed by Labor Code section 233 and that, under Labor Code section 234, the plaintiffs could not be disciplined for taking unlimited amounts of "kin care."

Supreme Court's Analysis

The Supreme Court reversed the Court of Appeal and concluded that Labor Code section 233 does not apply to employers who have a policy that provides their employees with uncapped paid sick leave. The Court noted that "kin care" is applicable only to paid sick leave policies that "accrue" sick leave, so that there is a way to determine the amount of sick leave an employee has "banked" for use for the employees' own illness or to care for a covered family member.

The Court reasoned that, absent a policy that enumerates an amount of accrued days per year, an employer cannot accurately determine the amount of compensated time off employees might be permitted to in a six-month period. As such, an employer is unable to determine the amount of sick days that an employee could use under Labor Code section 233 and, therefore, Labor Code section 233 does not apply to such sick leave policies.

What It Means To Employers

In its decision, the Court recognized that employers have options with respect to paid sick leave: 1) no paid sick leave provided; 2) a finite amount of accrued sick leave is provided; or 3) an unlimited amount of paid sick leave is provided.

The Court affirmed that employers have the prerogative to determine which option to choose.

The Court held that Labor Code sections 233 and 234 only apply to employers who select the second option and adopt a policy that accrues a definite amount of sick leave per year. As such, employers may wish to consider adopting a sick leave policy that does not accrue paid sick leave, but rather allows employees to take as much sick leave as needed, subject to the provisions of the employers' attendance management policy.

However, such a policy must be applied consistently to avoid claims of unlawful discrimination and the attendance management policy cannot be applied to absences that are protected by statutes. Further, any policy that gives employees discretion over the amount of paid time off they can take may be open to abuse by individuals who try to "game" the system. Therefore, employers should carefully weigh the pros and cons of such a policy before its adoption.