By Kim Silvers, SPHR-CA

The Healthy Workplaces, Healthy Families Act of 2014 (AB 1522), that will be effective July 1, 2015, will require just about all California employers (private and public sectors with one or more employees)  to accrue paid sick leave for all employees (exempt, non-exempt, full -time, part-time and temporary).  In a nutshell, the law requires one hour of sick leave to be accrued for every 30 hours (including overtime hours) an employee works.[1]  An employee will begin accruing sick leave when working in California for 30 or more days within a year from the date of hire.  (The law is not clear on whether these are calendar or actual work days. Details to come.) The employee will be entitled to use his/her accrued sick days beginning on the 90th day of employment. The minimum accrual rate for a full-time employee is about 8.6 days per year.

 An employer’s current benefits program may already allow the equivalent of what the law requires through a sick leave or a paid time off (PTO) program. Employers will want to fully review the new law’s requirements and understand the clarifications as they are published.  There are several nuances the law, as written, does not fully flesh out initially.  Of particular note is that the new law does have some administrative tracking and employee notices required that may be additional work for the employer. The good news is we have a few months to get everything in place.

 Although the employee may accrue almost nine days of paid sick leave each year, the employer may limit an employee’s use of accrued paid sick days to three days or 24 hours per year of employment.[2]  So then the employee has left over accrued sick leave – what’s the employer to do with that at the end of the year?

 Unused, accrued paid sick days must carry over to the following year of employment. However, in the heat of the political debate on the wording of this law, the parties negotiated a cap on the accrual. The employer may cap the total accrual of paid sick leave to 48 hours or 6 days per year. An exception to this carryover mandate is that there is no requirement to carryover accrued sick leave into the next year if the full amount of leave is received by the employee at the beginning of each year.  Obviously, there are pros and cons to this approach based on whether the employer uses a standalone sick leave program or has a PTO program that would require payout of all accrued and unused PTO to a separating employee.

 Employers will be required to provide each employee with a written notice that outlines the amount of paid sick leave or paid time off available, on the employee’s itemized wage statement (pay stub) or in a separate document on every designated pay date. Employers should ensure their payroll provider or HRIS can track the accrual and use of sick leave.

 Employers are not required to pay out accrued, unused paid sick days upon termination, resignation, retirement or other separation from employment. However, if an employee separates from an employer and is rehired by the same employer within one year from the date of separation, then the previously accrued and unused paid sick days must be reinstated.  This will be particularly challenging (and costly) if the employer has a PTO program and paid out the full PTO accrual at the employee’s termination.  There is no provision to require the employee to repay unused PTO that represents sick leave from the final paycheck upon rehire.

 There are a few exemptions of who is covered under the new law: These employees are not covered:

    • An employee covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for paid sick days or a paid leave or paid time off policy. There are several other requirements for this class outlined in the law.
    • An employee in the construction industry covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours worked, and regular hourly pay of not less than 30 percent more than the state minimum wage rate. There are several other requirements for this class outlined in the law.
    • A provider of in-home supportive services defined specifically in the law.
    • An individual employed by an air carrier as a flight deck or cabin crew member.

 There are many additional details around record keeping, postings, notices, reporting, policies (anti-discrimination), and supervisory practices. For example, the Notice to Employee form that has been required for all non-exempt employees for the past two years will be amended and republished by the CA Labor Commissioner to include the employee’s right to accrue and use sick leave, the right to request and use accrued paid sick leave and the right to file a complaint against an employer who retaliates against that employee for using accrued paid sick leave. 

We’ll send more information to our retained clients as they are fleshed out.  Employers should begin planning on the staffing and expense impact early.

 

© 2014 Silvers HR, LLC

[1] Exempt employees (specifically under the executive, administrative or professional exemptions) will be assumed to be working 40 hours per week unless their normal workweek is less than 40 hours.  

[2] Note that an employee on an alternative work schedule will be limited to sick days equal to the number of hours he/she is scheduled per day, e.g., a 4-10 schedule will allow the employee three 10 hour days rather than three 8 hour days.

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