New Paid Sick Leave Laws Affecting Employers and Employees

    This message serves to inform employers and employees of their rights, duties and obligations under the new California Healthy Workplace Healthy Family Act of 2014 (the “Act”).  The law took effect July 1, 2015.  The July 13, 2015 amendments took effect immediately. The law applies to all employees, both full-time and part-time. Any employee who works 30 or more days within a year from the beginning of his/her employment is entitled to paid sick days under the Act, and employers must provide a minimum of three days or 24 hours of paid sick leave per year.

    When it comes to calculating the amount of paid sick leave accrued by the employee, the employer can choose from the following options:

    1. Statutory Accrual Method: An eligible employee earns one hour of sick pay for every 30 hours worked beginning either July 1, 2015, or, if hired after July 1, on the employee’s first day of work.  Both regular and overtime hours are counted toward the accrual rate of one hour for every 30 hours worked; or
    2. Optional Accrual Method that Provides No Less than 24 Hours by the 120th Day: The employer can provide 3 days/24 hours sick or paid time off (PTO) by every 120th calendar day of employment or each calendar year or in each 12-month period; or
    3. Alternative Accrual for New Hires (Labor Code § 246(b)(4)): “[A]n employer may satisfy the accrual requirements . . . by providing not less than 24 hours or three days of paid sick leave [but not PTO] that is available to the employee to use by the completion of his or her 120th calendar day of employment.”; or
    4. Pre-Existing Employer Policy (Policy in Effect Prior to 1/1/15): You can use your existing accrual method and not provide an additional 3 days/24 hours of paid sick leave or PTO as long as your pre-existing policy accrues on a regular basis and meets both of the following requirements:
      a) Employees have no less than one day or 8 hours of accrued sick leave or PTO within 3 months of employment, each calendar year, or each 12-month period; and
      b) Employees were eligible to earn at least 3 days or 24 hours of sick leave or PTO within 9 months of employment.
    5. Lump-Sum Method: An employer can avoid the administrative and other burdens of having to calculate the accrual and the carryover amounts by using a “lump-sum” method.  Here, the full amount of leave (24 hours or 3 days) is provided to the employee at the beginning of each year of employment, calendar year or 12-month period.  In this “lump-sum” situation, an employee won’t be able to carry over any unused sick days but will get three new sick days at the beginning of the following year.

    Employers can, of course, choose to offer a more generous plan, but are not required to.

    Employers’ Ability to Limit the Amount of Paid Sick Leave Accrued

    If an employer chooses to use one of the accrual options, accrued paid sick days must carry over to the following year of employment, but an employer can cap the employee’s total accrual amount at 48 hours/six days.

    The lump-sum approach does not require a cap because paid sick time does not accrue or carry over from year-to-year.  Instead, the employer places the full amount of leave (three days/24 hours) in the employee’s leave bank at the beginning of each year of employment, calendar year or 12-month period.

    How Can An Employee Use Paid Sick Leave?

    The employee:

    • Cannot start using accrued sick days until the 90th day of employment, after which the employee can use paid sick leave as it is accrued.
    • Can use paid sick time for an existing health condition or preventive care for himself/herself or a “family member” – child, parent (including parent-in-law), spouse or registered domestic partner, grandparent, grandchild or sibling.
    • Is entitled to paid sick leave when he/she makes an oral or written request.
    • Must provide “reasonable” advance notice if the need for paid sick leave is foreseeable.  If not, the employee must provide notice as soon as practicable.
    • Can decide how much paid sick leave he/she needs to use.
    • Cannot be required by the employer to search for or find a replacement worker for the days off.

    What Limits Can Employers Put On Use of Paid Sick Leave?

    The employer:

    • Can require the employee to wait until the 90th day of employment before using paid sick days.
    • Can limit the amount of paid sick days an employee can use each year of employment to 3 days or 24 hours.
    • Can set a “reasonable minimum increment,” not to exceed 2 hours, for use of paid sick leave.  In other words, you can’t require that employees take half of a day off for a doctor’s appointment, but you could require that they take two hours off.
    • Should not require a doctor’s note to validate the need for the leave.  The California Labor Commissioner has taken this position.

    How Does The Employer Pay the Employee for the Sick Day?

    • The paid sick leave must be paid no later than the payday for the next regular payroll period after the sick leave was taken.
    • For nonexempt employees, the employer can calculate the paid sick time in same manner as the “regular rate of pay” for the workweek in which the employee uses paid sick time, regardless of whether the employee actually works overtime that workweek.
    • Another option for nonexempt employees is to divide the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.
    • For exempt employees: calculate paid sick time in the same manner as wages are calculated for other forms of paid leave time.

    When An Employee Leaves

    Employees who leave employment of the company are not entitled to a payout on any accrued but unused paid sick leave.  However, if you combine the sick leave and vacation into a PTO policy, you will have to follow the rules relating to vacation and PTO, including paying out accrued but unused PTO upon termination.

    Documents/Notice Requirements

    The employer should obtain all documents and notices relating to the Act, as well as the complete 2015 California and Federal Employment Notices Poster (these notices/postings can be obtained from the California Chamber of Commerce).  These documents/notices should be posted in an area frequented by employees where they may easily be read during the workday.

    The employer should also confirm with its payroll service that the service is providing the proper pay-stub notice (i.e., a written notice on each wage statement setting forth the amount of paid sick leave available to the employee each pay period).

    Recordkeeping Requirements

    The employer must keep records for at least 3 years that document the number of hours that each employee worked and paid sick days accrued and used by each employee.

    Penalties for Non-Compliance with Act

    The Act contains various stiff fines and penalties for not providing sick days, ranging from $50 to $4000 aggregate.

     

    Please contact Gustafson Nicolai pc at 310.361.0787 or acn@gnlawpc.com or jrg@gnlawpc.com with any questions.

    Posted by Adam C. Nicolai, Esq. and Ryan Gustafson, Esq. (Diana Nguyen contributing), January 6, 2016.