The California Healthy Workplaces, Healthy Families Act of 2014 (“the Act”) went into effect on January 1, 2015, but its key accrual and use provisions became effective on July 1. On July 13, 2015, Governor Jerry Brown signed Assembly Bill 304, amending California’s Sick Leave law to make immediate changes. Those amendments state:

  • Employers may now use different accrual methods. The Act originally provided for an accrual rate of no less than one hour for every 30 hours worked, for those employers that did not grant sick leave at the beginning of each year. The amendments now allow an employer to use an alternative accrual method if it is (a) on a regular basis, and (b) the employee has no less than 24 hours or three days paid sick leave or PTO by the 120th calendar day of employment, or each calendar year, or in each 12-month period (as determined by the employer). For example, an employer that wants to allow accrual at a faster rate may accrue one hour for every 20 hours worked.
  • The Act states that an employer need not provide additional paid sick leave if the employer already had in place as of January 1, 2015, paid sick leave or PTO plans that were at least as generous as under the Act and could be used for the same purposes. However, under the amendments, if the employer modifies those grandfathered plans, the employer must then comply with the new requirements.
  • Under the amendments, employers who provide unlimited paid sick leave or unlimited PTO to an employee meet the reporting obligations by stating “unlimited” on the wage statement in place of listing hours. Employers covered by Wage Orders 11 or 12 (motion picture and broadcasting industries) have until January 1, 2016, to comply with the notice requirements.
  • Employers may limit employees’ use of sick leave. The Act originally allowed employers to limit an employee’s use of sick leave to three days or 24 hours in each year of employment. The amendments allow an employer to limit use of sick leave to three days or 24 hours in (a) each year of employment, (b) each calendar year or (c) each 12-month period, at the employer’s choosing, as long as the method of limitation is regularly maintained.
  • Employers now have options for calculating the amount of pay owed to employees while taking sick leave. The Act originally required employers to pay sick leave based on the employee’s hourly rate (difficult to calculate if an employee’s wage rate fluctuated during the accrual period, the employee received commissions, or was salaried). The amendments state the employer can use any of the following calculations when determining how much to pay employees while on paid sick leave:
  • For non-exempt employees, the regular rate of pay can be calculated in the same manner as for overtime purposes.
  • For non-exempt employees, the regular rate of pay can be calculated by dividing the employee’s total wages (excluding overtime pay) by the employee’s total   hours worked in the prior 90 days.
  • For exempt employees, employers can calculate paid sick leave in the same manner as the employer calculates wages for other forms of paid leave time.
  • The amendments clarify that an employer need not inquire into or record the reasons why employees use sick leave. The employer must only document and keep records of the hours worked and paid sick days accrued and used by an employee for at least three years. Some employees may claim that they are taking time off as paid sick leave for reasons when, in fact, the time is taken for some other purpose. However, when this happens, they exhaust the opportunity to be paid for hours or days when they are (or a family member is) actually sick. Because of the risk that an employee may, in some circumstances, claim that the employer implemented disciplinary action or termination in retaliation for taking paid sick day(s), not recording, asking, or being concerned about the reason for using paid sick leave may help the employer defend against such a claim.
  • The Act requires employers to reinstate any previously accrued, unused paid sick leave if an employee separates from employment, but is re-hired within one year. The amendments clarify that, if the employer pays the accrued but un-used sick leave out at the time of separation (which is not required under the Act), then the employee is not entitled to re-instatement of those hours.