Analysis: California’s new mandatory paid sick leave bill

By Gerardo Hernandez and Anthony Raimondo

INTRODUCTION

The State of California recently enacted a bill that requires most employers to provide a minimum amount of paid sick leave to employees. Previously employers were not obligated to provide paid sick leave days to employees. However, the new law imposes a number of requirements and penalties for employees who fail to provide paid sick leave. The new law, known as the “Healthy Families Act” (HFA), will become effective July 1, 2015, so it is important that employers become familiar with the law in order to avoid liability.

WHO IS COVERED BY THE BILL

The new HFA covers all employees who work in California for 30 or more days within a year from the commencement of employment. However, the HFA does not apply to the following:
•    An employee covered by a valid collective bargaining agreement that satisfies certain requirements involving wages, hours and working conditions;
•    A provider of in-home supportive services under Section 14132.95, 14132.952, or 14132.956 Welfare and Institutions Code; or
•    An individual employed by an air carrier as a flight deck or cabin crew member that is subject to the provisions of  the Railway Labor Act (45 U.S.C. 181 et seq.)
It is important to accurately assess whether an employee is covered by the HFA. It is recommended that employers seek legal advice in order to determine if any of the exemptions apply.

HOW IT WORKS

An employee shall accrue paid sick days at the rate of one hour per every 30 hours worked, beginning at the commencement of employment or the effective date of the HFA, whichever is later. An employee who is exempt from overtime requirements under a wage order of the Industrial Welfare Commission is deemed to work 40 hours per workweek for the purposes of this section, unless the employee’s normal workweek is less than 40 hours, in which case the employee shall accrue paid sick days based upon that normal workweek.
An employee is 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. Accrued paid sick days shall carry over to the following year of employment. However, an employer may limit an employee’s use of paid sick days to three days in each year of employment.
Paid Time Off Policy
An employer is not required to provide additional paid sick days if the employer has a paid leave policy or paid time off policy, makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in the HFA, and the policy does either of the following:
•    Satisfies the accrual, carry over, and use requirements of the HFA; or
•    Provides no less than three days of paid sick leave, or equivalent paid leave or paid time off, for employee use for each year of employment or calendar year.
At all times, employers must provide employees with written notice that sets forth the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave, on either the employee’s itemized wage statement or in a separate writing provided on the designated pay date with the employee’s payment of wages.
Accrual or Pay Out
An employer is not required to provide compensation to an employee for accrued, unused paid sick days upon termination, resignation, or other separation from employment. However, if an employee separates from an employer and is rehired by the employer within one year from the date of separation, previously accrued and unused paid sick days must be reinstated. The employee may use those previously accrued and unused paid sick days upon rehiring.

POSTING REQUIREMENTS AND ENFORCEMENT

Posting

As part of the requirements imposed by the new HFA, employers must make certain postings in their place of business to provide employees with notice of the new sick leave laws. Employers must display a poster in a conspicuous place containing all of the following:
•    An employee is entitled to accrue, request, and use paid sick days;
•    The amount of sick days provided for by the HFA;
•    The terms of use of paid sick days;
•    That retaliation or discrimination against an employee who requests paid sick days or uses paid sick days, or both, is prohibited and that an employee has the right under this article to file a complaint with the Labor Commissioner.
In addition to posting requirements, employers are also obligated to keep for at least three years records documenting the hours worked and paid sick days accrued and used by an employee. Such records must be made available to the Labor Commissioner upon request.

Enforcement

The Labor Commissioner will have the authority to investigate and enforce any violations that are committed in violation of the new HFA. An employer who willfully violates the posting requirements is subject to a civil penalty of not more than one hundred dollars ($100) per each offense. If any other violation of paid sick leave has occurred, the Labor Commissioner may order reinstatement, backpay, the payment of sick days unlawfully withheld, and the payment of an administrative penalty of up to eight thousand ($8,000.00) dollars, depending on the amount sick days withheld and the harm caused to the employee.

HOW TO COMPLY

Complying with the new requirements of the paid sick leave HFA can be daunting. For some employers, it will be particularly difficult to keep track of all of the sick day hours accrued by each employee.   Employers do have the option of simply granting three days of sick leave at the start of the year or the start of the employment in order to avoid tracking accrual.
Employers with paid time off (PTO) policies may not need to make any changes.  The paid time off policy may replace the employer’s obligations as long as it offers at least three (3) sick leave days per year for employees who work more than thirty (30) in a given year. In addition, the policy must mirror the carry over and use requirements of the HFA, which paid time off policies should already contain, as PTO has historically been treated as wages just like vacation time.

The goal of this article is to provide employers with current labor and employment law information. The contents should not be interpreted or construed as legal advice or opinion. For individual responses to questions or concerns regarding any given situation, the reader should consult with Anthony Raimondo at Raimondo & Associates in Fresno, at (559) 432-3000.

Posted: Oct. 20, 2014