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New CA Law Requires Paid Sick Leave to Employees

Beginning July 1, 2015, California employers will be required to provide at least three days of paid sick leave each year to most employees, including part-time and temporary employees. The “Healthy Workplaces, Healthy Families Act of 2014 (A.B. 1522),” was recently signed into law by Governor Jerry Brown. The law requires California employers to provide employees at least three paid sick days (24 hours) per year.

Who is Covered?
California’s paid sick leave law generally applies to all employers and employees; however, the law does not apply to individuals who provide in-home supportive services (as defined by the state Welfare and Institutions Code), certain air carrier employees such as flight deck or cabin crew members subject to the federal Railway Labor Act (45 U.S.C. 181 et seq.), or employees covered by a valid collective bargaining agreement that expressly provides for paid sick days. There is no exception for small employers; organizations with one or more employees will be required to provide paid sick leave.

Accrual
Employees who have worked 30 days in California (within one year) are eligible. Non-Exempt employees accrue one hour of paid sick leave for every 30 hours worked. Employees who are exempt from overtime requirements (administrative, executive, or professional employees under a wage order) are deemed to work 40 hours per workweek, unless the employee’s normal workweek is less than 40 hours, in which case the employee will accrue paid sick leave based upon the normal workweek.
Employers must allow employees to carry over all unused accrued paid sick leave to the following year; however, employers are not required to allow employees to accrue more than 48 hours of paid sick leave.
Instead of using the accrual method described above, Employers may opt to provide a lump sum of 24 hours of sick leave at the beginning of each year, provided that a new bank of 24 hours is immediately available in the new year. Sick leave remaining from the end of the prior year from this lump sum bank does not need to carry over from the prior year.

Accrued paid sick time is not required to be paid out at termination unless it is part of a combined paid time off (PTO) plan. If an employee is rehired within a year, however, the previous paid sick leave balance must be restored.

Use
Annual use of paid sick leave may be capped by the employer at 24 work hours or three days. An employee shall be entitled to use accrued paid sick days beginning on the 90th day of employment, after which day the employee may use paid sick days as they are accrued.

Employers must allow eligible employees to use paid sick leave upon verbal or written request for preventive care, the diagnosis, care, and treatment of an existing health condition, or as a preventative measure for themselves or for a family member. Paid sick leave may also be used by employees who are the victims of domestic or sexual violence or stalking, or whose family member is a victim of such a crime. Covered family members under this act include children, spouses, registered domestic partners, parents, step-parents, parents-in-law, grandparents, grandchildren, and siblings. Employees can determine how much sick leave to use for a particular instance, though employers may set a minimum increment of not less than two hours per use.
Employers may not require as a condition of using paid sick time that the employee search for or find a replacement worker to cover the days during which the employee uses paid sick days. Employers may set a reasonable minimum increment of paid sick leave, not to exceed two hours, for the use of paid sick leave.

Rate of Pay
The rate of pay shall be the employee’s hourly wage. If the employee in the 90 days of employment before taking accrued sick leave had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee, then the rate of pay shall be calculated 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.

Posting Requirements
This new law contains strict posting and documentation requirements. At the time of hiring, new employees must be provided a notice (as part of the Wage Theft Prevention Act notice), informing them of their rights to paid sick leave and their right to file a complaint with the Labor Commissioner in the event of a violation of the law. Employers are required to display a poster, created by the Labor Commissioner, in each workplace that summarizes the requirements of the law.
Employers must also provide employees with written notice of their available amount of paid sick leave, or paid time off an employer provides in lieu of sick leave, on either the employee’s itemized wage statement or in a separate writing provided on every pay day.

Recordkeeping
Employers must keep records documenting the hours worked and the paid sick leave accrued and used by an employee for three years. These records must be made available to employees for inspection within 21 days of a verbal or written request.

Next Steps
Employers who already have paid sick leave or PTO policies in place should determine if their current policies and notifications will meet the requirements of the new plan. Employers who do not currently offer paid sick leave should begin to determine how they plan to implement the new requirements, including whether they plan to incorporate an accrual or lump sum method for providing the required leave. All employers should ensure that they have the appropriate notice and recordkeeping procedures in place prior to July 1, 2015.
With the signing, California joins Connecticut as one of only two states that require employers to provide paid sick leave. This new law makes California the only state that requires paid sick time for companies of all sizes, whereas, Connecticut legislation only applies to certain size companies.

Contact your client manager at California Payroll for more information or assistance in updating or setting up your policy.

California Payroll will continue to monitor and report on developments in this area.

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