Starting on July 1, 2015, California will become the second state in the nation (Connecticut was first) to require employers to provide paid sick leave. This Update answers some of the most frequently asked questions about California’s paid sick leave law, which is known as the Healthy Workplaces, Healthy Families Act of 2014 (AB 1522, the “Act”).
What employers are covered?
The Act applies to all private and public employers with California employees regardless of size. An employee who has worked in California for 30 or more days within a year from the beginning of his/her employment will be entitled to paid sick leave under the Act. Even out-of-state employers can be covered if they have employees who spend sufficient time working in California.
Importantly, employers with employees in San Francisco, San Diego, and, beginning March 2, 2015, Oakland, are also covered by local paid sick leave ordinances. California’s Act does not preempt or limit these local ordinances, which generally provide employees with greater paid sick leave benefits. Employers with employees in these cities should review their applicable paid sick leave ordinances or consult with employment counsel regarding the additional benefits they must provide.
What employees are covered?
Part-time and full-time employees are covered as well as exempt and non-exempt employees.
Employees not covered by the act are limited to the following four groups:
How much paid sick leave will employees be entitled to?
Eligible employees earn one hour of sick pay for every 30 hours worked. Both regular and overtime hours count toward the accrual. Exempt employees are deemed to work 40 hours a week. If, however, an exempt employee’s regularly scheduled work week is more or less than 40 hours, then accrual will be based on their regularly scheduled workweek.
What limits or caps can an employer put on paid sick leave?
Employers may preclude new employees from using accrued paid sick days until the 90th day of employment, after which the employee can use paid sick leave as it is accrued.
Employers may limit the amount of paid sick days an employee can use in a single year of employment to 24 hours (three days). In addition, an employer can cap the employee’s total accrual amount at 48 hours (six days). Employers can, of course, choose to have a more generous plan allowing the employee to use and accrue more than the minimum amounts required under the Act.
Like paid vacation, accrued paid sick carries over to the following year of employment.
Employers can avoid having to calculate the accrual and the carry-over amounts by providing the full minimum amount of leave (24 hours) to employees at the beginning of each year. Under such a “lump-sum” policy, an employee won’t be able to carry over unused sick days but will get three new sick days the following year.
How does the Act impact employers’ existing paid sick leave policies?
Employers need not provide the additional paid sick days required by the Act if they have a preexisting paid leave 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 this new law. The employer’s policy must either:
Employers will have to make sure that any existing policies can be used for all the same purposes and conditions specified under the Act.
Are employees entitled to “cash out” their accrued but unused paid sick leave when the employment relationship ends?
No. Unlike accrued unused vacation, which is treated like wages, sick leave under the Act does not need to be paid out at the end of employment. However, previously accrued and unused paid sick days must be reinstated if an employee leaves employment and is then rehired within one year.
How may employees use paid sick leave?
Employees may use paid sick time for an existing health condition or preventive care for themselves or a “family member.” Family member has a broader definition than is found in the Family and Medical Leave Act/California Family Rights Act (FMLA/CFRA). A family member under the Act is a:
Paid sick leave may also be used for an employee who is a victim of domestic violence, sexual assault or stalking.
Paid sick leave must be provided upon an employee’s oral or written request. If the need for paid sick leave is foreseeable, employees must provide reasonable advance notice. If not, the employee must provide notice as soon as practicable.
An employee may determine how much paid sick leave he/she needs to use. An employer, however, can set a “reasonable minimum increment,” not to exceed two hours, for the use of paid sick leave.
What are the documentation/notice requirements?
First, employers must provide employees with a written notice setting forth the amount of available paid sick leave each pay period. Employers can either provide this notice on the already required itemized wage statement or in a separate writing provided with the payment of wages.
Second, the Wage and Employment Notice (Labor Code section 2810.5), which employers have been required to provide since 2012, will now need to contain information about an employee’s right to accrue and use paid sick leave and about employee protections under the Act. The Labor Commissioner is required by law to develop this form and will need to provide an updated version.
Third, there is a required poster advising employees of their sick leave rights. The Labor Commissioner will also produce this poster.
Finally, employers will need to keep records for at least three years that document the number of hours that employees worked and paid sick days accrued and used by an employee. If the employer does not keep adequate records, there is a presumption that the employee is entitled to the maximum number of hours accruable.
What are the penalties for noncompliance?
The Act forbids employers from denying employees the right to use accrued paid sick days. Employers cannot discriminate or retaliate against employees for using or attempting to use accrued sick days or filing a complaint or cooperating in an investigation alleging a violation of the Act.
The Act contains various fines and penalties for not providing sick days ranging from $50 to $4,000 aggregate. In addition, employers can be required to compensate the state up to $50 for each day or portion of a day when a violation occurs or continues. This sum can be assessed for each employee and there is no maximum aggregate. There is also a fine for willfully violating the posting requirement of up to $100 for each offense.
The Act further authorizes the Labor Commissioner or the Attorney General to bring a civil action to enforce the law and obtain relief on behalf of any employee, including back pay, payment of sick days unlawfully withheld, penalties, liquidated damages, attorneys’ fees and costs.
Isolated, unintentional payroll errors or notice errors that are clerical or inadvertent mistakes will not be considered violations of the Act. The determination as to whether an employer has committed a violation may include an examination of whether the employer has compliant policies and practices in place.
The Act is not simple! Should you have questions or concerns about how the Act will impact your business, please contact our team of employment lawyers.