California's Healthy Workplaces, Healthy Families Act went into effect January 1, 2015, with accrual rights beginning July 1, 2015. Most California employers have spent the first half of 2015 trying to reconcile various apparent contradictions in the law. On July 13, 2015, Governor Jerry Brown approved Assembly Bill No. 304, which amended various aspects of California's paid sick leave law. The amendments are effective immediately and clarify some of the ambiguities pertaining to implementation.

Below are some of the changes made by the amendments.

Eligibility

Originally, the statute provided that employees who worked in California for 30 or more days within a year were entitled to accrue paid sick leave. The amendments now clarify that an employee must work in California for the same employer for 30 or more days within a year from commencement of employment to qualify under the law.

Exclusions

The law initially enumerated four categories of employees ineligible for leave under the statute. The amendments make a small change to one of the excluded categories, changing the definition of "employee in the construction industry" by eliminating the requirement that the employee perform "on-site" work. 

Additionally, the amendments create a fifth category of employees who are excluded from the statute's coverage: retired annuitants of a public entity, as defined in the amendments.

Accrual

Originally, employees were to accrue one hour of paid sick leave for every 30 hours worked. The amendments now make clear that employers can use an alternative method of accrual so long as the time accrues on a "regular basis." This requirement can be fulfilled by employees having accrued at least 24 hours (or three days) of sick leave (or paid time off) by (i) the 120th calendar day of employment; (ii) within each calendar year; or (iii) within a 12-month period.

Finally, if an employer does not wish to implement a policy involving accrual or carryover, the amendments still permit an employer to satisfy the statute if 24 hours or three days is given at the beginning of each year of employment, calendar year, or 12-month period.

Use

The law initially provided that employers could limit the use of paid sick leave to 24 hours or three days "per year." The amendments now clarify that an employer can limit the use of accrued paid sick time to 24 hours or three days in each year of employment, calendar year, or 12-month period.

Existing Paid Sick Leave or Paid Time Off Policies

The statute's original language stated that employers who already provided paid sick leave or paid time off, subject to certain requirements, were not required to provide "additional" paid sick days where the existing policy: (i) satisfied the new law's accrual, carryover and use requirements; or (ii) provided at least 24 hours or three days of paid sick leave for each year of employment.

The amendments make some modifications. Subject to certain requirements, as before, an employer does not need to provide additional paid sick days when the policy satisfies the amendments' accrual, carryover and use requirements.

However, the amendments also create a new option, which applies to employers who provided paid sick leave or paid time off to a class of employees prior to January 1, 2015. Under the amendments, and subject to certain requirements, an employer can use its prior policy if it provided paid sick leave or paid time off to a class of employees before January 1, 2015 even if it used an accrual method other than one hour per 30 hours worked, if:

• the accrual is on a regular basis, so that an employee, including one that is 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 three months of employment of each calendar year or each 12-month period; and
• the employee was eligible to earn at least three days or 24 hours of sick leave or paid time off within nine months of employment.

Under the amendments, if an employer modifies the accrual method used in a policy it had in place before January 1, 2015, the employer must comply with an accrual method described in the amendments or provide 24 hours or three days at the beginning of each year of employment, calendar year, or 12-month period. The amendments do not prohibit an employer from increasing the accrual rate or number of days accrued for a class of employees covered by the subdivision.

Finally, the amendment also clarifies that, notwithstanding any other law, sick leave benefits provided pursuant to specific sections of the Government Code, or annual leave benefits provided pursuant to specific sections of the Government Code, or by provisions of a memorandum of understanding reached pursuant to specific sections of the Government Code, meet the sections' requirements.

Reinstatement of Accrued Sick Leave

The law originally provided that if an employee separates from an employer and is rehired within one year from that date, any previously accrued and unused paid sick days must be reinstated. Under the amendments, if an employer pays an employee for accrued but unused paid time off at separation of employment, such as pursuant to a paid time off policy that combines vacation and sick leave, the employer is not required to reinstate accrued paid time-off upon rehire.

Notice

The law requires that employers must provide employees with information detailing the amount of paid sick leave available on either the employee's itemized wage statement or in a separate writing provided on the designated pay date along with the employee's payment of wages. The amendment now confirms that if an employer has an unlimited paid sick leave or paid time off policy, the employer satisfies this notice requirement by indicating "unlimited" on the required notice.

The amendment further indicates that the subdivision pertaining to employee notice applies to employers covered by Wage Order 11 (Broadcasting Industry) or Wage Order 12 (Motion Picture Industry) on and after January 21, 2016.

Calculating Leave

The amendments set forth a number of clarifications regarding how employers should calculate paid sick leave for their employees. The amendments provide three options:

1. an employer shall calculate paid sick leave for nonexempt employees in the same manner as the regular rate of pay for the workweek in which an employee uses paid sick time, regardless of whether the employee works overtime during the week;
2. an employer shall calculate paid sick leave for nonexempt employees by dividing the employee's total wages (not including overtime premium pay), by the total hours worked in the full pay periods of the employee's prior 90 days of employment; or
3. an employer shall calculate paid sick leave for exempt employees in the same way that it calculates wages for other forms of paid leave time.

Record-Keeping

The statute imposes a three-year record-keeping requirement on employers; however, under the amendments, notwithstanding any other provision of the paid sick leave law, employers have no obligation to inquire into or record the reasons an employee uses paid time off or paid leave.

What does this mean for employers?

Given the scope of the Healthy Workplaces, Healthy Families Act and the newly effective amendments, employers should continue to review their policies and procedures currently in effect. While the amendments clarify many implementation questions, employers may still struggle with the statutory language and how to apply it.

If you have any questions about how the amendments impact your policies or whether your policies comply with the law, please contact please contact a member of our Labor and Employment practice area or the Vedder Price attorney with whom you have previously worked.

If you have any questions about the issues covered in this bulletin, please feel free to contact Brittany A. Sachs at +1 (415) 749 9525.