Many employers voluntarily offer paid sick leave to their full-time employees. A new California law will now mandate that all employers provide such a benefit to all California employees, including part-time, temporary, and seasonal employees – thereby creating a huge burden on employers and significantly increasing the cost of doing business in California.

On September 10, 2014, Gov. Jerry Brown signed into law the Healthy Workplaces, Healthy Families Act of 2014 (AB 1522), which is the nation’s second state-law mandate requiring employer-provided sick leave (Connecticut’s 2011 paid sick leave law was the first). California’s far-reaching mandate requires all employers, large and small, to provide all their California employees (with only minor exceptions (see "Covered Employers/Employees" below)) with at least three paid sick days per year beginning July 1, 2015, on pain of statutory penalties and litigation for alleged violations.

Covered Employers/Employees Generally, AB 1522 (the “Statute”) covers all private and most public employers, regardless of size; there is no small-employer exception.

The Statute guarantees paid sick leave benefits to all employees who, on or after July 1, 2015, work in California for 30 or more days within a year from the start of their employment, except for: in-home supportive service workers, flight deck or cabin crew members of air carriers, and employees covered by collective bargaining agreements that provide specified minimum pay and benefit levels (such as paid leave benefits that exceed those mandated by the Statute).

Use of Paid Sick Leave Upon the oral or written request of a covered employee, the employer must allow the employee to use accrued paid sick leave in connection with: (1) the diagnosis, care, or treatment (including preventive treatment) of an existing health condition of the employee or the employee’s family member [see definition below], and (2) the employee’s being the victim of domestic violence, sexual assault, or stalking (as per Labor Code sections 230 and 230.1).

The Statute defines “family member” broadly as including:

• A child (regardless of age or dependency status), including: a biological, adopted, or foster child; a legal ward; or a child to whom the employee stands in loco parentis
• A biological, adoptive, or foster parent, stepparent, or legal guardian of an employee or the employee’s spouse or registered domestic partner, or a person who stood in loco parentis when the employee was a minor child
• A spouse
• A registered domestic partner
• A grandparent
• A grandchild
• A sibling

Notably, the expansive definition of “family member” goes beyond that in the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA). This difference in definition will mean situations where employees may be entitled to paid sick leave that is not chargeable to their FMLA or CFRA entitlements.

An employee must provide “reasonable” advance notice to the employer if the need for paid sick leave is foreseeable. If it is not foreseeable, the employee must provide notice of the need for leave as soon as practicable.

Accrual and Carryover Paid sick leave will accrue at a rate of not less than one hour per every 30 hours worked.

• The Statute applies equally to exempt and non-exempt employees, with exempt employees presumed to work 40 hours per workweek for accrual purposes, unless the employees’ normal workweek is less than 40 hours, in which case the employees will accrue paid sick leave based upon their normal workweek. The paid sick leave must be paid at the same wage rate as the employee normally earns during regular work hours. The Statute does not address whether paid sick leave should be calculated differently for tipped employees or certain other employees who receive non-traditional pay (even though still covered by the Statute).

Employees will be entitled to use accrued paid sick leave beginning on the 90th day of employment. Accruals, however, will begin on the later of July 1, 2015 (the Statute’s effective date) or the employee’s date of hire. An employer may elect to advance sick leave to an employee before it is accrued, but is not required to do so.

All unused sick leave will carry over to the following year of employment. Instead of requiring that employers track accruals and carryovers, however, the Statute permits employers to provide the full allotment of sick leave at the beginning of each year. The Statute does not clarify if “year” in this context refers to year of employment, calendar year, or something else. Employers can limit annual accrual of paid sick leave to 48 hours (or six workdays). Employers also may limit the use of paid sick leave to 24 hours (or three workdays) in each year of employment.

Employees have the right to determine how much accrued paid sick leave they need; however, employers can set a “reasonable minimum increment, not to exceed two hours,” for the use of paid
sick leave.

No Discrimination or Retaliation The Statute contains broad anti-discrimination and retaliation provisions, including a rebuttable presumption of unlawful retaliation under certain circumstances.

Termination and Reinstatement Employers are not required to pay out accrued but unused sick leave upon an employee’s termination, resignation, retirement, or other separation from employment (unless, of course, the employer provides paid time off (PTO) in lieu of sick leave, with such PTO being payable upon termination). If an employee separates from employment but is rehired within one year, any previously accrued and unused paid sick leave will need to be reinstated, and the employee will be able to use the restored leave time without satisfying the 30- and 90-day waiting periods applicable to new employees.

Notice, Posting, and Recordkeeping Requirements The Statute will impose on employers additional notice, posting, and recordkeeping requirements, including:

• Notice on wage statements: Employers will have to provide written notice setting forth the amount of paid sick leave available for use, either on the employee’s itemized wage statement or in a separate writing provided on the designated pay date with the employee’s payment of wages. Beginning January 1, 2015, employers also will be required to provide employees with information about their paid sick leave entitlement in writing upon hire. A template Labor Code 2810.5 notice is now available online through the Department of Industrial Relations website at dir.ca.gov/DLSE/Publications/LC_2810.5_Notice_(Revised-11_2014).pdf
• Workplace posters: Beginning January 1, 2015, employers will have to display in a conspicuous location a poster specifying the following: (1) that employees are entitled to accrue, request, and use paid sick days; (2) the amount of paid sick days provided for by the new Statute; (3) the terms of use for paid sick days; and (4) that retaliation or discrimination against an employee who requests or uses paid sick days, or both, is prohibited, and that an employee who experiences prohibited conduct has a right to file a complaint with the California Labor Commissioner (the “Commissioner”). (The Statute charges the Commissioner with creating a suitable poster This poster is now available online through the Department of Industrial Relations website at http://www.dir.ca.gov/DLSE/Publications/Paid_Sick_Days_Poster_Template_(11_2014).pdf)
• Recordkeeping: Employers will have to keep records documenting the hours worked and paid sick days accrued and used by an employee for at least three years after accrual. The Commissioner will have access to these records, and employers must make the records available to their employees.

Enforcement The Commissioner is tasked with enforcing the new Statute, investigating alleged abuses, and ordering appropriate relief for violations. The Commissioner can impose specified administrative fines for violations, and the Commissioner or the attorney general can recover specified civil penalties against an employer who violates the Statute, as well as attorneys’ fees, costs, and interest.

Minimum Requirements The Statute establishes minimum requirements for paid sick leave and does not preempt or limit other applicable laws, regulations, or requirements that provide for greater accrual of sick leave benefits, whether paid or unpaid, or similar employee protections. Accordingly, employers with paid sick leave policies that provide the same or greater benefits (used for the same purposes and under the same conditions) need not provide additional paid sick leave benefits if their existing policies: (1) satisfy the accrual, carryover, and use requirements of the Statute; or (2) provide for no less than 24 hours or three days of paid sick leave, or equivalent paid leave or paid time off, for employee use during each year of employment, calendar year, or 12-month basis.

We will keep you informed of any important developments under the new Statute.

For more information on the Statute and employer-provided sick leave, contact Julia Y. Trankiem or the member of the Reed Smith Labor & Employment Group with whom you work.

Client Alert 2014-249