Recent Amendments to California Paid Sick Leave Law

Governor Jerry Brown signed into law significant amendments to California’s Healthy Workplaces, Healthy Families Act of 2014, also known as the California Paid Sick Leave Law. The amendments are effective immediately.

We have not changed any of your California Handbook policies, but we have updated the advisory notes (accessed via the “Explain this to me” tab). However, employers may wish to update the policies in their handbooks with respect to accrual methods, usage of sick days in a 12-month period or payment calculation for exempt and nonexempt employees.

The modifications resulting from the amendments are summarized below:

Accrual Methods

Employers can now provide for paid sick leave accrual on a basis other than the traditional accrual method of one (1) hour for every 30 hours worked, provided that the accrual is on a regular basis and the employee will have 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment of each calendar year, or in each 12-month period.

Additionally, the amendment provides that under certain circumstances, an employer’s pre-January 1, 2015 paid sick leave or paid time off policy can comply with the law. Specifically, the policy must permit use of the prior policy, even if it used an accrual method different than providing one hour for every 30 hours worked, provided that the accrual is on a regular basis so that an employee, including an employee hired into that class after January 1, 2015; has no less than one day or eight hours of accrued sick leave or paid time off within three months of employment of each calendar year or each 12-month period; and was eligible to earn at least three days or 24 hours of sick leave or paid time off within nine months of employment.

An employer modifying the accrual method used in the pre-January 1, 2015 policy must comply with any of the law’s established accrual methods or provide the full amount of leave at the beginning of each year of employment, calendar year or 12-month period.

Usage/12-Month Period

The Amendment permits an employer to limit an employee’s use of paid sick days to 24 hours or three days in each year of employment, a calendar year or a 12-month period. Additionally, FAQs on the DLSE website state that the year is “a 12 month basis, based on the employee's anniversary date of hire or on a date determined by the employer.”

Rate of Pay Calculations

The amendment requires an employer to calculate paid sick time for non-exempt employees using one of the following methods: 1) by calculating the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek; or 2) by dividing 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.

For exempt employees, the amendment requires that paid sick time be calculated in the same manner as the employer calculates wages for other forms of paid leave time.

Similarly, the concepts raised by the amendments do not require policy modifications to the San Francisco and Oakland policies that integrate the California Paid Sick Leave Law. Nevertheless, employers should be aware — particularly since the policies do not address every requirement or possible nuance — that the greater benefit on any issue must always be provided to employees — whether that benefit is provided pursuant to the California law or the relevant ordinance.

With respect to the San Francisco policies — both the integrated and non-integrated policies — please note that pursuant to agency guidance, leave can be used in minimum increments of one hour, and policies should be revised accordingly.