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Labor & Employment Alert >> Beginning July 1: California Employers Must Provide Paid Sick Leave

May 20, 2015

California employers take note: Beginning on July 1, 2015, covered employers are required to provide eligible workers with at least three paid sick days a year under California’s Healthy Workplaces, Healthy Families Act of 2014 (the Act).

Who is Covered
The Act applies to nearly all employers with at least one employee who works more than thirty days in a year in the state of California. Under the Act, employees who work thirty or more days within a year will accrue a minimum of one hour of paid sick leave for every thirty hours worked. Employees who are classified as exempt from overtime requirements are generally deemed to have worked forty hours in a week for purposes of calculating paid sick leave.

Notably, covered employers are not required to provide additional paid sick leave under the Act if they already maintain a paid sick leave or paid time off policy allowing for: at least twenty-four hours (three days) of paid leave that can be used for all of the reasons provided for in the Act; and permit carry-over of accrued and unused leave from year to year or bank at least twenty-four hours (three days) of paid sick leave to employees at the beginning of each year.

Permissible Uses of Paid Sick Leave
Eligible employees may use paid sick leave for:

  • Diagnosis, care, treatment of an existing health condition of, or preventative care for, an employee or an employee’s family member; and
  • For an employee who is a victim of domestic violence, stalking or sexual assault, as defined by California law.

Under the Act, “family members” include a child, parent, spouse, registered domestic partner, grandparent, grandchild or sibling.

Accrual and Use of Paid Sick Leave
Employees begin accruing paid sick leave on their first day of employment or on July 1, whichever is later, but may not use the leave until their ninetieth day of employment (and thereafter, as accrued). Employers must either allow carryover of accrued but unused sick days from year to year, or bank the employee a minimum of twenty-four hours of paid sick time at the beginning of each year (as defined).

Employers must compensate employees at their regular rate of pay for time taken under the Act, and must pay employees no later than the next, regularly-scheduled payroll period after the employee uses paid sick leave. The Act does not, however, require employers to pay employees out for accrued but unused paid sick leave at any time, including upon separation from employment.

Under the Act, Employers May:

  • Limit use of paid sick leave to twenty-four hours (typically three days) a year;
  • Cap accrual of paid sick leave at forty-eight hours (typically six days) per year, but once an employee uses paid sick leave and falls below the cap, the employee is eligible to accrue additional paid sick leave until the employee reaches the cap;
  • Set minimum increments in which employees can use accrued paid sick leave, provided that the increment does not exceed two hours; and
  • If the need to use paid sick leave is foreseeable, require employees to provide reasonable advance notice of this need.

Employers May Not:

  • Require employees to arrange for a replacement worker as a condition of using accrued paid sick leave;
  • Deny paid sick leave; or
  • Retaliate or discriminate against an employee for taking sick leave under the Act. In fact, an employer who denies paid sick leave, discharges, threatens to discharge, demotes, suspends or in any manner discriminates against an employee within 30 days of the employee’s filing of a complaint (with the Labor Commissioner or alleging a violation of the Act), cooperating with an investigation and/or opposing an unlawful practice under the Act, is presumed to have retaliated in violation of the Act.

Notice and Recordkeeping Requirements
Employers must clearly display a poster in the workplace informing employees that they are entitled to accrue, request and use paid sick leave; the amount of paid sick leave provided for by the Act; the terms of use of this leave; that retaliation or discrimination against an employee who requests and/or uses paid sick leave is prohibited; and that an employee has the right under the Act to file a complaint with the California Labor Commissioner against an employer who retaliates or discriminates against the employee. The poster is available here.

Additionally, employers must amend their Notice to Employees required by California’s Wage Theft Prevention Act to inform employees that they are entitled to accrue, request to use and use paid sick leave without fear of termination and/or retaliation and that they have the right to file a complaint against an employer who engages in retaliation in violation of the Act. The revised notice is available here (note that employers are only required to give this Notice to non-exempt employees).

Additionally, under the Act, employers must provide all employees (i.e., both exempt and non-exempt), on each payday, with written notice of the amount of paid sick leave, or paid time off that can be used in lieu of paid sick leave, available for use, either on the employee’s itemized wage statement or in a separate writing with the employee’s payment of wages.

Records of hours worked and paid sick leave accrued and used by an employee must be retained by the employer for at least three years.

Enforcement of the Act
The California Labor Commissioner is responsible for enforcing the Act. The Commissioner may order reinstatement, back pay and/or the payment of sick days unlawfully withheld as a remedy for violations of the Act, and/or order payment of an administrative penalty of up to $4,000. Violations of the posting requirement will result in a $100 fine for each offense. The Commissioner has the authority to file a civil action against an employer in order to secure compliance with the Act.

San Francisco Employers
Employers in San Francisco are already subject to the San Francisco Paid Sick Leave Ordinance (the SF Ordinance). San Francisco employers must comply with both the Act and the SF Ordinance. While the accrual rates are the same under the Act and the SF Ordinance, there are some key differences in the laws which afford greater rights to employees in San Francisco, specifically with regard to accrual and use of paid sick leave. San Francisco employers should consult with counsel regarding specific questions about complying with both state and city law.

Compliance Checklist
Employers should ensure they:

  • Display the required poster (available here) in a conspicuous place at the workplace;
  • For all new non-exempt employees hired on or after January 1, 2015, use the updated form Notice to Employees (available here);
  • No later than July 8, 2015, disseminate a revised Notice to Employees to all non-exempt employees hired prior to January 1, 2015;
  • Revise employee wage statements to reflect rights to paid sick leave under the Act and reflecting amount of accrued and unused paid time off under the Act;
  • Update employee handbooks and leave policies to ensure compliance with the Act;
  • and Maintain all records showing compliance with the Act for at least three years.

The Bottom Line

Covered California employers must take all necessary steps to comply with the Act and must permit covered employees to use accrued, paid sick leave as of July 1.