On September 10, 2014, Governor Jerry Brown signed into law the Healthy Workplaces, Healthy Families Act of 2014 (HWHFA), requiring all California employers to provide their employees in the state with at least three days of paid sick leave per year. The HWHFA also requires that employers include on an employee’s wage statement, or on a separate document provided on payday, the employee’s paid sick leave available for use. The act will go into effect on July 1, 2015. The HWHFA contains no exemption for small employers.

Subject to certain exemptions, the law applies to any employee, whether exempt or non-exempt, full-time, part-time, temporary, or seasonal, who works in California for 30 or more days in a calendar year. The only employees not covered under the law are:

• Employees covered by a valid collective bargaining agreement if the agreement expressly provides for the wages, hours of work, and working conditions of employees; for paid sick days or a paid leave or paid time off policy that permits use of sick days; for final and binding arbitration of disputes concerning the application of its paid sick day provisions; for premium wage rates for all overtime hours worked; and for regular hourly rate of pay not less than 30 percent more than that state minimum wage rate
• Employees in the construction industry covered by a valid collective bargaining agreement if the agreement either was entered into before January 1, 2015, or expressly waives the requirements of the HWHFA, and expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime hours worked, and regular hourly pay at least 30 percent more than the state minimum wage
• In-home supportive services providers
• Flight deck or cabin crew members for air carriers who receive compensated time off equal to or greater than the time required by the act

The specific requirements of the HWHFA are:

• Purposes of Sick Leave: Sick leave may be used for the diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee’s family member, or an employee who is a victim of domestic violence, sexual assault, or stalking. “Family member” is broadly defined to include a child, parent, spouse, registered domestic partner, grandparent, grandchild, and sibling.
• Accrual: Employees must accrue paid sick days at the rate of at least one hour per every 30 hours worked, beginning at the commencement of employment or July 1, 2015. Exempt employees are deemed to work 40 hours per week, unless their normal workweek is less than 40 hours. An employer may limit an employee’s total accrual of paid sick leave to 48 hours or six days.
• Using Sick Days: Employees are entitled to use accrued sick days starting on the 90^th day of employment. Employers can limit the amount of paid sick leave to 24 hours or three days per year. Accrued paid sick days must carry over to the following year, but an employee’s total accrued paid sick leave may be capped at 48 hours or six days. No accrual or carry over is required, however, if the full amount (24 hours or three days) of leave is received by employees at the beginning of each year. While an employee may determine how much paid sick leave he or she needs to use, the employer may set a reasonable minimum increment of at least two hours for use of paid sick leave. If the need for sick leave is foreseeable, an employee must provide reasonable advance notice. Where the need for sick leave is unforeseeable, the employee must provide notice as soon as practicable. An employer cannot require as a condition of using paid sick days that an employee find a replacement worker to cover for him or her.
• Notice: An employer must provide an employee with written notice that sets forth the amount of paid sick leave available for use, either on the employee’s itemized wage statement or in a separate writing provided on the designated pay date with the employee’s payment of wages. An employer must also display a poster in a conspicuous place in each workplace stating that an employee is entitled to accrue, request, and use paid sick days, the amount of paid sick days provided for by the HWHFA, the terms of use of paid sick days, that retaliation or discrimination against an employee who requests or uses paid sick days is prohibited, and that an employee subjected to such retaliation or discrimination has the right to file a complaint with the Labor Commissioner against the employer.
• Rate of Pay: Sick leave must be paid at the employee’s hourly wage. If the employee has different hourly pay rates, is paid by commission or piece rate, or is non-exempt, but paid a salary, the rate of pay is calculated by dividing the employee’s total wages (excluding overtime premium pay) by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. Payment for sick leave must be made no later than the pay date for the next regular payroll period after the employee took sick leave.
• No Payout Upon Termination: An employer is not required to compensate an employee for accrued, unused paid sick days upon termination, resignation, retirement, or other separation from employment. However, if an employee separates from an employer and is rehired within one year, previously accrued and unused paid sick days must be reinstated, and the employee is permitted to use those reinstated days upon rehire.
• Existing PTO Policies: An employer that already has a paid leave or paid time off policy is not required to provide additional paid sick days if the employer makes available an amount of leave that may be used for the same purposes and under the same conditions as required by the HWHFA and either satisfies the accrual, carryover, and use requirements of the HWHFA or provides at least 24 hours or three days of paid sick leave, or equivalent paid leave or paid time off, for employee use for each year of employment or calendar year or 12-month basis. Employers with existing policies, however, must still comply with the posting, record-keeping, and other requirements of the HWHFA. And employers that combine vacation and sick leave into undifferentiated paid time off must pay out all of the paid time off upon termination.
• Record-keeping: Employers must keep for at least three years records documenting the hours worked and paid sick days accrued and used by an employee. Employers must make these records available to an employee for inspection if requested.
• No Retaliation or Discrimination: Employers may not deny an employee the right to use accrued sick days; discharge; threaten to discharge, demote, or suspend; or in any manner discriminate against an employee for using or attempting to use accrued sick days, filing a complaint with the Labor Commissioner or otherwise alleging a violation of the HWHFA, cooperating in an investigation or prosecution of an alleged HWHFA violation, or opposing any policy or practice prohibited by the HWHFA. The statute also establishes a rebuttable presumption of retaliation if an employer takes any of the aforementioned actions within 30 days of an employee filing a complaint or engaging in any other similar activity outlined above regarding enforcement of HWHFA violations.