Proposed Amendments Aim to Modify the Healthy Workplaces, Healthy Families Act Prior to Its July 1, 2015 Effective Date

Our article “Mandatory Paid Sick Leave For California Employees” (Mandatory article) describes the California’s Healthy Workplaces, Healthy Families Act of 2014 (the Act) which on July 1, 2015 will require all California employers — regardless of size (and except for those with collective bargaining agreements and other very limited exemptions) — to provide paid sick leave to any temporary, part-time or full-time employee who meets some basic eligibility requirements.

As the Mandatory article also summarizes, such employers must, by required written policy, announce their choice of one or more of several methods to calculate the benefit for each employee, including the “advance” method and the “accrual rate” method. Under the accrual method, the Act directs that an eligible worker will earn sick pay benefit at a minimum rate of one paid hour for every 30 hours worked (starting July 1 or the date of hiring, whichever comes later). The Act also directs that an eligible employee may begin to use accrued paid sick days beginning on the 90th day of employment after July 1, or the date of hiring, whichever comes later. Among the many other details in the Act, employers may (but do not have to) cap the annual usage, provided the limit is at least three days or 24 hours paid time. Employers must also notify each employee in writing of his or her available paid sick leave benefit with each wage payment.

As we relayed in the subsequent blog Shall the Fog Be Forever Forsaken? California Labor Commissioner Again Attempts to Resolve Questions on New Paid Sick Leave Benefits Law, the language of the Act is in many places ambiguous, requiring the state’s Division of Labor Standards Enforcement (Division) to attempt clarifications by publishing and then in February, 2015 extending FAQs (Frequently Asked (answered) Questions) on the Division website.

Meanwhile, and also to clear-up persisting questions and confusions, the Act’s author, Assembly Member Lorena Gonzales of San Diego, introduced clean-up legislation on February 12, 2015 (Assembly Bill [AB] 304) which proposes

1. Clarification of Eligible Employees (Labor Code 246(a)): Currently, an employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the commencement of his or her employment becomes eligible for paid sick days. AB 304 would clarify that the employee must work in California for the same employer for 30 or more days within the previous 12 months.

2. Excluded Employees (Labor Code 245.5(a)): AB 304 would exclude two additional groups of workers from the definition of “employee” under the Act: (a) a retired annuitant [a person receiving an annuity or pension] of a public entity and (b) a worker covered by the federal Railroad Unemployment Insurance Act.

3. Additional Accrual Options (Labor Code 246(e)): Currently the Act requires an employer using the accrual method to provide a minimum of one hour of paid sick leave for every 30 hours worked. AB 304 would authorize other methods of accrual provided that the accrual occurs regularly and the employee will have at least 24 hours of accrued sick leave available by the 120th calendar day of employment.

4. Tracking Unlimited Sick Leave (Labor Code 246(h)): AB 304 would clarify that an employer who provides unlimited sick leave to its employees (no maximum cap) could meet its notice requirements by indicating “unlimited” [sick leave] on the employee’s itemized wage statement.

5. Simplified Hourly Rate Calculations (Labor Code 246(k)): Currently, if the employee “in the 90 days of employment before taking accrued sick leave had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee,” then the employee’s total wages (excluding overtime premium pay) must be divided by “the total hours worked in the full pay periods of the prior 90 days of employment” to calculate the hourly rate of paid sick leave. AB 304 would amend this: “The rate of pay shall be the employee’s hourly wage. If the employee receives different hourly rates in the pay period when the accrued paid sick leave is taken, then the rate of pay shall be calculated in the same manner as the regular rate of pay for purposes of overtime.”

6. Reinstatement (Labor Code 246(f)): The Act currently requires an employer to reinstate “previously accrued and unused paid sick days” for any employee rehired within one year from the separation date. AB 304 would clarify that this requirement does not pertain to such employees who received payment at the time of separation for their accrued and unused paid sick days.

7. No Private Right of Action (Labor Code 248.5(e)): AB 304 would remove the term “any person” regarding the Act’s enforcement provisions, presumably to clarify that no private right of action exists.

Ms. Gonzalez has also introduced new legislation (AB 11) to require providers of “in-home supportive services” (as defined under the Welfare and Institutions Code) to qualify for the Act’s mandatory paid sick leave benefit. Such providers are currently exempt.

We will continue to update the progress of each of these the bills and any modifications of the Act. For additional assistance understanding and implementing the Healthy Workplaces, Healthy Families Act, please contact one of our attorneys Tim Bowles, Cindy Bamforth or Helena Kobrin.