California Enacts Mandatory Paid Sick Leave

California lawmakers and Governor Brown have been busy enacting new laws that are guaranteed to impact California businesses, particularly small employers. One requires employers to provide accrued, paid sick leave beginning on July 1, 2015.

The Healthy Workplaces, Healthy Families Act of 2014 (“Act”) will apply to all employers. It will cover employees, including otherwise exempt employees, who work 30 or more days in California within a year from the commencement of their employment. Excluded from the Act are: (1) employees covered by a collective bargaining agreement (“CBA”) that provides for paid sick leave; (2) certain construction employees covered by a CBA, even if it does not provide for paid sick leave; (3) airline flight crew employees who already accrue paid time off of at least one hour for every hour worked; and (4) in-home support service providers. There are additional requirements to trigger these exclusions.

Paid sick leave is accrued at a rate of “not less than” one hour for every 30 hours worked. Employers can limit accrued sick leave to 48 hours (6 days), and can limit carryover to 24 hours (3 days) each year. The hourly rate for sick pay is calculated by dividing the employer’s total wages (no overtime premium) by the total hours worked in the full pay periods of the prior 90 days. Calculating this rate may be challenging for employees paid at varying rates depending on work.

Sick leave will be available for treatment of a health condition or preventative care for the employee or a family member, or if the employee was a victim of domestic violence, sexual assault or stalking. There is a 90-day “threshold” period of employment that the employee must cross before first taking sick leave under the Act.

There are posting requirements. Employers must display a poster explaining the new sick leave accrual requirements. New employees must be informed in writing of sick leave accrual rights. All employees must be given notice of sick time accrued after each pay period. Employers must maintain records reflecting hours worked and sick leave accrued and used for three (3) years, so they can make them available if requested by the employee or Labor Commissioner.

Employers should act proactively to protect themselves from liability under either new law. Over the next few months, employers should revise policies, including handbooks, to reflect compliance with the new paid sick leave law. Employers are encouraged to consult with their regular employment attorneys to ensure they are in full compliance.