In a flurry of activity before the Labor Day holiday, the California Legislature moved to make California only the second state in the nation to mandate paid sick leave for employees (Connecticut’s 2011 paid sick leave law was the first). On August 30, 2014, the Legislature passed Assembly Bill 1522 (AB 1522), the “Healthy Workplaces, Healthy Families Act of 2014,” requiring employers to provide up to three days of paid sick leave each year for most California employees. Though the proposed new law awaits Governor Jerry Brown’s signature, he has expressed strong support for the bill and is expected to sign it before its September 30, 2014, veto deadline.

Who is covered?  

Under AB 1522, an employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the start of employment is entitled to paid sick leave. Upon the oral or written request of an employee, an employer must allow the use of accrued sick leave for 1) the diagnosis, care, or treatment (including preventive treatment) of an existing health condition for the employee or the employee’s family member, and 2) an employee who is the victim of domestic violence, sexual assault, or stalking.

“Family member” is broadly defined as including:

  1. A child (regardless of age), including a biological, adopted, or foster child; legal ward; or a child to whom the employee stands in loco parentis
  2. A biological, adoptive, or foster parent, stepparent, or legal guardian of an employee or the employee’s spouse or registered domestic partner, or a person who stood in loco parentis when the employee was a minor child
  3. A spouse
  4. A registered domestic partner
  5. A grandparent
  6. A grandchild
  7. A sibling

The expansive definition of “family member” goes beyond the definitions in place for family leave under the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA), creating a situation in which employees may be entitled to paid sick leave that is not chargeable to their FMLA or CFRA entitlements.

AB 1522 will not apply to certain in-home supportive service workers, flight deck or cabin crew members of air carriers, and employees working under collective bargaining agreements that provide specified minimum pay and benefit levels, including paid leave in excess of that mandated by the anticipated law.

For all other employees, the bill mandates the accrual of paid sick leave at a rate of not less than one hour for every 30 hours worked. The new law will apply equally to exempt and non-exempt employees, with exempt employees presumed to have a 40-hour workweek for accrual purposes unless the employees’ normal workweek is less than 40 hours, in which case the employees will accrue paid sick leave based on their normal workweek.

As for the definition of covered employers, the anticipated statute will apply to all private and most public employers. The statute does not exempt “small businesses” from its coverage, unlike similar municipal paid leave ordinances.

Accrual, use, and carryover  

Employees will be entitled to use accrued paid sick leave beginning after the 90th day of employment, after which they may use paid sick leave as it is accrued. Accruals, however, will begin on the later of the statute’s effective date or the commencement of employment. Accordingly, while employees must work at least 30 days within the year to earn paid sick leave, and while new employees will not be entitled to use paid sick leave until the 90th day of employment, accruals will be retroactive to the first day of employment for employees hired after the statute’s effective date. An employer may elect to advance sick leave to an employee before it is accrued, but is not required to do so.

All unused sick leave will carry over to the following year of employment. Instead of tracking accruals and carryover, however, the statute permits employers to provide the full allotment of sick leave at the beginning of each year. The statute does not clarify if “year” in this context refers to year of employment, calendar year, or something else. Sick leave accruals may be capped at 48 hours (six workdays). 

Employers may limit the use of paid sick leave to 24 hours (or three workdays) in each year of employment. Employers may also set a “reasonable minimum increment, not to exceed two hours” for the use of paid sick leave, but the statute expressly authorizes the employee to “determine how much paid sick leave he or she needs to use.” This provision arguably seems to override the employer’s ability to schedule leave within the requirements of its workplace and staffing needs.

The proposed statute attempts to define the “hourly rate” at which accrued sick leave must be paid out when used, but does not address the wages earned by tipped employees or certain other employees who receive non-traditional pay.

Accrued but unused sick leave will not need to be paid out upon termination, resignation, retirement, or other separation from employment (unless, of course, the employer provides undifferentiated paid time off in lieu of sick leave, with such PTO being payable upon termination). If an employee separates from his employment but is rehired within one year, any previously accrued and unused paid sick leave will need to be reinstated, and the employee will be able to use the restored leave time without satisfying the 30- and 90-day waiting periods applicable to new employees.

Other alternatives

Employers may also satisfy the mandates of the paid sick leave statute through an existing paid leave policy or paid time off policy that makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in the proposed statute and that either 1) satisfies the accrual, carryover, and use requirements of the statute; or 2) provides no less than 24 hours or three days of paid sick leave, or equivalent paid leave or paid time off, for employee use during each year of employment, calendar year, or 12-month basis.

Notice, posting, recordkeeping, and enforcement

The proposed law will place new notice, posting, and recordkeeping requirements on employers, including:

  1. Notice on wage statements: Employers will have to provide employees with written notice that sets forth the amount of paid sick leave available for use on either the employee’s itemized wage statement or a separate writing provided on the designated pay date with the employee’s payment of wages.
  2. Workplace posters: Employers will have to display a poster in a visible location specifying 1) that employees are entitled to accrue, request, and use paid sick days; 2) the amount of paid sick days provided for by the new law; 3) the terms of use for paid sick days; and 4) that retaliation or discrimination against an employee who requests or uses paid sick days, or both, is prohibited and that an employee who experiences prohibited conduct has a right to file a complaint with the California Labor Commissioner. The Labor Commissioner is charged by the statute with creating a suitable poster and making it available to employers.
  3. Recordkeeping: Employers will have to keep records documenting the hours worked and paid sick days accrued and used by an employee for at least three years. The Labor Commissioner will have access to these records, and employers must make the records available to their employees. 

The statute authorizes the Labor Commissioner to enforce the new law, investigate alleged abuses, and order appropriate relief for violations. Either the Labor Commissioner or the Attorney General will be able to bring a civil action against persons violating the new law. The new statute contains broad penalty and anti-discrimination and retaliation provisions, including a rebuttable presumption of unlawful retaliation under certain circumstances. Finally, the statute provides that it establishes minimum requirements for paid sick leave and does not preempt, limit, or otherwise affect the applicability of any law, regulation, or requirement that provides for greater accrual of sick leave benefits, whether paid or unpaid, or similar employee protections.