Our prior articles “Mandatory Paid Sick Leave For California Employees” and “Shall the Fog Be Forever Forsaken? California Labor Commissioner Again Attempts to Resolve Questions on New Paid Sick Leave Benefits Law” cover provisions of California’s new paid sick leave (PSL) Healthy Workplaces, Healthy Families Act (the Act), key portions of which went into effect July 1, 2015.
Confusions in the Act’s language prompted proposed clean-up legislation (Assembly Bill [AB] 304) in February, 2015: “Proposed Amendments Aim to Modify the Healthy Workplaces, Healthy Families Act”. After numerous revisions, Governor Brown has signed AB 304 into law, effective July 13, 2015. The changes, many of them fairly technical, include:
1. Excluded Employees: Revised Labor Code 245.5(a) now excludes a “retired annuitant” of a government entity [a person receiving an annuity or pension] from PSL eligibility. That section also broadens the types of workers covered by construction industry collective bargaining agreements who can be excluded from receiving PSL benefits. Proposed AB 11, which would have extended PSL benefits to providers of “in-home supportive services,” did not pass. Thus, such caregiver employees continue to be excluded from the Act.
2. Eligible Employees Clarification: Under revised Labor Code 246(a), an employee who, on or after January 1, 2015, works in California for 30 or more days for the same employer within a year from the commencement of his or her employment becomes eligible for paid sick days.
3. Optional Accrual Methods: Originally the Act required an employer using an accrual method to provide a minimum of one hour of paid sick leave for every 30 hours actually worked. Revised Labor Code 246(b)) now allows an employer to implement a different accrual method provided that the accrual occurs regularly and the employee will have at least 24 hours of accrued sick leave or paid time off available by the 120th calendar day of employment or each calendar year or 12-month period.
4. Grandfathered Policies: Under revised Labor Code 246(e)(2), certain employer policies in existence prior to January 1, 2015, that have not yet been modified can be grandfathered so long as (i) they provide for regular accrual of paid sick leave (or “paid time off” [PTO]); (ii) the employee accrues at least one day or eight hours within three months of employment of each calendar year or 12-month period; and (iii) the employee was eligible to earn at least 24 hours/three days of paid sick leave/PTO within nine months of employment.
5. Reinstatement: Revised Labor Code 246(f) clarifies that the employer’s requirement to reinstate previously accrued and unused paid sick days for any employee rehired within one year from the separation date does not apply to employees who were paid out at the time of separation of employment.
6. Pay Stub Notification: Originally, the Act specified that all eligible employees must receive written notice of the amount of available paid sick leave or PTO on the employee’s pay stub or a separate writing provided with the employee’s payment of wages. Under revised Labor Code 246(h), an employer who provides unlimited sick leave to its employees (no maximum cap) may now meet this notice requirement by indicating “unlimited” [sick leave] on the employee’s itemized wage statement or in a separate writing provided on each designated pay date. Also, employers covered by Wage Orders 11 or 12 (broadcasting and motion picture industries) now have until January 21, 2016 to comply with the pay stub notification requirements.
7. Improved Hourly Rate Calculations: Revised Labor Code 246(k) now allows employers to select from several alternative calculations when determining how to pay PSL. For non-exempt employees, either (i) calculate pay in the same manner as the “regular rate of pay”* for the same workweek in which the employee uses paid sick time; or (ii) divide the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment; and (iii) for exempt-from-overtime employees, calculate paid sick time in the same manner as the employer calculates wages for other forms of paid leave time.
* Regular rate of pay means the employee’s actual rate of pay, not just the straight hourly rate. It includes all hourly earnings plus compensation in the form of commissions, non-discretionary production bonuses, piece work compensation and the value of meals and lodging. To calculate the regular rate of pay divide the total of all such compensation by the total hours worked (including overtime hours) in the given pay period(s).
8. Record keeping Requirements: Although employers must maintain records for at least three years documenting the number of hours worked and paid sick days accrued and used, revised Labor Code 247.5(b) confirms an employer is not obligated to inquire into or record the purposes for which an employee uses PSL or PTO.
The Division of Labor Standards Enforcement (DLSE) is currently revising its Frequently-Asked Questions to address AB 304’s changes to the Act. We will continue to update the status of DLSE announcements and postings. Employers should review their paid sick leave/PTO policies and workplace recordkeeping, timekeeping and payroll practices to ensure continued compliance with the modified Act.
Cindy Bamforth, August 6, 2015Back to Blog
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