California’s New Paid Sick Leave Law: Not an Easy Pill to Swallow

A new California law, known as the Healthy Workplaces, Healthy Families Act of 2014, will impose significant new paid sick leave requirements on California employers. Specifically, employers must guarantee at least three paid sick days per year. All employers should review their sick leave policies to make sure they are compliant with the new law.

What Employers need to know:

1. While the law does not become effective until July 1, 2015, companies that employ workers should begin addressing difficult decisions regarding how to comply with the new law’s assorted accrual, use, notice and record-keeping requirements now.
2. California will require virtually all employers of all sizes with California employees, regardless of where the company is based, to grant at least three days of paid annual sick leave to California employees. There is no exclusion for small employers or nonprofit corporations.
3. An “employee” is defined as every employee with a handful of exceptions, such as those covered by CBAs or in-home workers. Thus, it applies to both exempt and non-exempt employees, whether full-time, part-time, or temporary, who work in California for 30 or more days within a year from the commencement of employment.

General Requirements of the New Law

1. Once an employee whether exempt, non-exempt, full-time, part-time, or temporary works 30 days, an employer is required to provide the employee with at least one hour of sick leave for every 30 hours worked.
2. In general, an employer must allow accrued paid sick leave to roll over to the next year.
3. However, an employer may limit the use of paid sick leave in a year to 24 total hours, or three days, in each year of employment.
4. No accrual or carry-over is required if an employer provides the full amount of sick leave at the beginning of each year, allowing the employee to take sick leave before he or she would have otherwise accrued it.
5. An employer is also not required to allow an employee to accrue a total of paid sick leave in excess of 48 hours, or six days.
6. Employees are able to use paid sick time for preventive care for themselves or a family member.
7. Covered employees are entitled to take paid sick leave to address their own health condition or that of a family member. The definition of “family member” is broad, and includes grandparents, grandchildren and siblings, in addition to spouses, registered domestic partners and children. Sick leave may also be taken to care for the adoptive parent, foster parent, stepparent or legal guardian of an employee or of the employee’s spouse or domestic partner. Employees are also eligible to take paid sick leave if they are a victim of domestic assault, sexual violence or stalking.
8. An employee who uses sick leave is entitled to compensation for his or her sick day at his or her standard hourly rate; employees who earn commissions must have those commission payments factored into their sick leave payment. An employer is not required to pay out the sick leave upon termination.
9. Employees are free to determine how much paid sick leave they need to use, subject to an employer-set minimum increment, not to exceed two hours. Employers may not require employees to search for or find a replacement worker to cover a permitted use.
10. The employees must earn one hour of paid sick leave for every 30 hours worked. Accrual is immediate, and employers cannot impose probationary periods on accrual or beginning period when accrued time may be used but an employee would be entitled to use accrued sick days beginning on the 90th day of employment.

What Employers Need To do:

1. Employers that do not currently grant paid sick time to their California employees must revise their policies accordingly and notify their employees of the new law.
2. Employers that already provide paid leave that may be used for sick days may not have to offer any additional paid time off, but will nonetheless have to comply with additional specific recordkeeping, notice and posting requirements. And if the policy only extends to full-time employees, it must be revised to cover part-time, or temporary employees.
3. Employers must notify employees of their rights to paid sick leave by two means:
4. 1. posted notice; and
   2. an additional clause in time-of-hire Wage Theft Prevention Act notice.
5. Employers must provide each employee with written notice at the time of each payment of wages showing “the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave.” Such “payday” notice may be included in an employee’s wage statement or in a separate, simultaneous writing.
6. Employers must keep, for at least three years, records documenting (i) the hours worked, (ii) the paid sick days accrued, and (iii) the paid sick days used by each employee. These records are subject to review by the Labor Commissioner, as well as the employee upon request.

Penalties for Non-Compliance

The law is enforced by a combination of the Labor Commissioner, the Attorney General, and civil actions under the California Private Attorneys General Act (PAGA).

For every paid sick day unlawfully withheld, treble damages are available up to a maximum of $250, not to exceed an aggregate penalty of $4,000 per employee.

Other penalties apply to violation of the statute’s notice obligations.

PAGA actions are permitted, but recoveries exclude PAGA penalties and are limited to restitution, equitable or injunctive relief, and reasonable attorney’s fees and costs.

Future Sick Leave Legislation

These laws appear to be on the rise. California is the second state (after Connecticut) to pass a paid sick leave law, and as stated above, employees working for non-California companies are covered. Massachusetts approved a law in the November 4 election that requires certain employers to provide paid sick leave. The law also takes effect July 1.

Several municipalities have also mandated paid sick leave, including New York City, San Francisco, San Diego, Seattle, Jersey City and Newark, New Jersey and Eugene, Oregon.

Therefore, even employers with few or no employees in California are advised to stay attentive to this evolving area and to consult with counsel to ensure compliance.

For more information, please contact Laura P. Worsinger, senior counsel at Dykema Gossett LLP in Los Angeles, at (213) 457-1744 or lworsinger@Dykema.com, or your Dykema relationship attorney.

---

^{As part of our service to you, we regularly compile short reports on new and interesting developments in public company matters and the issues these developments raise. Please recognize that these reports do not constitute legal advice and that we do not attempt to cover all such developments. Readers should seek specific legal advice before acting with regard to the subjects mentioned here. Rules of certain state supreme courts may consider this advertising and require us to advise you of such designation. Your comments on this newsletter, or on any Dykema publication, are always welcome. © 2014 Dykema Gossett PLLC.}