California paid sick leave (Health Workplaces, Healthy families Act of 2014, AB 1522) became effective July 1, 2015, and on July 13, 2015 it was amended by AB 304, which was signed into law on that day as “urgency legislation” to amend and clarify many of the key provisions of the new law, including:
- Accrual methods to determine amount of paid sick leave available,
- Calculation of the rate of sick pay
Accrual Methods to Determine Amount of Paid Sick Leave Available
AB 1522 specifies two alternative methods an employer can use to calculate the amount of paid sick leave available: 1) under the accrual method an employee must accrue at least one hour of paid sick leave for each 30 hours worked; 2) under the up-front lump-sum method, an employer can credit an employee with 3 days or 24 hours of sick leave at the beginning of each calendar year or 12-month period.
AB 304 allows employers to use an alternative accrual method, as long as employees accrue paid sick leave on a regular basis and accrued at least 24 hours of paid sick time or paid time off (PTO) by the 120th day of employment each calendar year (or other 12-month period).
AB 304 also allows employers to continue certain sick leave or PTO policies that were implemented before January 1, 2015, and that use an accrual method other than one hour for each 30 hours worked. Grandfathered policies may continue if they meet certain conditions:
- Within three months of employment each calendar year (or other 12-month period), each employee must accrue at least one day or eight hours of paid sick leave or PTO (this applies to employees hired after January 1, 2015 also).
- Within nine months of employment, employees must accrue at least three day or 24 hours of paid sick leave or PTO.
- Accrual must be on a regular basis
- The grandfathered policy must comply with other provisions of AB 1522, including sick pay calculation, definition of family members, and notice and recordkeeping requirements.
Calculation of the Rate of Sick Pay
AB 304 allows employers to calculate paid sick leave using any of the following methods:
- For nonexempt employees (usually hourly), an employee’s pay rate during paid sick leave shall be calculated the same way the employee’s regular rate of pay is calculated for the workweek in which the employee uses paid sick time. This applies even if the employee actually worked overtime in that week.
- For nonexempt employees (usually hourly), an employer can calculate an employee’s pay rate during paid sick leave by dividing the employee’s total wages (not including overtime premium pay) by the employee’s total hours worked in the full pay periods during the 90 days prior to the date the accrued sick leave starts. This method will likely apply where the employee’s pay rate is not straightforward, for example, if an employee had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee.
- For exempt employees, an employee’s pay rate during paid sick leave shall be calculated in the same manner as the employer calculates wages for other types of paid leave time.
Policies that Provide Unlimited Sick Leave
If an employer’s sick leave policy provides for unlimited sick leave, AB 304 allows the employer to indicate “unlimited” amount on each pay stub or documents delivered with each paycheck. AB 1522 initially required that employers show the number of hours of paid sick leave available on the pay stub or other required documents.
The “30-day” Rule Applies for Work for the Same Employer
Employees who have worked at least 30 days in the prior 12 months in California are eligible to accrue paid sick leave. Originally it seemed under AB 1522 that this 30-day rule meant that an employee had to have worked for any one or more employers in California. AB 304 clarifies that an employee must work for at least 30 days for the same employer within the previous 12 months.
Reinstatement of Accrued Sick Leave if Employee is Re-hired
If a terminated employee is re-hired within 12 months, AB 1522 requires that the employee’s accrued sick leave be reinstated. However, AB 304 clarifies that if the employee was paid for that accrued time when the employee terminated, the employer is not required to reinstate that time.
Employer are required to keep records for three years that show employees’ hours worked and paid sick time accrued. AB 304 clarifies that employers are not required to inquire into or record the reasons employees use paid sick leave or PTO.