July 13, 2015 California Paid Sick Leave Law Amended and Clarified

Yesterday, Governor Jerry Brown signed a bill amending and clarifying California's paid sick leave law.  The bill was passed as an "urgency statute" and took effect immediately.

Discussion

The Healthy Workplaces, Healthy Families Act of 2014 took full effect on July 1, 2015.  It requires employers to provide paid sick leave to employees who work 30 or more days in California in a calendar year.  The new bill signed yesterday amends several provisions of the law.  The most noteworthy changes are the following:

Eligibility:  The new bill clarifies that an employee must work 30 days for the same employer in California to be eligible for sick leave, and not simply work 30 days in California.

Accrual:  As originally enacted, the law allowed employers to provide paid sick leave either by (1) providing 24 hours in bulk at the beginning of the year; or (2) allowing employees to accrue sick leave at a minimum rate of one hour for every 30 hours of work.  These options were problematic for employers who tie sick leave accruals to pay periods, not time worked.  The new bill provides greater flexibility by allowing the following additional accrual methods:

24 Hours Within 120 Days:  An employer may use a different accrual method, provided the accrual is on a regular basis and the employee will have 24 hours of accrued paid sick leave available by his or her 120th calendar day of employment.

Grandfathering of Pre-Existing Accrual Methods:  If an employer provided paid sick leave prior to January 1, 2015 pursuant to an accrual method, that program will satisfy the law's accrual requirements if an employee (including any employee hired after January 1, 2015) will accrue eight hours of paid sick leave within three months, and the employee is eligible to earn at least 24 hours within nine months.

Unlimited Sick Leave:  If an employer provides unlimited paid sick leave or unlimited paid time off, the law's written notice requirement may be satisfied by indicating on the notice or the employee's itemized wage statement that such leave is "unlimited."  Of course, employers should carefully consider the implications of "unlimited" paid time off, and exercise caution when drafting such policies.

Rate of Pay Clarified:  Employers may pay out paid sick leave to nonexempt employees either at the regular rate of pay for the workweek in which the employee uses paid sick leave, or by dividing 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.  Paid sick leave for exempt employees should be calculated the same way as other forms of paid leave time.

This E-Update was authored by Aaron Buckley and Nancy Berner.  For more information, please contact Mr. Buckley, Ms. Berner, or any other Paul, Plevin attorney by calling (619) 237-5200.