As we addressed in our prior newsletter, one of the most significant pieces of employment-related legislation is the Healthy Workplaces, Healthy Families Act of 2014 which provides for mandatory paid sick leave to all employees.
Accrual, Caps & Carryover
Employers are required to provide paid sick leave to any employee who worked in California for 30 days at an accrual rate of one hour for every 30 hours worked. Part-time and full-time employees are covered as well as exempt and non-exempt employees. Both regular and overtime hours are counted toward the accrual rate of one hour for every 30 hours worked.
Employers are allowed to limit an employee’s use of paid sick leave to 24 hours or three days in each year of employment and may put a maximum cap on total accrual of 48 hours or six days.
Also, an employee cannot start using accrued sick days until the 90th day of their employment. Then employees are permitted to use sick leave as it is accrued.
Accrued paid sick days can carry over to the following year of employment, just like vacation. The carry-over provision allows an employee to have paid sick days available at the start of the next year, depending on how much has already been used and accrued. But, an employer can limit the amount of paid sick days an employee can use to 24 hours/three days per year.
Employers can decide to provide more sick leave and/or allow more hours to accrue before being capped and carried over from one year to the next, but must still comply with the minimum accrual requirements.
Current Sick Leave or PTO Plan
An employer is not required to provide any additional paid sick days if the employer has a paid leave or paid time off policy in place that complies with the requirements of the new law. Specifically, the employer’s policy must either:
• Satisfy the accrual, carry over and use requirements of the new law; or
• Provide no less than 24 hours or three days of paid sick leave, or equivalent paid leave or paid time-off for employee use each year of employment or calendar year or 12-month basis.
No Payment on Separation
Currently, sick leave (unlike unused, accrued vacation) does not need to be paid out at the end of employment. Nothing has changed with the new law in this respect; however, if the policy is for PTO (Personal Time Off) which combines sick leave and vacation into one policy, then any accrued but unused PTO must be paid out upon termination.
One new condition is that if an employee leaves and is reinstated within one year, then any previously accrued and unused paid sick days must be reinstated and the rehired employee must be allowed to use those previously accrued sick days and begin accruing additional paid sick days upon rehire.
Uses of Sick Leave
An employee can use paid sick time for an existing health condition or preventive care for themselves or a “family member” which includes:
• Child
• Parent
• Spouse or registered domestic partner
• Grandparent
• Grandchild
• Sibling
The definition of “family member” under the new law is broader than that under FMLA/CFRA which only covers children, parent, spouses and (CFRA only) registered domestic partners. So if an employee used three days of paid sick leave under the new act to care for a grandchild, those three days could not be counted against the employee’s FMLA/CFRA entitlement.
Paid sick leave may also be used for an employee who is a victim of domestic violence, sexual assault or stalking.
Request For Leave
Employees must submit an oral or written request to use paid sick leave. If the need for paid sick leave is foreseeable, an employee must provide reasonable advance notice. If not, the employee must provide notice as soon as practicable.
Amount of Time Taken
An employee may determine how much paid sick leave he/she needs to use; however, an employer can set a “reasonable minimum increment” for the use of paid sick leave (e.g. two hour minimum) for payroll purposes.
Coverage for Employee During Sick Leave
A significant aspect of this new law is that an employer cannot require an employee to search for or find a replacement worker for the days off. This may be a significant change for workers in the restaurant industry.
Sick Leave Compensation
Paid sick leave must be compensated at the employee’s hourly wage, and must be paid no later than the next payday after the sick leave was taken.
Notice Requirements
An employer must provide an employee with a written notice setting forth the amount of paid sick leave available to the employee each pay period. An employer can either provide this notice to the employee on the itemized wage statement or in a separate writing provided to the employee with the payment of wages.
The Wage Theft Protection Act 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.
A poster is required advising employees of their sick leave rights. The Labor Commissioner will also produce this poster.
Record Keeping
Records for 3 years will need to be kept by employers which detail:
• the number of hours worked;
• paid sick days accrued;
• paid sick days 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.
Failure of Employer to Comply
Employers are forbidden from denying employees the right to use accrued paid sick days. In addition, the law expressly prohibits any discriminatory or retaliatory action against an employee for using or attempting to use accrued sick days or filing a complaint or cooperating in an investigation alleging a violation of the Act.
Fines and penalties ranging from $50 to $4,000 aggregate can be assessed for failure to comply. In addition, the employer can be required to compensate the state up to $50 for each day or portion of a day where 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.
In addition, the Labor Commissioner or the Attorney General are authorized 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.
Options for Accrual of Sick Leave
The new law mandating sick leave has been met with many questions by employers on how to comply in light of their existing policies.
Another bill has been passed to provide guidance to employers and sets forth three options by which paid sick leave can be accrued for compliance.Accrual Method
The accrual method requires an employee earn one hour of paid sick leave for every 30 hours worked.
This method requires the employer to track the hours of each employee to determine when the employee has accrued one hour of paid sick leave. An employer may cap an employee’s accrual at six days or 48 hours. Any accrued, unused paid sick leave must be carried over to the following year.
`Front Loading’ Policy
Another option is called “front loading” where the employer provides an employee with at least three days or 24 hours of paid sick leave or Paid Time Off (PTO) at the beginning of each year. Using this method, the sick leave is provided at the outset of the year and is not accrued during the year. Under this option, an employer does not have to track the employee’s hours for accrual and does not have to carry over any unused paid sick leave.
Employer Policy
The last option available is to have a policy that provides an employee with at least three days or 24 hours of paid sick leave in a 12-month period, year of employment, or calendar year.
Using this option, the employer can set the accrual rate so long as the annual amount provided to all employees is at least three days or 24 hours of paid sick leave, paid time off, or other paid leave.
Many employers that currently provide paid sick leave allow employees to accrue the time on a pay period basis, as it is easier to track and administer than having to track actual hours worked, so the accrual method may be the less desirable option.
These three options provide an employer with the flexibility to determine which method of offering paid sick leave best fits with the employer’s specific environment.
What Should I Do Now?
Review your sick leave or PTO (paid time off) policies to ensure that the policies are compliant with the requirements of this new legislation.