Beginning July 1, 2015, California employers, with limited exceptions, must grant every employee 24 hours or three paid sick days each year. Even employers who are already providing paid sick leave face potential liability for failing to comply with the new law’s accrual, notice and recordkeeping requirements. Employers should start preparing now for this regulatory challenge as this state-mandated benefit will likely be fertile ground for new wage and hour class actions.
Entitlement To Paid Sick Leave
California employees are entitled to accrue paid sick leave after they have worked in the state for 30 or more days within a year of the start of their employment. This includes full-time, part-time, seasonal, per diem, and temporary employees. Unlike other leave laws, there is no exemption for “small” employers so all employers regardless of size must provide paid sick leave, subject to limited exceptions.
Accrual Of Sick Leave
After the introductory 30 days, employees accrue one hour of paid sick leave for every 30 hours worked, including overtime hours. Employees may decide the amount of sick time they wish to use, although their employer may set a reasonable increment of use, not to exceed two hours. Employers also may limit use of paid sick leave to 24 hours or three work days per year. For those with an alternative workweek schedule, employers may be required to allow more than 24 hours of paid sick time to equate to three work days of paid leave per year. Similarly, part-time employees working less than eight-hour days may take more than three work days, up to the statutory limit of 24 hours per year.
You may cap the total amount of accrued paid sick time at 48 hours or six work days. Employees are entitled to carry over accrued but unused sick days into the following year, subject to the 48 hour/six-day accrual cap. But employees are not entitled to be paid for accrued but unused sick days upon resignation or termination of employment. If you rehire an employee within a year of separation, you must reinstate any unused sick leave that was previously accrued.
Calculating The Rate Of Pay
For non-exempt employees, paid sick leave is normally calculated at the employee’s hourly rate of pay. For exempt employees and those with variable pay rates, including those paid on a commission or piece rate, the rate of pay is calculated by totaling the employee’s wages, excluding overtime premium pay, and dividing by the employee’s total hours worked in the full pay periods of the 90 days prior to taking leave. Because these regulations don’t supply immediate answers to all situations, you should seek legal counsel for guidance when applying these provisions.
Employees may use paid sick leave to seek preventive care or for the diagnosis, care, or treatment of their own existing health condition or that of a family member. Covered family members include a spouse, registered domestic partner, children (regardless of the child’s age or dependency status), parents (including step-parents and parents-in-law), grandparents, grandchildren, and siblings. Paid sick days are also available for employees who are the victims of domestic violence, sexual assault, or stalking.
Changes For Employers Currently Offering PTO Or Paid Sick Leave
Even those employers who already offer paid sick leave or paid time off (PTO) will likely have to revisit their policies. In particular, you must ensure that your current policies: 1) satisfy the accrual, carryover, use, and reinstatement requirements of the law; and 2) provide no less than the minimum amount of paid sick time required by law.
Employees must provide reasonable advance notice, orally or in writing, of their need to use accrued paid sick leave. If the need for leave is unforeseeable, notice must be provided as soon as practicable. Surprisingly, there is no provision in the law permitting employers to require reasonable documentation that the sick time was used for a covered purpose. Consequently, absent some future clarification, or unless allowed under another applicable leave law (e.g., FMLA, California Family Rights Act, pregnancy disability leave, workers’ compensation, etc.), you should refrain from requesting medical documentation to support the leave taken.
Employer Notification And Recordkeeping Requirements
California employers must provide employees with written notice of their right to accrue paid sick leave under the new law, as follows:
- Poster: Starting January 1, 2015, display a poster informing employees of their right to accrue paid sick leave under the new law. This poster is available on the Division of Labor Standards Enforcement (DLSE) website.
- Wage Theft Prevention Act Notice: Revise this notice which is provided to all new hires to include information regarding employees’ rights to paid sick leave under the Healthy Workplaces, Healthy Families Act.
- Itemized Wage Statements: Provide written notice of the amount of paid sick leave available for use or the amount of PTO that your company provides in lieu of sick leave. Alternatively, this information may be provided in a separate writing on the employee’s pay date at the time wages are paid.
Employers also face new record-retention requirements. Employee usage and accrual of paid sick leave must be documented and retained for at least three years, and the records must be made available for employee inspection within 21 days of a written or oral request. If you do not keep adequate records, your employees will be presumed to be entitled to the maximum number of accrued hours.
One aspect of the law is unprecedented. If an employer takes adverse action against an employee within 30 days of the employee asserting paid sick leave rights, there is a presumption of unlawful retaliation. This presumption is “rebuttable,” meaning it can be proven wrong, but the burden of proof is on the employer to prove that the decision was for a legitimate business reason, rather than on the employee to prove retaliation.
Enforcement And Penalties
The California Labor Commissioner and the state Attorney General have the authority to enforce paid sick leave requirements and order “any appropriate relief,” which may include reinstatement, back pay, payment of unlawfully withheld sick days, administrative penalties, and enforcement fines payable to the state. Employers who fail to comply with the posting, notification and record-keeping requirements face monetary penalties. There is a safe haven from penalties and liquidated damages for employers who can attribute their non-compliance to an isolated and unintentional payroll error or written notice error deemed to be a clerical error or an inadvertent mistake.
Your Next Steps
Every employer with employees in California should examine their policies and procedures now to prepare for this new required employee leave. Keep in mind the following considerations when preparing for July 1st:
- Determine the type of leave to offer: You have several options in implementing paid sick leave that complies with the new law. For example, if you wish to avoid the administrative burden of tracking accrual and carryover leave, consider frontloading the minimum amount of leave at the beginning of each year which alleviates the need to track accruals or carryovers.
If you currently offer paid sick leave or PTO only to full-time employees, you may consider extending your current benefits to non-full-time employees. Or you may choose to adopt a separate paid sick leave policy that applies to employees who are not full-time. Various options exist so consider what will work best for your organization while staying compliant with the new requirements.
- Adopt a compliant written policy: Given the extensive consequences of non-compliance, adopt or revise your written leave and attendance policies to comply with the new law. Because the legislature left many unanswered questions, be sure to consult with experienced California labor and employment counsel in drafting sound and compliant policies.
- Train your supervisors: The rebuttable presumption of retaliation creates high stakes for employers. Inform and train your supervisors on employees’ rights under the law and your organization’s policies and procedures for addressing requests for time off.
- Determine interaction with local sick pay laws: Some municipalities have their own sick leave pay regulations. The statewide law generally does not limit more generous provisions in local regulations regarding sick leave, but will preempt those provisions which are less generous to employees. Again, it’s best to seek legal counsel when harmonizing local sick pay laws with California’s new paid sick leave law.