By: Naomi R. Dewey, Partner
September 2014
While most of us were relaxing in the sun and enjoying one last summer barbecue, Labor Day weekend saw significant changes to California law covering employee leave, with Gov. Jerry Brown signing AB1522 into law. This new legislation gives a minimum of three paid sick days per year to almost all workers in California, and will come into effect in July 2015.
With an estimated 60 percent of California employees already getting some type of paid sick leave, this new law should cause anyone with employees working over 30 hours a week to take a long, hard look at their existing policies on paid time off.
HOW TO CALCULATE MANDATORY SICK LEAVE
From July 1, 2015, employees must earn one hour of paid leave for every 30 hours worked in a work week. Employers can calculate this two ways – using the accrual method, which could result in more than eight days a year for a full-time employee or as a one-time award that can be banked and drawn on through the year.
If you use the accrual method, you can cap the leave at six days, or 48 hours, and employees can carry up to six days of leave over to the following year. Employers can still limit the amount of leave taken each year to three days. The lump sum award does not carry over, but the employee will get a new allowance of three days the following year.
If your employee leaves with leave in the “bank” you do not have to cash them out or pay for unused sick leave, but if you re-hire them in the same calendar year, the banked leave will reactivate. This means that an employee cannot use three days, leave, get rehired, and get another three days in the same year.
HOW TO PAY MANDATORY SICK LEAVE
Knowing how to pay the new leave is important. First, employers must indicate how much leave is available on each pay stub given to the employee. Second, records for each employee showing how much leave is earned and used must be kept for three years. Third, the sick leave should be paid at the employee’s regular hourly rate, or if the employee is partly compensated based on commission, the average hourly compensation over the preceding 90 days.
HOW CAN THE LEAVE BE USED, AND WHAT HAPPENS TO AN EXISTING POLICY?
Many of our clients already have sick leave or paid time off programs for full-time employees. Like “regular” sick leave, AB1522 leave can be used for an employee or a family member for medical care, as a victim of domestic violence, sexual assault or stalking. Employers can’t require employees who use a partial day to take more than two hours leave.
If you have written policies and procedures, such as Employee Handbook or Personnel Manual, we recommend you have an attorney review your sick leave or paid time off policy this year, so you have plenty of time to implement any needed changes. It is important that paid sick leave is coordinated with any existing leave you offer employees – failing to do so could result in administrative and legal headache as employers juggle new payroll reporting requirements and the ever-expanding web of paid and unpaid leave entitlements.
WHAT ELSE DO I NEED TO KNOW?
For clients doing business in multiple locations, be aware that some cities – San Francisco, for example – also have sick leave requirements. It is also important to be aware of issues such as Worker’s Compensation leave, disability accommodations and health privacy laws whenever you, as an employer, get involved in issues relating to employee wellness. As always, some work up front will save you time in the long run and our goal is to work with you to do all we can to prevent litigation and manage risk.
Naomi R. Dewey, Partner
NDewey@BFASLaw.com
(Direct) 805.966.7422
DISCLAIMER: This Advisor is one of a series of business, real estate, employment and tax advisories prepared by the attorneys at Buynak, Fauver, Archbald & Spray, LLP. This Advisor is not exhaustive, nor is it legal advice. You should discuss your particular situation with us or with your own attorney. Our legal representation is only undertaken through a written engagement letter and not by the distribution of this legal Advisor.
