The recently enacted Assembly Bill 1522 (“AB 1522”), enacting the Healthy Workplaces, Healthy Families Act of 2014 (“Paid Sick Leave law”), has left employers with a multitude of questions about how to apply the new law and how it will affect their existing sick leave policies. While the law itself went into effect on January 1, 2015, the implementation of the actual paid sick leave provisions for employees is not effective until July 1, 2015.
Although there are still numerous questions regarding the implementation of AB 1522 which need to be better answered, here are four practical impacts of this law that employers need to being thinking about now:
1. Most employees who do not currently receive any paid sick leave, will now be eligible for paid sick leave under this law and employers need to be prepared to apply the Paid Sick Leave law provisions to these uncovered employees. This includes temporary, seasonal, and part-time employees.
2. Employers will need to modify their current policies and practices regarding paid sick leave to implement the provisions of the Paid Sick Leave law.
3. Employers should work with their Payroll and Human Resources Departments to ensure they are aware of the new Paid Sick Leave law and are properly tracking its use by employees and ensuring that paid sick leave accrual information is provided to employees.
4. For employers who already provide paid sick leave for their employees, the Paid Sick Leave law will not likely provide additional leave to those employees, but additional restrictions (e.g., the entitlement to allow use for familial relationships not typically permitted by sick leave provisions) will likely apply for the first 3 days or 24 hours in a 12-month period.
However, the Paid Sick Leave law – codified as Labor Code sections 245 through 249 – tends to raise more questions than it answers. The plain language of the Paid Sick Leave law is vague and ambiguous, and it does not consider how the Paid Sick Leave law will interact with existing and related laws involving paid sick leave (e.g., Labor Code sections 233 and 234 – “Kin Care law”, various provisions of the Education Code that already provide paid sick leave, and local paid sick leave ordinances). In December 2014, the California Division of Labor Standards Enforcement (“DLSE” or “Labor Commissioner”) did issue a Frequently Asked Questions (FAQ) webpage that does help provide some guidance on the application of the Paid Sick Leave law: http://www.dir.ca.gov/dlse/Paid_Sick_Leave.htm
However, the Labor Commissioner’s FAQ webpage provides more of an overview of the Paid Sick Leave law as written and does not provide any interpretations of the law’s ambiguities. Unfortunately, the Labor Commissioner does not actually have the authority to promulgate regulations to interpret the Paid Sick Leave law. As a result, any clarifications of the law will likely need to come in the form of clean-up legislation from the Legislature. Whether any such clean-up legislation will happen is uncertain. This means that many open questions regarding the Paid Sick Leave law still cannot be fully answered at this time.
In the meantime, Liebert Cassidy Whitmore has analyzed several issues that may arise as employers look to ensure compliance with the Paid Sick Leave law and has provided the following questions and answers below to assist in this regard. Due to the ambiguities in AB 1522, we unfortunately do not have all the answers on how this law will apply but instead have tried to provide a reasonable interpretation where possible. Nonetheless, employers should review their current sick leave policies and practices carefully and remain up to date on any future legislation or guidance regarding the Paid Sick Leave law as July 1, 2015 approaches. We encourage employers to consult with legal counsel when drafting paid sick leave policies.
PAID SICK LEAVE LAW QUESTIONS AND ANSWERS
1) For what purposes must paid sick leave be provided under AB 1522?
AB 1522 requires that covered paid sick leave be provided for the following three purposes:
a) Diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee;
b) Diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee’s family member (includes parent, child, spouse, registered domestic partner, parent-in-law, sibling, grandchild or grandparent); or
c) For an employee who is a victim of domestic violence, sexual assault, or stalking, the purposes described in Labor Code section 230(c) and Labor Code Section 230.1(a).
For employers who currently have paid sick leave or paid time off policies, the permissible uses allowed under AB 1522 are likely more expansive than current sick leave policies. For example, the Paid Sick Leave law includes the use of sick leave to care for a parent-in-law, sibling, grandchild, or grandparent, who are not covered “family members” under California’s Kin Care law (Labor Code sections 233-234) and are not covered under most employer sick leave policies.
For employers who plan to limit the use of AB 1522 paid sick leave to 24 hours or 3 days in a 12-month period, they should be prepared to track an employee’s use of paid sick leave to see if it qualifies for one of these three reasons.
The application of this new Paid Sick Leave law will result in only the first 24 hours or 3 days of sick leave applying to one of these relationships when the employer caps sick leave in a 12-month period.
Therefore, once the first 24 hours or 3 days in a 12-month period have been used by an employee, an employer does not need to provide sick leave for these AB 1522 covered reasons and can fall back on the permissible reasons of any additional paid sick leave provided by the employer’s policy.
2) Which employees are covered by the Paid Sick Leave law?
Almost all employees are covered under the new Paid Sick Leave law. There are very limited exceptions from the law for the following types of employees:
- In-Home Supportive Services (IHSS) employees;
- Certain airline cabin crew and flight deck employees;
- Construction Industry employees covered under a valid collective bargaining agreement with regular hourly pay of not less than 30 percent more than the state minimum wage and premium overtime wages; or
- Any employee covered by a collective bargaining agreement if the agreement provides a regular hourly pay of not less than 30% more than the state minimum wage ($11.70/hour based on the current $9/hour minimum wage; $13/hour based on $10/hour minimum wage effective January 1, 2016), premium overtime wages, paid sick leave, and final and binding arbitration of paid sick leave disputes.
Absent one of these exceptions, all other employees are covered under the Paid Sick Leave law. This includes part-time, seasonal, and temporary employees. Under AB 1522, employees are entitled to begin accruing paid sick leave after 30 days of employment and can begin using paid sick leave after 90 days of employment.
3) For employers who already have paid sick leave or paid time off (PTO) polices in place, what changes must be made to ensure such policies comply with AB 1522?
The Paid Sick Leave law provides that employers who already have sick leave/PTO policies in effect do not need to provide any additional paid sick leave under AB 1522 if they meet the following requirements:
a) Make paid sick leave available for the same purposes and conditions as AB 1522; and
b) Ensure their policies either:
i. Satisfy the accrual, carry over, and use requirements of AB 1522, or
ii. Provide no less than 24 hours or 3 days of paid sick leave for employees to use for each year of employment, calendar year, or 12-month period.
However, it is not entirely clear from this provision whether the AB 1522 accrual, carry-over and use requirements must apply to all of the paid sick leave provided by an employer, or just to a minimum of 3 days or 24 hours in a 12-month period. The Labor Commissioner’s FAQ sheet unfortunately does not provide a lot of insight on how an employer’s current sick leave and PTO policies will interact with the Paid Sick Leave law.
We believe that so long as an employee’s accrual of paid sick leave/PTO is greater than or equal to the 1 hour for every 30 hours worked accrual rate noted in the Paid Sick Leave law and such accruals can carry-over to subsequent years, the only effect of the law on a current policy is that the first 3 days or 24 hours of sick leave used in a 12-month period must be for one of the reasons covered under this law. Although we feel that this is a reasonable interpretation of the law’s application to an employer’s current paid sick leave/PTO policies, this is an area that is not settled.
4) How do the use, accrual, and carry-over requirements of the Paid Sick Leave law interact?
From a practical standpoint, most employees are going to accrue covered paid sick leave under the Paid Sick Leave law at a faster rate than they can use it in a 12-month period if an employer provides for such a cap. Part-time and temporary employees who have fewer hours worked will accrue less sick leave. Here’s a summary of the use, accrual and carry-over requirements of the Paid Sick Leave law:
Use: An employer may cap the paid sick leave an employee is allowed to use in a 12-month period to 24 hours or 3 days.
Accrual: Under the Paid Sick Leave law, the rate of accrual of 1 hour of paid sick leave for every 30 hours worked is the minimum rate of accrual an employer must provide. An overtime exempt employee is deemed to work 40 hours per workweek unless the exempt employee’s normal workweek is less than 40 hours and the actual hours worked in that normal workweek would apply.
Accrual Cap/Carry-Over: An employee’s actual accrual of covered sick leave under the Paid Sick Leave law would still continue even if an employee has already used the allotted 3 days or 24 hours required by law in a 12-month period. For a full-time employee who works 2,080 hours in a 12-month period (average of 40 hours a week), the full paid sick leave accrual could technically be 69 hours. However, the Paid Sick Leave law allows an employer to cap the maximum accrual of covered paid sick leave for an employee at 48 hours or 6 days. Although the covered paid sick leave accruals can be capped, the Paid Sick Leave law requires that an employee be allowed to carry-over their covered paid sick leave accruals year to year.
5) How does the “24 hours or 3 days” 12-month use cap and “48 hours or 6 days” accrual cap apply to employees who work shifts greater or fewer than 8 hours per day (e.g., a full-time employee who works 10-hour shifts or a part-time employee who works 4-hour shifts)?
AB 1522 does not well define “hours” versus “days.” The difference in interpretation greatly affects the definitions of “24 hours or 3 days” for purposes of the 12-month use cap and the “48 hours or 6 days” for purposes of the accrual cap for employees who work shifts greater or fewer than 8 hours.
One unofficial interpretation we heard from the Labor Commissioner’s office was to provide covered sick leave at the greater amount of 24 hours or 3 days. Such an interpretation would mean that an employee who works a 12-hour shift would actually be able to use up to 3 days/36 hours of paid sick leave and accrue up to 6 days/72 hours of paid sick leave. Conversely, for a part-time employee who only works a 4-hour shift, this interpretation would mean that the employee would be able to use up to 24 hours of covered paid sick leave (the equivalent of 6 part-time days) and could theoretically accrue up to 48 hours of paid sick leave in a 12-month period. However, keep in mind that a part-time employee who normally works 4-hour shifts may not necessarily work enough hours to reach the full 48 hour cap in a 12-month period.
Absent further clarification of the law, the interpretation of 24 hours or 3 days and 48 hours or 6 days will be an open question. The safest (and most generous) approach would be to provide sick leave and accrual caps at the greater amount of the hours/days thresholds.
6) Does a non-exempt employee accrue sick leave for overtime hours?
Overtime hours worked by non-exempt employees would also be considered hours worked for purposes of determining sick leave accruals based on the accrual formula of 1 hour of sick leave for every 30 hours worked. The fact that hours worked were overtime hours as opposed to straight time hours would have no impact on the accrual rate, which is based on any and all hours worked.
7) How does providing paid sick leave time upfront at the beginning of each 12-month period impact an employer’s obligations under AB 1522?
The Paid Sick Leave law provides that an employer does not have to satisfy the accrual and carry-over methods if it provides the full amount of paid sick leave at the beginning of each 12-month period. We believe this means that an employer need only provide 3 days or 24 hours of paid sick leave that can be used for the purposes allowed under the Paid Sick Leave law and does not necessarily need to provide all of its annual sick leave accruals from any other sick leave policy up front. However, we recognize that vast majority of employers require their employees to accrue sick leave each pay period as opposed to providing them with an allotment of sick leave. Allowing an allotment is not required by AB 1522. It is simply a method of complying with the law.
8) How does the Paid Sick Leave law interact with California’s Kin Care law (Labor Code sections 233-234)?
Since 2000, California employers who have provided paid sick leave or PTO to employees must allow an employee to take up to one-half of an annual accrual such sick leave/PTO to care for a parent, child, spouse, or registered domestic partner. See Labor Code sections 233-234. However, AB 1522 now puts a different spin on the Kin Care law as there is a broader definition of “family member” under AB 1522, including grandparent, grandchild, sibling, and parent-in-law. The end result of reading the AB 1522 and Kin Care obligations together is that an employee’s use of paid sick leave to care for a family member pursuant to AB 1522 will not necessarily count towards the employee’s Kin Care law entitlement – rather, it will depend on which family member the employee is caring for.
EXAMPLE: Acme Employer has a paid sick leave policy which provides employees with 12 paid sick leave days (96 hours) a year. Below are some scenarios of how we believe that the Paid Sick Leave law would interact with the Kin Care law and Acme Employer’s paid sick leave policy:
(i) Employee John Doe takes his first three days of sick leave in a 12-month period for his own illness, because he has the flu.
- In this situation, we believe Acme Employer’s obligations under the Paid Sick Leave law have been satisfied as the first three days of the sick leave are for one of the covered reasons under the law. However, none of this sick leave time would be covered under the Kin Care law and John Doe would still be eligible to use up to 6 days of remaining sick leave to care for a parent, child, spouse or registered domestic partner. He would also have the remaining 9 days of sick leave available per the Acme Employer sick leave policy.
(ii) Employee John Doe takes his first three days of sick leave in a 12-month period to care for his grandchild (2 days) and his brother (1 day).
- Similar to the first scenario, we believe Acme Employer’s obligations under the Paid Sick Leave law have been satisfied as the first three days of the sick leave are for one of the covered reasons under the law. However, none of this sick leave time would be covered under the Kin Care law and John Doe would still be eligible to use up to 6 days of remaining sick leave to care for a parent, child, spouse or registered domestic partner. He would also have the remaining 9 days of sick leave available per the Acme Employer sick leave policy.
(iii) Employee John Doe takes his first three days of sick leave in a 12-month period to care for his Dad (2 days) and his wife (1 day).
- Unlike the first two scenarios, this scenario would involve overlap between the Paid Sick Leave law and the Kin Care law. We believe Acme Employer’s obligations under the Paid Sick Leave law have been satisfied as the first three days of the sick leave are for one of the covered reasons noted in the law. In addition, this sick leave time would be covered under the Kin Care law and John Doe would still be eligible to use up to 3 days of remaining sick leave to care for a parent, child, spouse or registered domestic partner. He would also have the remaining 9 days of sick leave available per the Acme Employer policy.
9) Does the Paid Sick Leave law provide employers with the ability to verify an employee’s need to use sick leave (e.g., obtain a doctor’s note)? Are employers precluded from requesting such information?
The Paid Sick Leave law is silent on whether employers can request verification of the need to use paid sick leave or verification of the amount (number of hours or days) of paid sick leave needed as a condition of granting paid sick leave under AB 1522.
However, AB 1522 requires employers to provide an employee with paid sick days upon oral or written request (Labor Code section 246.5(a)) and allows an employee to determine how much paid sick leave he or she needs to use (Labor Code section 246(j)). The law also points out that employers cannot deny an employee the right to use AB 1522 covered paid sick leave or retaliate against an employee for using such covered paid sick leave. Therefore, an employer’s insistence on verification of AB 1522 sick leave does not come without risk of an employee claiming he or she was denied coverage of paid sick leave under the law.
The only exception to this appears to be for the use of AB 1522 paid sick leave for victims of domestic violence, sexual assault, or stalking as AB 1522 references Labor Code sections 230 and 230.1, which do allow an employer to request certification for unscheduled absences.
This possible inability to require verification of sick leave use would most likely only apply to the first 24 hours or 3 days of paid sick leave used in a 12-month period. Any sick leave use contractually provided by an employer after that would be subject to any verification requirements imposed by the employer’s internal policy.
10) Does an employer have to reinstate accrued paid sick leave for former employees who are re-employed within one year?
Yes. The Paid Sick Leave law provides for the reinstatement of a former employee’s accrued paid sick days at the time of re-hiring so long as the employee resumes employment within one year of his or her previous departure of employment with the employer. However, if an employer’s policy allows employees to cash out their sick leave at the time of separation of employment, there is no paid sick leave to reinstate as it no longer exists.
We do not believe this would apply to any accrued sick leave an employee received beyond that required under the Paid Sick Leave law’s accrual and cap/carry-over requirements.
This reinstatement provision applies to all covered employees, including any seasonal or temporary employees who work for an employer sporadically each year. It also appears that an employee who is rehired within one year of separation is eligible to use any previously accrued and unused paid sick leave immediately upon rehiring or reinstatement even if he/she did not work the requisite 90 days during their previous employment. Absent further guidance, employers should carefully examine the reinstatement of paid sick leave for eligible former employees who did not work the requisite 90 days in their previous employment.
11) Are transfers of sick leave permitted?
Transfers of sick leave from one employee to another employee are not described by the new law— it is neither permitted nor prohibited by AB 1522. The Paid Sick Leave law notes that it does not limit or affect any other policy that provides for greater accrual or use by employees of sick days. However, it is not clear if an expanded “use” of sick leave would also include the ability to transfer sick leave to another employee. Therefore, it is possible that transfers of sick leave covered under AB 1522 may be allowed if an employer permits such transfers under its own internal policy.
As AB 1522 provides an employee a statutory right to certain accruals of sick leave, it is not entirely clear if such a right can be contractually waived by the employee to be transferred to another employee. Therefore, it is very important that any such transfers of AB 1522 sick leave by an employee be voluntary and expressly authorized by the employee at a minimum. A safer approach may be to allow the transfer of sick leave under an employer’s internal policy, except for those sick leave accruals statutorily protected under AB 1522 (e.g., ensure that an employee has at least 24 hours or 3 days of paid sick leave to use personally in a 12-month period before allowing him or her to transfer any additionally accrued sick leave).
12) Are employers required to provide written notice to employees of their available sick leave balances?
Yes, the Paid Sick Leave law requires employers to provide each employee with written notice of sick leave balances on an itemized wage statement or in a separate writing provided on the designated pay date with the employee’s payment of wages. Although public employers are not required to provide an itemized wage statement under Labor Code section 226, they are still required to provide their employees with their paid sick leave balances in writing each designated pay date.
13) Are PERS retired annuitants who perform post-retirement work for a PERS agency entitled to paid sick days?
We believe the answer is Yes. AB 1522 includes PERS retired annuitants in its definition of employees eligible for paid sick days and PEPRA does not preempt AB 1522. Even if a PERS retired annuitant performs temporary, limited-term work for a PERS agency, under AB 1522, he or she is probably entitled to paid sick days if he or she works for 30 days or more within a year and is entitled to begin using accrued paid sick days on the 90th day of employment. The same reasoning would also apply to retired annuitants under a ’37 Act County Retirement System. To date, CalPERS has not yet formally commented on the effect of the Paid Sick Leave law on retired annuitants.
14) Are employers prohibited from requiring employees to find substitute employees for the time they are out on covered paid sick leave?
The Paid Sick Leave law prohibits an employer from requiring that an employee search for or find a replacement worker to cover the days during which the employee uses paid sick days. See Labor Code section 246.5(b).
15) What requirements of the Paid Sick Leave law go into effect on January 1, 2015? Do employers have to provide individual written notices to each employee by this date?
The code sections of the law go into effect on January 1, 2015 even though the actual implementation of paid sick leave does not begin to apply until July 1, 2015. Employers should be prepared to satisfy the new posting requirement by January 1, 2015.
The Paid Sick Leave law does require that each employer put a posting up in the workplace regarding the Paid Sick Leave law, similar to other required workplace postings (e.g., Minimum Wage, FMLA, etc.). A copy of this poster is available on the Labor Commissioner’s website:
Although the Paid Sick Leave law also amended Labor Code section 2810.5 to require that employers provide individual employees with a written notice on the Paid Sick Leave law, public employers are exempt from Labor Code section 2810.5. Therefore, public employers are not required to provide such an individual written notice to their employees. See Labor Code section 2810.5(c)(1).
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