by Yvonne Obregon
Although there are nineteen cities and one county across the United States that have passed Employee Sick Leave Legislation, states have been slow to adopt the idea of paid sick leave legislation. Currently the only states to enact Employee Paid Sick Leave Laws are California, Connecticut, Massachusetts and recently, Oregon. The assumption is more will follow suit soon.
Large and small companies, both private and public, are required to pay California sick leave. All employers, whether you have one employee or five thousand employees, must comply with the Healthy Workplaces, Healthy Families Act (HWHFA) of 2014, also known as California’s New Paid Sick Leave Law.
Although the state’s new sick leave law took effect, January 1, 2015, and the right to accrue and take sick leave under this law did not take effect until July 1, 2015, the regulations are broadly and vaguely worded in many respects leaving employers with some uncertainty regarding policy compliance, accurate recordkeeping, and questions concerning the multiple calculations for various types of employees.
An employee who works for the same employer at least 30 days within a year in California, including part-time, per diem, and temporary employees, are covered by this law with a few clearly defined exceptions:
- Providers of publicly-funded In-Home Supportive Services (IHSS).
- Individuals employed by an air carrier as a flight deck or cabin crew member who receives compensated
- Employees covered by collective bargaining agreements with specified provisions.
- Construction employees covered by a valid union contract.
- Individuals employed by an air carrier as a flight deck or cabin crew member who receives compensated time off equivalent to or in excess to the requirements of the law.
- Specified retired annuitants.
Under the HWHFA of 2014, an employee includes full-time, part-time, temporary, per diem and/or seasonal employees. An employee is qualified under this legislation by:
- Working for an Employer on or after January 1, 2015.
- Working for the same employer for 30 or more days within a year in California.
- Satisfying a 90 day employment period (which works like a probationary period) before an employee can actually take any sick leave. Although an employee begins to accrue paid sick leave on their first day of employment, if an employee works less than 90 days for their employer, they are not entitled to take paid sick leave.
Statutory Accrual Method:
- Accrual begins on July 1, 2015 or when employment starts, whichever is later.
- Paid sick leave accrues at the rate one hour per every 30 hours worked. Both regular and overtime hours are counted towards the accrual rate. An employee who works 40 hours per week accrues 1.33 hours per week.
- Accrued paid sick leave must carry over to the following year and may be capped at 48 hours (or 6 days). If an employer caps sick leave at 48 hours, an employee will not earn sick leave in excess of 48 hours.
Alternative Accrual Method:
- An employer may use a different accrual method, other than providing 1 hour per every 30 hours worked, so long as that accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment, each calendar year, or each 12-month period (anniversary date or twelve month basis as documented in company policy).
Alternative to Accrual Method (Lump-Sum Method):
- Employers can provide 24 hours, or 3 days, at the beginning of each calendar year, anniversary date or twelve months basis. Twelve month period (calendar year, anniversary date, or an alternative twelve month period) must be written into company policy.
- This method requires that all 24 hours, or 3 days, of sick leave is paid in advance at the beginning of the chosen period.
- Employer doesn’t need to track accrual when using the alternative to accrual method but needs to record and display usage on the individual employee wage statement or other written document on the same day as payroll.
- Under this method, employers are not required to provide carryover of sick leave.
- An employee may use accrued paid sick days beginning on the 90th day of employment.
- An employee may request paid sick days in writing or verbally. An employee cannot be required to find a replacement as a condition for using paid sick days.
- An employee can take paid leave for their own, or a family members, diagnosis, care or treatment of an existing health condition or preventive care or for specified purposes for an employee who is a victim of domestic violence, sexual assault or stalking.
- An employer may limit use at 24 hours or 3 days per year. Employee needs to be notified prior to implementation.
- Employers are not required to inquire into or record the purpose of why the employee uses paid leave.
- Employer may lend paid sick days to an employee in advance of accrual (as with all other aspects of the law, the employer must ensure specific documentation).
California employers are required to notify all employees about Paid Sick Leave. There are many things employers must do in order to comply with the HWHFA of 2014 including:
- Display poster on paid sick leave rights in English, Spanish and Vietnamese where employees can read it easily.
- Provide written notice to employees with sick leave rights in English, Spanish and Vietnamese at the time of hire.
- Provide for one of the above mentioned accrual methods for each eligible employee.
- Allow eligible employees to use accrued paid sick leave upon reasonable request.
- Show how many days of sick leave an employee has available. This must be documented on a pay stub or a document issued the same day as a paycheck.
- For those employers who provide unlimited sick leave or unlimited PTO, you will satisfy the notice requirement by indicating “unlimited” on the employee’s itemized pay statement.
- Keep records showing how many hours have been earned and used for three years.
Calculating Sick Leave Pay:
- Same as hourly rate.
- If in the 90 days prior to the time off the employee had more than one hourly rate, or more than one rate was in effect, divide the employee’s total wages, not including overtime pay, by total hours worked in the full pay periods of the prior 90 days to determine the proper sick leave rate of pay.
- If an employee is paid commission or piece rate, then divide total compensation for previous 90 calendar days by number of hours worked and pay this rate.
- Employee was paid a piece rate of $.36 per square foot for 16,500 square feet during 400 hours of work in a 90 day period. The employee earned $5,940 . . . . . The employee’s hourly rate for paid sick leave is $5,940/400 hours = $14.85 per hour.
- Employee is paid on commission only. In a 90 day period, the employee worked 480 hours and earned $9,000 . . . . . The employee’s hourly rate for sick leave is $9000/480 hours = $18.75 per hour.
- As an alternative to the 90 day method, employers may use the weekly regular rate formula used for calculating overtime compensation. Essentially, employers calculate the average rate of pay by taking total compensation earned during the work week and dividing it by the total hours worked during the work week (there are many technical matters associated with this method, it is recommended that you visit the DIR website for more information).
Pay on Termination:
- Accrued and unused sick leave does not have to be paid out upon termination, resignation, retirement, or other employment separation.
- If an employee separates, resigns, or terminates employment and is rehired within one year, the paid sick leave balance at terminations must be reinstated.
- Upon, rehire, an employee will also be entitled to accrue additional paid sick days.
- However, if an employer pays out the accrued sick leave to an employee at the time of termination, resignation, or separation, the employer is not required to reinstate the previously accrued and unused paid sick days.
Company PTO Policy:
Although the new law established a minimum requirement, it is lawful for an employer to provide sick leave through its own plan or establish different plans for different categories of workers. You must follow these guidelines of compliance:
- Offer more hours of usage but not less than the law requires.
- Allow leave to be taken for the same purposes as under the paid leave law
- Must still comply with all recordkeeping and notice requirements under the paid leave law.
- If an employer chooses an accrual method, the employer must keep records for three years, documenting the hours worked and paid sick days accrued and used by an employee.
- If an employer chooses the alternative (or lump-sum) method, the employer must keep records for three years documenting the lump sum payments to employees.
- An employer is required to make records available to the Labor Commissioner upon request.
With a number of amendments to the law already, from accrual methods, proper recordkeeping, and employee separation to reinstatement of accrued paid time off, California employers along with their HR Departments have just been handed a whole lot of confusion along with countless and tiresome recordkeeping procedures in order to stay in compliance.
Keep in mind; if an employer is subject to city or county (local) sick leave laws, it must follow whichever requirement is most beneficial to the employee.
Information based on changes as of 8-18-2015. For recent amendments and additional mandates to the law, I urge you to visit the DIR website; http://www.dir.ca.gov/DLSE/Paid_Sick_Leave.htm.