While the posting requirements for California’s new paid sick leave law under the Healthy Workplaces, Healthy Families Act of 2014 (HWHFA) took effect on January 1, 2015, the next step in the process – accrual of paid sick leave – must begin by July 1, 2015. So make sure to review and update your policy now!

The Labor Commissioner created the mandatory poster that employers were required to start posting conspicuously as of January 1, 2015. The poster can be found at www.dir.ca.gov. In addition, as of January 1, 2015, employers were required to use the revised Notice to Employee under Labor Code § 2810.5, which now includes information about employees’ rights to use and accrue paid sick leave. A template of the updated new hire notice was created by the Labor Commissioner and is also available at www.dir.ca.gov. California employers must comply with these requirements now.

In addition to posting and notice requirements, by July 1st all employers – regardless of size – must provide sick leave to their employees. Most employees are entitled to paid sick days at the employee’s regular hourly rate whether they are exempt or non-exempt, temporary, part-time, full-time or seasonal employees so long as they work 30 or more days within a year from the date they are first hired. Even employers located outside of California must provide paid sick leave in compliance with the HWHFA to any employee who works at least 30 days in California.

Employers can comply with HWHFA by providing paid sick leave under one of two methods – an accrual method or an “upfront” method. Under the accrual method, employees must, at minimum, accrue one hour of paid sick leave for every 30 hours worked. Accrued sick leave must carry over year to year, but employers can cap the accrual at no less than 48 hours (six days). While employees are entitled to accrue up to 48 hours (six days) of paid sick leave, an employer can limit an employee’s use of paid sick leave to 24 hours (three days) in any one year.

Alternatively, under the “upfront” method, employers must provide employees with a lump sum of no less than 24 hours (three days) of paid sick leave at the beginning of each year of employment. Under this option, the full 24 hours (three days) of leave must be available at the beginning of each year for each employee to use.

Employees must be allowed to use paid sick leave for the diagnosis, care, treatment or preventative care of a health condition of the employee or the employee’s family member. “Family member” specifically includes children, parents, spouses, registered domestic partners, grandparents, grandchildren and siblings. Paid sick leave can also be used for leave related to domestic violence, sexual violence and/or stalking.

New employees are entitled to begin using paid sick leave on their 90th day of employment and must be allowed to take leave in increments of two hours or less.

As the July 1st deadline gets closer, some of the most common questions and concerns employers raise are as follows:

• The company already has a sick leave/PTO policy, isn’t that enough? No, unless the company’s prior policy complies with all of the new paid sick leave requirements.
• Does the company really have to include the amount of accrued sick leave with every paycheck? Yes. A company’s failure to do so opens it up to not only individual claims but potential class action and Private Attorney General Act of 2004 (PAGA) representative claims. Under the new law, each pay period, employers must provide written notice to employees of the amount of paid sick leave available either on employees’ itemized wage statements or in a separate writing provided on the designated pay date.
• Does the company have to track sick leave taken? Yes, both for purposes of accurately providing notice of the amount of paid sick time available with every paycheck and to comply with recordkeeping requirements. Under the new law, employers must retain, for at least three years, records documenting the hours worked and paid sick days accrued and used by each employee. Failure to maintain adequate records results in a presumption that the employee is entitled to the maximum number of hours accruable under this law, unless the employer proves otherwise by clear and convincing evidence.
• Can the company require employees to provide a doctor’s note to use sick leave? It is unclear under the new law. We hope to receive more guidance by way of regulations.
• This policy doesn’t cover temporary employees, right? Wrong. This law covers all employees, even temporary employees.
• Does this law cover individuals that work for the company through a staffing agency? Yes, temporary employees of a staffing agency are covered by the new law. Whoever is the employer or joint employer is required to provide paid sick leave to these individuals.
• What wage rate is a company supposed to use for commission employees or those paid on piece rate or at different hourly rates? Sick leave must be paid at the employee’s regular hourly rate. However, for employees whose pay fluctuates – for example, if they are paid on a commission, piece rate or at different hourly rates for different work – to determine the pay rate for paid sick leave, the employer must divide the employee’s total wages (not including any overtime premium pay) by the employee’s total hours worked during the 90 days prior to the date the accrued leave starts, and pay the employee at that rate.
• Does the company have to pay accrued but unused sick time at the time of termination? No, employers are not required to pay out accrued but unused sick days when an employee is terminated. However, if the sick leave is included within PTO time provided to employees, it must be paid out at the time of termination.
• What are the penalties for failure to comply with these requirements? The Labor Commissioner may order any of the following, if it finds an employer in violation of the HWHFA requirements: reinstatement, back pay, payment of sick days unlawfully withheld and payment of an administrative penalty. The administrative penalty may be the greater of three times the dollar value of the paid sick days withheld, or $250, to a maximum of $4,000. In addition, if the employer fails to promptly comply with the new law, the Labor Commissioner may take enforcement action, which could result in a penalty of up to $50 per day per employee whose rights are violated.
• What kind of claims could employees really make based on this law? Not only can employees allege failure to provide sick leave or denial of the right to use paid sick leave, but they can also allege claims for retaliation if they claim they were in any manner discriminated against for using accrued sick days, attempting to use accrued sick days, filing a complaint with the Labor Commissioner or alleging a violation of the HWHFA, cooperating in an investigation, or opposing any policy or practices prohibited by the HWHFA. There is a rebuttable presumption of unlawful retaliation if an employer denies an employee the right to use accrued sick days, discharges, or in any manner discriminates against an employee within 30 days of the employee filing a complaint with the Labor Commissioner or alleging violation of the HWHFA, the employee cooperating with an investigation or prosecution of an alleged violation of the HWHFA, or the employee opposing a policy, practice or act prohibited by the HWHFA.