California’s Paid Sick Leave Expansion: Understanding and Preparing for New CA Labor Laws

Just this month, the California state legislature passed Senate Bill No. 616 (SB 616), an amendment to the 2014 Healthy Workplaces, Healthy Families Act to set a statewide minimum standard for Paid Sick Leave. This is in response to local communities who, in recent years, across California have passed their own Paid Sick Leave ordinances to set minimums for Paid Sick Leave accrual, subjecting California businesses with multiple locations to a patchwork of regulations.

The new California Paid Sick Leave law takes effect on January 1, 2024. Virtually all employers with employees in California will be affected, except for railroad carrier employers — leaving only a few months for businesses to review and, if necessary, alter their Sick Leave policies to ensure compliance.

The New California Paid Sick Leave Law at a Glance

SB 616 lays out the following changes to statewide Sick Leave regulations:

• The statewide PSL minimum for full-time employees increases from 24 hours (3 days) to 40 hours (5 days).
  • An employer must allow an employee to use at least 40 hours or 5 days, whichever is more.
    • For example, if an employee works 10‑hour days, the employee will be entitled to use at a minimum 50 hours of paid sick leave.
    • Alternatively, if an employee works only 6 hours a day and takes 5 days of paid sick leave, for a total of 30 hours, the employee will still have 10 hours remaining.
    • These examples assume the employee has earned or received upfront their full amount of leave.
• Full-time and part-time employees must accrue a minimum of 1 hour PSL per 30 hours worked.
• Employers must allow employees to use their available sick balance beginning 90 days after the start of employment.
• Employers cannot restrict employees from using less than 40 hours per year of the PSL they have accrued.
• The cap employers can place on PSL accrued hours increases from 40 hours (5 days) to 80 hours (10 days). If an employee has reached the maximum accrual of 80 hours (10 days) and uses some of their PSL, they continue to accrue again until reaching the maximum 80 hours (10 days).
• Employers cannot limit less than 40 hours of accrued PSL to carry over to the next year. (Employers must carryover a minimum of 40 hours of any unused, accrued PSL to the following year.)
• Employees are entitled to paid sick days if they work in California for the same employer for 30 or more days within a year from the start of their employment.
• Employers must provide written notice to employees about the amount of PSL they have available, such as including their current balance on their pay stubs.
• Any local cities’ paid sick leave ordinances that provide a lower minimum than the new state minimum are superseded.
• Employers have three options for providing PSL in their policies:
  • State-guided accrual calculation of 1/30
  • Lump sum
  • Custom accrual calculation
• If an employer uses a custom calculation for PSL accrual, they must meet certain new standards, including:
  • Employees are required to be provided 24 hours (3 days) of Paid Sick Leave time by the 120th day of employment.
  • Employees are required to be provided an additional 16 hours of Paid Sick Leave by the 200th calendar day of employment (for a total of 40 hours).
  • Employers may limit the use of Sick Time to 40 hours (5 days) for each calendar year, year of employment, or 12-month period.

The text of the law also provides extensive information on how new changes to California Paid Sick Leave apply to employees covered by a collective bargaining agreement, defines protections against retaliation, outlines how the law applies to businesses with alternative accrual methods, and more.

Five Things Every California Company Should Do to Prepare for the Paid Sick Leave Expansion

California labor law is ever-changing, and businesses that operate in the Golden State must keep on top of the shifting legal landscape to ensure their operations can continue to run smoothly and in compliance.

1. Carefully review and update your current Sick Leave policies and ensure they align with California’s new statewide requirements.
2. Update your employee handbook and communicate the upcoming changes to your employees by January 1, 2024.
3. Train your HR staff and specialists to ensure everybody understands the new requirements and how to administer them.
4. Ensure your payroll and recordkeeping systems are capable of accurately tracking and documenting accrued Sick Leave and maintaining records of Sick Leave balance and usage for each employee.
5. Review the new law with your company’s payroll processor and seek counsel from HR and labor law experts if necessary to ensure your practices and policies fully comply with SB 616.

Stay Compliant with SB 616 with California Payroll

California Payroll offers a wide variety of flexible, powerful timekeeping, HR, and payroll products to help businesses of all shapes and sizes track Sick Leave accrual, usage, and requests and maintain compliance with current and upcoming California laws.

California Payroll has a very robust, easy-to-use accrual tracking module to assist with staying in compliance with Paid Sick Leave accrual tracking. Contact us to find out more!

If you have any further questions about this new law and what it means for your Paid Sick Leave policies, our HR On-Demand solution is here to provide you with a vast array of HR resources to help you find the answers, including a dedicated number to connect you to knowledgeable HR specialists who can offer advice and guidance.