Beginning July 1, 2015, employers in the State of California are required to provide employees with paid sick leave (PSL) under the California Healthy Workplace Healthy Family Act of 2014. In short, every employee who works at least 30 days in a year is entitled to accrue PSL at a rate of at least 1 hour of PSL per 30 hours worked, up to 24 hours per year.
Simple enough? Not really. As employers implement new PSL plans, or modify existing paid time off (PTO) plans to comply with the law, new questions arise.
Below are 10 points to consider in complying with California’s new PSL law.
No. 1: How much PSL time will you allow employees to use? Employees must be allowed to use a minimum of 24 hours of sick time and may provide more PSL. PSL can be used for preventive care (i.e. annual physicals or flu shots) or care of an existing health condition for you or a family member (parent, child, spouse, registered domestic partner, grandparent, grandchild, and sibling). PSL can also be used for specified purposes for employees who are victims of domestic violence, sexual assault or stalking.
No. 2. How much PSL time do employees accrue? The Act provides for two methods of providing paid sick time by an employer: 1) accruing one hour of PSL for every 30 hours worked; or 2) without the need for accrual, allocating 24 hours or 3 days of PSL at the beginning of each year.
If you choose the accrual method, then the minimum cap you can have is 48 hours – double what you can use in a year. If you do this, any accrued but unused PSL time is carried over from year to year, subject to your annual cap. Alternatively, you can give employees a full bank of 24 hours on the first day of the year as you define it (a calendar year beginning on January 1, an anniversary year that varies for each employee, or you can use July 1 if you are creating these banks when the PSL law comes into effect). If you frontload the 24 hours, then there is no carryover from year to year.
No. 3: Make sure you track amounts of PSL used and accrued AND display it on employee pay stubs.
Pay stubs, or a written document issued the same day as the pay stub, must display the amount of PSL accrued and available to an employee. Employers must also retain records of time accrued for three years. Employers should also double check their California posting, to ensure that the required notice of employee rights under this new law is included.
No. 4: Harmonize PSL and unlimited vacation policies. “Unlimited” vacation or PTO policies are increasingly common. Companies that offer more time off than the 24-hour minimum, through unlimited vacation or sick leave policies, don’t have to provide additional paid time off. But employers, even those with unlimited vacation plans, still need to track PSL accrual and usage, and display the amount of PSL each employee has available on their pay stubs or another document issued on pay day. Employers with unlimited PTO policies may find the up-front accrual an attractive option. With the upfront method, there is no need to track accrual by hours of work, but employees still need to record PSL use so that use and availability of unused time can be tracked and reported.
No. 5: Extend PSL to apply to part-time and temporary employees. Many employer PTO plans do not provide sick leave, vacation or general use PTO to part-time or temporary employees. Under the new law, all employees, including part-timers and those who primarily work outside of California but do some work within the state, accrue 1 hour of leave for every 30 hours of work, up to 24 hours total, provided they work at least 30 days in a year. Make sure your PSL policy covers part-time and temporary employees. In the alternative, employers can also elect to frontload 24 hours per year for part-time and temporary workers.
No. 6: Update sick leave policies that require documentation or physician notes. The new law requires employers to approve the use of PSL “upon oral or written request” and require notice “as soon as practicable. If your sick leave policies require medical verification (a doctor’s note) for illnesses of 2 or 3 days, consider limiting that requirement to requests for time off other than PSL time. Notice provisions on your existing policies should also be altered to ensure there is no requirement for advance notice where that is not practical.
No. 7: Specify minimum use increments. Many employers have PTO policies that require employees to use PTO in at least half-day (four-hour) increments. But the new law sets the minimum usable block of PSL at two hours. Many employers faced with the prospect of having to implement and track different minimum increments for non-illness PTO and PSL, have decided to apply the two-hour minimum block to all PTO. Remember too that employers cannot require a note to take PSL – employers can require a note if someone is absent for a certain number of days, but if someone requests to take PSL time, employers are required to give it to them.
No. 8: Account for employees with varying schedules and varying hourly rates. Another wrinkle of the new PSL law pertains to employees whose hourly rates of pay vary. On the day an employee takes PSL, the employer must look backward, and total all straight time compensation earned in the last 90 days, and divide that compensation by the total number of hours worked. The resulting number becomes that employee’s hourly rate of pay for that PSL. When addressing employees in this situation, we recommend talking to counsel to help tackle this complicated requirement.
No. 9: Comply with local sick leave ordinances. A number of jurisdictions have their own sick leave ordinances, including San Francisco, Oakland and Emeryville. In general, these jurisdictions provide more advantageous PSL ordinances (including higher accrual caps and no “up front” method), that apply once thresholds are met for work in those jurisdictions. This is especially tricky when employees drive into these jurisdictions to do work periodically – remember that even if you are not based there, any work within the city limits must be accounted for under the local sick leave ordinance. And here there is a conflict between state and local law, employees get the benefit of whichever provides the more generous leave.
No. 10: Don’t go it alone. The new law is complicated. Have your PSL or PTO policy reviewed by counsel at DLA Piper. Avoid penalties, which can range from US$250 or three times the value of the paid sick days withheld, whichever is greater, up to a total aggregate penalty of US$4,000, and liquidated damages of US$50 per employee per day of the violation may also be imposed.
Please contact us for assistance in your compliance efforts:
Eric S. Beane
Maria C. Rodriguez
Katharine J. Liao