Governor Brown signed AB 1522, which will provide California employees up to three days of paid sick leave per year, effective July 1, 2015. The bill (sponsored by Lorena Gonzalez, D-San Diego) is officially entitled The Healthy Workplaces, Healthy Families Act of 2014. It adds new sections 245-249 to the California Labor Code. A quick summary of AB 1522 provisions:
- Most employees (exempt and non-exempt) who work in California for at least 30 days are entitled to paid sick days at the employee’s regular rate of pay. This includes temporary, part-time, and seasonal employees who work 30 or more days within a year from the date they are first hired.
- Paid sick days accrue at a rate of no less than one hour for every 30 hours worked.
- An employer can limit an employee’s use of paid sick days to 3 days (24 work hours) per year.
- An employee is entitled to use accrued sick days beginning on the 90th day of employment.
- Employers are prohibited from discriminating or retaliating against an employee who requests paid sick days.
- Employers must satisfy specified posting and notice and recordkeeping requirements.
The California Labor Commissioner is tasked with administering and enforcing AB 1522, including the promulgation of regulations, and the investigation, mitigation, and relief of violations of the new requirements. The Labor 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 these provisions on, as well as attorney’s fees, costs, and interest.
California is the second state to enact state-wide paid sick leave. Connecticut already has a state law on paid sick leave. Particular counties or cities in California also have paid sick leave requirements, such as San Francisco and soon San Diego (unless stayed by a referendum vote). AB 1522 establishes “minimum” requirements and does not preempt or limit other applicable laws that provide greater accrual of paid sick days, so some California employers might have to have multiple paid sick leave policies to comply with all applicable laws.
Following is additional detail on the requirements of AB 1522.
Accrual of Paid Sick Leave
Exempt and non-exempt employees who work in California for more than 30 days will accrue paid sick leave at a rate of no less than one hour for every 30 hours worked. This equates to approximately 5.3 hours per month for employees who work 40 hours per week. Exempt employees are deemed to work 40 hours per week for accrual purposes, except employees who normally work fewer than 40 hours will accrue based on their actual scheduled workweek.
Accrual of paid sick leave does not begin until the later of July 1, 2015 or date of hire.
Using Paid Sick Leave
Employees can begin to use paid sick days as of the 90th day of employment. After that employees can use paid sick days as they accrue. Employers have discretion to lend employees paid sick days before they have accrued. Employers cannot condition use of paid sick leave on employees finding replacement workers to cover the time they are on paid sick leave.
Employees may use paid sick time for themselves or a family member, for the following purposes:
- preventive care
- diagnosis, care, or treatment of an existing health condition
- if the employee is a victim of domestic violence, sexual assault, or stalking (as per Labor Code sections 230 and 230.1)
“Family member” for whom employees may use paid sick time include:
- child (as defined)
- parent (as defined)
- registered domestic partner
- grandchild, or
Employees have the right to determine how much accrued paid sick leave they need; however, employers can set a reasonable minimum increment of time, not to exceed two hours, for the use of paid sick leave.
Annual Limits on and Carry Over of Paid Sick Leave
An employer can limit annual accrual of paid sick leave to 6 days or 48 hours, as long as an employee’s rights to accrue and use paid sick leave under this law are not otherwise limited.
Employers must allow employees to carry over at least three days or 24 hours of paid sick leave from one year to the next. One exception is if the full amount of paid sick leave is available as of the beginning of each year, then no accrual or carry-over is required.
Pay Rate for Paid Sick Leave Time
An employee’s pay rate during paid sick leave shall be the employee’s normal rate during regular work hours. In circumstances where this is not straightforward ( e.g., if an employee had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee), the employer shall calculate the 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 of employment prior to the date of the accrued sick leave.
Employers Who Already Offer Paid Sick Leave or Paid Time Off
If an employer already has a paid leave policy or paid time off policy, the employer is not required to provide additional paid sick days (new Labor Code section 246(e)) if:
- the employer makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in this new law, and
- the employer’s policy does either of the following:
- (1) it satisfies the accrual, carry over and use requirements of this new law; or
- (2) it provides at least 24 hours or 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 or 12-month basis.
This provision does not appear to exempt employers from other requirements of this new law (e.g., notices, posters, record-keeping, etc.). Additionally, employers who already offer paid sick leave or paid time off should review their existing policies and make any needed changes.
Employment Termination and Rehire
Employers are not required to pay out accrued but unused sick days when an employee terminates employment, as is required for accrued vacation time. If an employee is rehired within one year, however, the employer must reinstate the accrued but unused balance the employee had at date of termination. The rehired employee can use that time plus will start accruing additional paid sick leave under the regular rules (i.e., one hour for each 30 hours worked).
Prior Notice of Need for Sick Leave
Employees must provide “reasonable” advance notice if the need for paid sick leave is foreseeable. If it is not unforeseeable, the employee must provide notice of the need for leave as soon as practicable.
No Exemption for Small Employers, but Some Other Categories of Employees are Exempt
There is no exemption for small employers or government employers. The paid sick leave requirements apply for small employers with only one or two employees. However, paid sick leave is not required for:
- employees covered by collective bargaining agreements (CBAs) that expressly provide for the wages, hours of work, and working conditions of employees, as well as for paid sick days (with final and binding arbitration for any disputes regarding paid sick days), premium wage rates for all overtime, and a regular hourly rate of not less than 30% more than the state minimum wage.
- construction industry employees covered by a valid CBA, if the CBA was entered into before January 1, 2015, or if the CBA expressly waives the requirements of “this article” in clear and unambiguous terms.
- providers of in-home support services under specified sections of the California Welfare and Institutions Code
- certain airline industry employees (flight deck or cabin crew members), if they receive compensated time-off at least equal to the paid sick leave under AB 1522.
Notice, Posting and Record-Retention Rules
Employers must satisfy the following notice and posting requirements under AB 1522:
- At time of hire, employers must provide written notice to employees of their paid sick leave rights (to accrue and use paid sick leave, to be free from retaliation, and to file a complaint). This adds to the information already required at time of hire by Labor Code section 2810.5. It appears this requirement does not apply to employees of non-federal governmental employers, to exempt employees, or to employees covered by specified collective bargaining agreements, because the new requirement is added to the list of information already required by Labor Code section 2810.5 at time of hire, and this section does not apply for the above categories of employees.
- At regular paydays, employers must provide each employee with written notice that sets forth the amount of paid sick leave available (or paid time off) either on the employee’s itemized wage statement (Labor Code section 226) or in a separate writing provided on the designated pay date with the employee’s payment of wages.
- In each workplace, employers must display a poster (in a conspicuous place) informing employees of their paid sick leave rights. The Labor Commissioner is required to create this poster and make it available to employers. Employers who willfully violate the posting requirements will be subject to a civil penalty of not more than $100 per offense.
Employers must retain, for at least three years, records documenting the hours worked and paid sick days accrued and used by each employee. Employers must allow access to these records by the Labor Commissioner (per Labor Code section 1174) and by employees (per Labor Code section 226). If an employer does not maintain adequate records, it shall be presumed that the employee is entitled to the maximum number of hours accruable under this new law, unless the employer proves otherwise by clear and convincing evidence. (This is a higher standard than the “preponderance of the evidence” standard traditionally used for civil penalties.)
Prohibition on Retaliation
Employers must not retaliate against employees who use paid sick time, oppose an employer’s policy or action that violates the new requirements, or file complaints with the Labor Commissioner claiming the employer violated their rights. The new law provides for a rebuttable presumption that an employer has unlawfully retaliated if the employer denies an employee the right to use accrued sick days, discharges, threatens to discharge, demotes, suspends, or in any manner discriminates against an employee within 30 days after the employee has taken one of the above actions. (Labor Code section 246.5)
Enforcement and Penalties
If the Labor Commissioner determines (after a hearing) that an employer has violated the paid sick leave requirements, new Labor Code section 248.5 allows the Labor Commissioner to enforce them by ordering any of the following: reinstatement, back pay, and payment of sick days unlawfully withheld, plus payment of an administrative penalty to an employee whose rights were violated. The amount of the additional payment (administrative penalty) shall be:
- If the employer unlawfully withheld (failed to pay) paid sick leave, the employee shall recover the greater of: three times the dollar value of the paid sick days withheld, or $250, to a maximum of $4,000.
- If the employer’s actions resulted in “other” harm to the employee or person (such as termination of employment), the administrative penalty shall include: $50 for each day the violation occurred or continued, to a maximum of $4,000.
If the employer fails to promptly comply with the above, the Labor Commissioner may take “appropriate” enforcement action to ensure compliance, including filing a civil action. The employer may be ordered to pay the state of California up to $50 for each day a violation occurs or continues for each employee or other person whose rights under the paid sick day rules were violated.
Employees may not file lawsuits against employers for allegedly violating the new paid sick leave provisions. However, the Labor Commissioner or the Attorney General may file a civil action in court against the employer and, if they prevail, are entitled –“on behalf of the aggrieved” employee – to appropriate legal and equitable relief, including reinstatement, back pay, the payment of sick days improperly withheld, and liquidated damages of $50 to each employee for each violation each day, plus reasonable attorneys’ fees and costs.
The final version of AB 1522 does include some language that protects employers: Section 248.5(h) provides that “an employer shall not be assessed any penalty or liquidated damages under this article due to an isolated and unintentional payroll error or written notice error that is clerical or an inadvertent mistake regarding the accrual or available use of paid sick leave. In reviewing for compliance with this section, the factfinder may consider as a relevant factor whether the employer, prior to an alleged violation, has adopted and is in compliance with a set of policies, procedures, and practices that fully comply with this section.”