California Governor Jerry Brown, on August 29, 2014, signed the
California Healthy Workplaces, Healthy Families Act of 2014, which
requires all California employers to provide at least three paid
sick days per year to employees, with only very limited exceptions.
This law applies to all private-sector employers regardless of size
and to all state, county, and municipal employers.
Effective Date of the New Paid Sick Leave
Rules
The Act's provisions for the accrual and use of paid sick days
becomes effective on July 1, 2015. However, as discussed in
"Permissible Uses of Sick Leave," below, the Act contains
posting, recordkeeping, and pay stub disclosure requirements that
may be effective January 1, 2015.
Required Accrual of Paid Sick Leave; Limitations on Use of
Paid Sick Leave
The Act requires that employers permit employees to accrue paid
sick days at the rate of at least one hour of paid sick leave per
every 30 hours worked, or approximately 8.7 sick days per year for
a full-time employee. However, the employer may limit the use of
paid sick days to 24 hours or three days in each year of
employment.
Employees who work 30 or more days within a year from commencement
of employment are entitled to accrue and use paid sick leave. An
employee is entitled to use accrued sick leave beginning on the
90th day of employment.
The Act further requires that accrued paid sick days carry over
from year to year, but the employer may limit the amount of
carried-over, accrued paid leave to 48 hours or six days, as long
as the employer does not otherwise limit the employee's right
to accrue and use paid sick leave. Sick leave may be used in
increments of less than a full day. An employer may establish a
reasonable minimum increment, not to exceed two hours, for the use
of paid sick leave.
Effect on Existing Sick Leave or PTO Plans
Many employers already have sick leave or personal time off plans
that comply with most or all of the statute. For those employers,
the employer's current plan will be deemed to satisfy the
statute, and no additional leave accrual is required, if the
employer (i) makes available the required amount of leave to be
used for the employee's illness or the illness of a child,
spouse, parent, stepparent, grandparent, grandchild, sibling, or
certain other family members; (ii) the employer's plan provides
for paid leave at the same rate of pay as the employee normally
earns during regular work hours; and (iii) the employer's plan
permits the carryover of paid sick leave and an accrual rate no
less favorable than required by the statute.
Existing sick leave or personal time off plans will be deemed to
comply with the accrual/carryover requirements if the plan provides
no less than 24 hours or three days of paid sick leave or the
equivalent for each year of employment and if it permits the
carryover of accrued paid sick leave or personal time off up to at
least the 24 hour or three day per year accrual "cap" in
the statute.
No Payment of Accrued Sick Leave on Termination
(Usually)
Generally, sick leave pursuant to the Act need not be paid on
termination of employment (discharge, quitting, or retirement).
However, many employers' current "personal time off"
plans are treated under California law as the equivalent of
vacation pay. Accrued, unused leave under those plans must be paid
at the time of termination of employment.
If an employee separates from employment and is rehired by the
employer within one year from the date of separation, previously
accrued and unused pay sick days must be reinstated. The employee
being rehired is entitled to use the previously accrued but unused
paid sick days and to accrue additional paid sick days based on the
date of rehire.
Rate of Pay for Paid Sick Leave
For employees paid by methods where the wages fluctuate (e.g.,
commission, piece rate, multiple hourly rates, etc.), the rate of
pay for paid sick leave is determined by dividing the
employee's total wages for the 90 days of employment before
taking the sick leave by the total hours worked in that period,
excluding overtime premiums. Hourly employees are paid according to
their hourly rate of pay. Overtime-exempt employees are deemed to
work 40 hours per work week unless the normal work week is less
than 40 hours, in which case the employee accrues paid sick days
based upon that normal work week.
Sick leave taken by an employee must be paid no later than the
payday for the next regular payroll period after the sick leave was
taken.
Requirement for Advanced Notice
The employee must provide reasonable advance notice of the use of
paid sick leave if the reason for the paid sick leave is
foreseeable. If the need for the paid sick leave is not
foreseeable, the employee must provide notice of the need for leave
as soon as practicable. Paid sick leave must be paid no later than
the next regular payroll period after the sick leave was
taken.
Permissible Uses of Sick Leave
Paid sick days may be used for the diagnosis, care, or treatment
of an existing health condition or preventive care for an employee
or the employee's family member. "Family members"
include a child, foster child, stepchild, legal ward, a child to
whom the employee stands in loco parentis, a parent
(biological, adopted, or foster parent), stepparent, legal
guardian, spouse, registered domestic partner, grandparent,
grandchild, sibling, or a person who stood in loco
parentis when the employee was a minor child. The Act
also requires that sick leave be available for use by an employee
who is a victim of domestic violence, sexual assault, or
stalking.
Postings, Notification, Recordkeeping, Paystub Disclosure
Requirements
The Act contains several posting, recordkeeping, disclosure, and
notification requirements.
First, the employer must provide the employee with written notice
of the amount of paid sick leave available or paid time off that
the employer provides in lieu of sick leave, either on the
employee's itemized wage statement or in a separate writing
provided on the designated paid date with the employer's
payment of wages. This creates an obligation to notify all
employees every pay period of the amount of sick leave or paid time
off that can be used for purposes stated in the Act. Failure to do
so can result in penalties as discussed below.
Next, the employer must keep records for at least three years
documenting the hours worked and paid sick leave days accrued and
used by each employee. The Labor commissioner must be allowed
access to these records, and the employer must make the records
available to an employee upon request in accordance with the
provisions of California Labor Code Section 226. If the employer
does not maintain such records, it cannot enforce the three-day
annual usage and six-day maximum accrual "caps" unless it
shows the employee's actual usage, or the existence of those
caps, by "clear and convincing evidence."
The Act also requires that the employer display a poster in a
conspicuous location in the workplace containing a description of
the requirements of the Act. The poster must also contain an
anti-retaliation statement. The Labor commissioner is to develop a
poster that can be used by all employers.
Although the accrual/sick leave usage provision states that
accrual need not begin until July 2015, there is no provision in
the statute for the effective date of the paystub disclosure,
posting, notification, and recordkeeping requirements. The apparent
intent of the Act is that the disclosure, posting, and related
requirements would also be effective as of July 1, 2015. However,
under general California law, a statute becomes effective on
January 1 of the year following its signature by the governor.
Therefore, there is an argument that those requirements become
effective January 1, 2015.
A further disclosure requirement involves the "wage theft
notice" that is part of California Labor Code Section 2810.5.
This applies to nonexempt employees only. In addition to the
numerous other items required for such a written notice, the
statute now requires that, at the time of hire of most nonexempt
employees, the notice include statements that the employee may
accrue and use sick leave; that the employee has a right to request
a new sick leave; that the employee may not be terminated or
retaliated against for using and requesting the use of accrued paid
sick leave; and that the employee has the right to file a complaint
against an employer who retaliates. The Labor commissioner is to
prepare a template of the notice, presumably an amendment to the
existing template the Labor commissioner has previously
issued.
Categories of Employees Excluded from
Coverage
A few categories of employees are exempt from the
statute:
- An employee covered by a collective bargaining agreement ("CBA") in any industry other than the construction industry, if the CBA provides for wages, hours of work, and working conditions of employees, and expressly provides for paid sick days or a paid leave or paid time off policy that permits the use of sick days for those employees, and it includes a final and binding arbitration provision, premium wages for all overtime hours worked, and a regular hourly rate of pay of not less than 130 percent of the current state minimum wage (currently $11.70, although that amount will increase effective January 1, 2016 to $13.00) (there are special rules for construction industry CBAs);
- Certain in-home health care or supportive services workers as defined in several sections of the California Welfare and Institutions Code; and
- Individuals employed as flight deck or cabin crew members by an air carrier subject to the Federal Railway Act if the individual is provided with compensated time off equal to or exceeding the amount required by the Act.
Anti-Retaliation Provision
The Act includes a provision that an employer may not discriminate
against an employee for using accrued sick leave, attempting to
exercise the right to use accrued sick days, filing a complaint
with the Labor commissioner or alleging a violation of the Act,
cooperating in an investigation or prosecution of an alleged
violation of the Act, or opposing any "policy or practice or
act that is prohibited" by the Act. Further, the
anti-retaliation provision creates a rebuttable evidentiary
presumption of unlawful retaliation if an employer denies an
employee the right to use the accrued sick days, or discharges,
threatens to discharge, demotes, suspends, or otherwise
discriminates against an employee within 30 days of (i) the filing
of a complaint by the employee with the Labor commissioner or
"alleging a violation" of the Act; (ii) cooperation of an
employee with an investigation or prosecution of an alleged
violation of the Act; or (iii) "opposition" by the
employee to a policy, practice, or act that is prohibited by the
Act.
Enforcement and Remedies
The Act contains no provision for a private right of action.
Instead, the Act states that "the Labor commissioner shall
enforce this Article, including investigating an alleged violation,
and ordering of appropriate temporary relief to mitigate the
violation or to maintain the status quo pending the completion of a
full investigation or hearing...."
The Act does contain penalty provisions. If paid sick days are
unlawfully withheld, the employer must pay the amount unlawfully
withheld multiplied by three, or $250, whichever is greater, but no
more than an aggregate penalty of $4,000. If the violation of the
Act results in "other harm" to the person such as a
discharge from employment, the penalty may include $50 for each day
or portion thereof that a violation occurred or continued, but not
to exceed $4,000. The Labor commissioner or the Attorney general
may bring a civil action in court against an employer who violates
the Act and may seek legal or equitable relief, such as
reinstatement, back pay, and reasonable attorneys' fees. The
provision authorizing the Labor commissioner to file lawsuits
refers to the fact that a person or entity may seek to enforce the
Article "on behalf of the public as provided under applicable
state law." This appears to be a reference to the Labor Code
Private Attorneys General Act, which permits an "aggrieved
employee" to seek to recover statutory penalties that would
otherwise be recoverable by the Labor commissioner.
Sick Leave Legislative in Certain California
Cities
Several California cities have already enacted similar mandatory
paid sick leave laws. These include San Francisco, San Diego, and
Long Beach (for certain hotel employees). The Act contains an
anti-preemption provision that allows cities or other
municipalities to establish different, more generous paid sick
leave requirements.
No Effect on Other Paid or Unpaid Leave
Statutes
The Act does not affect the employer's obligations under other
statutes that provide for other forms of paid or unpaid time off,
such as the California Family Rights Act, the California paid
family leave provisions of the Unemployment Insurance Code, and
various statutes requiring unpaid leave for victims of crimes,
domestic violence, or for jury duty or other purposes.
What Should Employers Do?
Every employer with employees in California should review its sick
leave or paid time off policy to determine if the policy complies
with the accrual, usage, and carryover provisions of the Act.
Employers with unionized personnel should review their CBAs to
determine if the exceptions for employees under the CBA apply.
Special rules apply to CBAs in the construction industry.
Employers should become familiar with the detailed requirements
for written notice of sick leave entitlement and usage, for
inclusion of the required statements in the "wage theft"
form for new nonexempt hires, and for accurate disclosure on pay
stubs of sick leave accrual information. Employers must also ensure
that their record retention systems will retain for at least three
years the necessary data regarding sick leave accrual and
usage.
Finally, employers should review the local ordinances of the city
or cities in which they employ personnel: San Francisco, San Diego,
and Long Beach have their own paid sick leave statutes that in some
respects are inconsistent with the statewide Act. Other cities or
municipalities may adopt similar ordinances in the future.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.