As has been widely publicized and consumed much time in discussion and analysis, employers are reminded that effective July 1, 2015 the State of California’s Mandatory Sick Leave law will become effective. While the poster was required to be in place by January 1, 2015, the implementation of the law takes effect in a few short weeks.
Currently Assembly Bill 304 is pending and stalled in the Assembly. This bill could make changes to the Act as currently enacted, and if passed would become effective immediately as urgency legislation. The pending bill makes changes to the numerous provisions of the Act which could require further revisions to sick leave policies. Stay tuned.
Overview – California’s Mandatory Paid Sick Leave Law
The Healthy Workplaces, Healthy Family Act (The Act) establishes the minimum requirement of providing paid sick days to employees working at least 30 days in California. Employers can provide more generous leave than what the new law provides.
Employers Covered Under the Mandatory Paid Sick Leave Law
The Act applies to all employers, regardless of size, and also applies to public and private employers, and for-profit and not-for-profit companies.
“Employer” is defined as “any person employing another under any appointment or contract of hire and includes the state, political subdivisions of the state, and municipalities.”
Employees Entitled to Paid Sick Leave
All employees who have worked in California for 30 or more days within a year from the start of employment are entitled to earn paid sick leave. Employees covered by the Act include:
- Part-time and full-time employees.
- Exempt and non-exempt.
- Temporary seasonal out-of-state employees if they spend 30 days or more working in California.
The following groups of employees are not covered by the Act and are not entitled to any mandatory paid sick leave benefit:
- Employees covered by a collective bargaining agreement that provides for sick leave, has binding arbitration and meets other requirements, including a regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate;
- Construction employees under a collective bargaining agreement;
- Providers of publicly funded in-home supportive services under certain sections of the Welfare and Institutions Code, including sections 14132.95, 14132.952, 14132.956;
Calculating Leave – Employer Options
The amount of sick leave an employee can earn and/or carry-over will depend on which of the 3 options for providing sick leave benefits is selected by the employer:
- Statutory mandated accrual method;
- Lump-sum approach; or
- Employer policy meeting minimum requirements.
Statutory Mandated Accrual Method
An eligible employee earns one hour of sick pay for every thirty hours worked. Eligible employees will begin to accrue paid sick leave on July 1, 2015.
If hired after July 1, an eligible employee will begin to accrue on the employee’s first day of work.
The following rules apply to the accrual method:
- Both regular and overtime hours are counted toward the accrual rate of one hour for every 30 hours worked;
- After July 1, 2015, new hires can begin accruing on their first day of work (though time is not available until the completion of 90 days);
- Exempt employees are deemed to work 40 hours per workweek, but if the normal workweek is less than 40 hours then accrual will be based on their normal workweek.
Any accrued but unused time must carry over to the following year of employment. However, an employer can cap the employee’s total accrued amount at 48 hours or six days. If there is no cap on accrual, a full time employee (40 hours a week with no overtime) could potentially accrue over 69 hours of paid sick leave per year and be allowed to carry that to the next year.
Example: 40 hours a week x 52 weeks in a year = 2080 hours worked per year. Accrue one hour for every 30 hours: 2080 hours/30= 69.33 hours accrued per year. 69.33 hours /8 hours worked a day = 8.67 days per year.
Lump-Sum Method
The full amount of leave (three days or 24 hours) is “given” to the employee at the “beginning of each year” under an employer’s policy. This method allows the employer to avoid the accrual and carry-over provisions by having a policy that uses a “lump-sum method.”
An employee will not be able to carry over unused sick days, but will get three new sick days at the beginning of the following year. The following specific requirements must be satisfied:
- The paid sick days must be offered at the beginning of each year. (The law does not provide guidance to determine if the “year” is measured from date of hire, calendar year, date the benefit begins to accrue by law (July 1), or something else.
- The employee must receive a minimum of 24 hours or 3 days.
- The employer must put all the paid sick leave into the employee’s leave “bank” at once.
- Employees are permitted to use the leave for all of the same purposes and conditions specified under the Sick Leave law.
Employer Paid Leave and PTO Plans
If an employer already has a paid sick leave, PTO or other paid leave policy in place, the employer may be able to continue to use the existing policy as long the employers policy makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in the Act. (See below – Permissible Usage and Parameters of Paid Sick Leave Use.)
In addition, the employer’s policy must either:
- Satisfy the accrual, carry over and use requirements of the new law; or
- Provide at least 24 hours or three days of paid sick leave, or equivalent paid leave or paid time-off, for employees to use each year of employment or calendar year or on a 12-month basis.
Sick leave is not paid out at time of separation, but PTO must be paid out at separation.
Permissible Usage
An employee can use paid sick leave for the diagnosis, care, or treatment of an existing health condition, or preventive care for, themselves or a “family member.”
“Family member” is more broadly defined than in the existing “kin care” law or Family and Medical Leave Act/California Family Rights Act (FMLA/CFRA). Because of the differences in definitions, the use of paid sick leave under the Act may not be the same as use of the leave under FMLA.
For example, if an employee used three days of paid sick leave under the Act to care for a grandchild, those three days could not be charged against an employee’s FMLA/CFRA entitlement because grandchildren are not covered under FMLA/CFRA.
A “family member” under the Act is a:
- Child: A “biological, adopted, or foster child, stepchild, legal ward, or a child to whom the employee stands in loco parentis.” The definition of child applies regardless of the child’s age or dependency status.
- Parent: A “biological, adoptive or foster parent, stepparent, or legal guardian of an employee or the employee’s spouse or registered domestic partner, or a person who stood in loco parentis when the employee was a minor child.”
- Spouse or registered domestic partner
- Grandparent (outside of kin care and FMLA/CFRA laws)
- Grandchild (outside of kin care and FMLA/CFRA laws)
- Sibling (outside of kin care and FMLA/CFRA laws)
Paid sick leave may also be used for an employee who is a victim of domestic violence, sexual assault or stalking.
An employee can use the full amount of the paid sick days for a qualifying family member.
Tracking Use
Employers must ensure that they are correctly tracking when time is used for eligible reasons under paid sick leave law. Employers will also need to track whether any other leave law may also apply, such as FMLA/CFRA.
Parameters of Paid Sick Leave Use
There are severe criteria regarding how paid sick leave can be used.
- Employees cannot start using accrued sick days until the 90th day of employment; after that the employee can use sick days as accrued.
- Employers can limit the amount of paid sick leave an employee can use to three days or 24 hours per year. This limitation applies even when an employee, under the accrual method could have accrued six days or 48 hours of paid sick leave (or even more if the employer did not put a cap on accrual).
- Paid sick leave must be provided upon an employee’s oral or written request.
- 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.”
It is unclear under the Act whether an employer can require the employee to provide medical certification of the need for paid sick leave (i.e., a doctor’s note). Unless certification is required pursuant to another leave law, there is no provision in the Act allowing an employer to require certification for paid sick leave.
- Policies that discipline employees based on a specific number of absences should not count days off that are protected by this law (or any other protected leave of absence).
- Attendance bonus programs should not count days taken as paid sick leave against eligibility.
- An employee may determine when and how much paid sick leave he/she needs to use, but an employer can set a “reasonable minimum increment” of time not to exceed two hours. You cannot require an employee to take sick leave in increments greater than two hours. For example, you cannot tell an employee that he/she needs to take a half-day off for a doctor’s appointment.
- An employer cannot require an employee to find a replacement worker for the time off.
- An employer can “lend” or advance paid sick days to employees prior to accrual. Any advance should be properly documented. It is unclear under the Act what “proper documentation” means.
Paying the Employee for the Sick Day
Employees are compensated at their hourly wage, and the pay is to be provided no later than the payday for the next regular payroll period after the sick leave was taken. For employees with one pay rate this is easy. Determining the rate to pay sick leave can be more complicated when:
- Different hourly pay rates exist
- Employee is paid by commission or piece rate
In these situations, the employer must calculate the rate of pay by “dividing the employees 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.”
Payment on Separation and Reinstatement
An employer does not have to pay out accrued but unused “sick leave” when an employee leaves employment. There is no “cash-out” of paid sick leave at separation from employment.
If mandatory paid sick leave and vacation are combined into a paid time off (PTO) policy, then the PTO follows the rules relating to vacation, including paying out accrued but unused PTO, upon separation of employment.
Unused paid sick days must be reinstated if an employee leaves employment and then is rehired within one year. Upon rehire, the employee must be allowed to use those previously accrued sick days and to begin accruing additional paid sick days.
Protections Under the Law
The Act protects employees from certain adverse actions such as:
- Denying employees the right to use accrued paid sick days.
- Taking any adverse action against an employee for using accrued sick days or attempting to exercise the right to use accrued sick days.
- Retaliating against employees who file complaints alleging violations of the Act, or who cooperate in an investigation or prosecution of an alleged violation, or oppose any policy, practice or act prohibited by this law. Employers will be faced with a “re-buttable presumption” of unlawful retaliation if an employer takes adverse action (including denying the right to use accrued sick days) against a person within 30 days of when the employee:
- Files a complaint with the Labor Commissioner or alleges a violation of this law.
- Cooperates with an investigation or prosecution of an alleged violation of this law.
- Opposes a policy, practice, or act that is prohibited by this law.
Notices, Postings and Record keeping
The Act contains notice, posting and record keeping requirements. The poster was to be displayed as of January 1, 2015.
Payday Notice
An employee must be provided with a written notice setting forth the amount of paid sick leave available to the employee each pay period. This notice can be provided to the employee either:
- On the already required itemized wage statement; or
- In a separate writing provided to the employee with the payment of wages.
Wage and Employment Notice to Employees (Labor Code section 2810.5)
Employers have been required to provide this notice to non-exempt employees since 2012. The Notice has been updated by the Labor Commissioner to contain information about an employee’s right to accrue and use paid sick leave and about employee protections under the mandate. Employers must provide updated notice to all non-exempt employees designating the sick leave option chosen.
Poster
The Labor Commissioner has created a poster that advises employees of their sick leave rights. The poster needs to be posted in a conspicuous location. Failure to post can result in a penalty.
Record Keeping
Employers will need to keep records for at least three years that document the:
- Number of hours that the employee worked
- Paid sick days accrued
- Paid sick days used by an employee
The records must be available for inspection by the Labor Commissioner. The records must also be available for inspection by the employee upon reasonable request, as with other payroll records.
Payroll and record keeping systems must be updated to ensure that the sick leave is properly calculated, tracked, and recorded.
Penalties for Non-Compliance
Violations & Penalties
The Act contains various fines and penalties for not providing sick days, ranging from $50 to $4,000 aggregate, and allows for a civil action by the state. The Labor Commissioner is charged with enforcement, can also order reinstatement, back pay, and the payment of sick days unlawfully withheld.
- Unlawful withholding of sick days: The greater of the dollar amount of paid sick days withheld multiplied by three, or $250 per employee.
- Violation results in harm to the employee or person: Administrative penalty of $50 per day. This penalty would apply in instances of discharge.
There is a $4,000 aggregate cap on these two penalties. These penalties are paid to the employee or other person whose rights were violated.
- Failure to promptly comply: The Labor Commissioner has discretion to take appropriate action, including filing a civil action, and may assess a penalty of $50 per day, per employee or other person whose rights were violated. This penalty is paid to the state. There is no cap on this penalty.
- Civil action: The Attorney General or the Labor Commissioner may file a civil action behalf of the public, and includes the recovery of reasonable attorney’s fees and costs. The law does not expressly permit employees to bring a private civil lawsuit against employers for violation of the statute.
- Failure to post the poster: $100 civil penalty per offense.
Unintentional Errors
Unintentional payroll errors or notice errors that are clerical or inadvertent mistakes regarding accrual and use of paid sick leave will not be considered violations of the Act. A 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.
Coordinating Paid Leave
There may be times where paid sick days are used to supplement SDI or PFL benefits as SDI and PFL only partially subsidize an employee’s regular wages. The Employment Development Department (EDD) has not addressed the interaction of the new paid sick leave requirement with SDI and PFL.
An employer should be permitted to require employees to use their mandatory paid sick leave under the Act to cover some of the unpaid FMLA leave taken and run concurrently with FMLA leave. However, this answer is not entirely clear as the Act does not specifically address this point. An employer cannot require an employee to use accrued paid leave during FMLA leave if the employee is receiving any type of disability benefits, including SDI, workers’ compensation insurance or other type of disability benefits
Kin Care
Use of 50% of Sick Leave Entitlement
Under the “kin care” law, employees are permitted to use one-half of their annual sick leave entitlement to care for their sick child, parent, spouse, domestic partner or the child of a domestic partner. The “kin care” law defines sick leave as accrued increments of compensated leave meant for an employee’s illness or injury, physicians’ appointments or other medical needs.
If an employee needs time for kin care, you must allow that employee to use one-half of his/her annual sick leave allotment, after it has actually accrued, when time off for kin care is needed.
No Carry Over Under Kin Care
Nothing in the law requires that the amount of days available for kin care carry over from year to year. Employers can limit the amount of kin care leave to one-half of that year’s allotment of sick leave, regardless of what was or was not taken the year before.
“Kin” Defined
- “Child”: A biological, adopted or foster child; a stepchild; a legal ward; or a child an employee has accepted the duties and responsibilities of raising, for example, a grandmother who raises her grandchild. Nothing in the law requires that the child be a minor.
- “Parent”: A biological, foster or adoptive parent; a stepparent; or a legal guardian. Mothers-in-law, fathers-in-law and grandparents are not considered parents for purposes of this law.
- “Spouse”: Not defined in the law, but presumably would apply only to an individual to whom the employee legally is married.
- “Domestic partners”: Defined under California law as “two adults who have chosen to share one another’s lives in an intimate and committed relationship of mutual caring” and who file a Declaration of Domestic Partnership with the Secretary of State. Domestic partners can be:
– Individuals of the same sex living together in the same household who register as domestic partners
– Opposite sex individuals with one partner over the age of 62 and living together in the same household who register as domestic partners
The mandatory paid sick leave law covers grandparents, grandchildren and siblings, who are not covered by the kin care law so it is important to determine which family member or “kin” requires care from the employee.
An employee can use the entire amount of paid sick leave accrued under the Act for care of a defined family member because the kin care law covers different family members than the mandatory paid sick leave law.
Paid Time Off (PTO) and Kin Care
PTO combines vacation and sick leave into one benefit. According to the Labor Commissioner, if PTO does not specifically designate part of the time provided as vacation and/or sick, then the entire allotted time will be considered sick leave for kin care purposes. Half of the total PTO accrual will be subject to kin care.
Penalties for Denying Kin Care
An employer cannot deny an employee the right to use kin care, nor take any adverse action against an employee for using or attempting to use sick leave to attend to the illness of a child, parent, spouse or domestic partner. Violation can lead to an order of reinstatement and actual damages, or one day’s pay, whichever is greater, and any other relief a court may award.
It is also unlawful for employers to count days off taken for kin care purposes as days of absence that can result in discipline, demotion or discharge. An employee who suffers an adverse action is entitled to penalties provided by statute.
Exhaustion of Sick Leave & Reasonable Accommodations
While there is no requirement to continue to pay employees who have exhausted accrued paid sick leave or PTO, employers may have obligations under other leave laws or an obligation to reasonably accommodate the employee under the Americans with Disabilities Act (ADA) or the Fair Employment Housing Act (FEHA). Any disciplinary action or termination decisions should be carefully evaluated to determine if such adverse action would run afoul of any obligation of an employer to provide a reasonable accommodation for an employee due to their disability condition.
Conclusion
Employers must take great care to ensure that they are in compliance with all aspects of the Mandatory Paid Sick Leave Law as the law is complex, compliance can be confusing and the penalties and fines for non-compliance can be substantial.