California Statewide Paid Sick Leave (AB 1522)

On July 1, 2015, California employers of all sizes will be required to provide paid sick leave benefits to their employees under the Healthy Workplaces, Healthy Families Act of 2014 (AB 1522). Employers should carefully review any sick leave or paid time off policies, as well as payroll and wage statement practices regarding such time off.

Qualifying Employees:
• Full-time, part-time, temporary, migrant and seasonal employees.
• Employees who have worked 30 or more days within a year from the start of their employment.

Exempted Employees:
• Employees covered by qualifying collective bargaining agreements.
• Providers of In-Home Supportive Services of Cal Welfare.
• Employees of an air carrier as a flight deck or cabin crew member who are provided time off equal to that provided in the HWHFA under the Railway Labor Act.

Purpose of Paid Sick Days:
• Diagnosis, care, or treatment of an existing health condition of, or preventative care for, an employee or an employee’s family member.
o “Family member” includes child, foster child, stepchild, legal ward, a child whom the employee stands in loco parentis, a parent (biological, adopted, or foster parent), stepparent, legal guardian, spouse, registered domestic partner, grandparent, grandchild, sibling, or a person who stood in loco parentis when the employee was a minor child.
• As described in Section 230(c) and 230.1(a) of the California Labor Code, for an employee who is a victim of domestic violence, sexual assault, or stalking.

Paid Sick Leave Benefit Structures Effective on July 1, 2015:

1. ACCURAL METHOD—Employees must accrue at leastone hour of paid sick leave for every 30 hours worked (approximately 5.3 hours per month for employees who work 40 hours per week), which is subject to possible caps set by the employer, limiting the accrual to 6 daysor 48 hoursper year, or

2. UP-FRONT LUMP-SUM— Employee is credited with 3 daysor 24 hours of sick leave at the beginning of each year or 12-month period, whereby the employer will not need to track accrual based on hours worked.

Starting from the 90th day of employment, employees are entitled to use accrued sick days. The rate of pay for paid sick leave is the employee’s regular hourly wage, which must be paid by employer no later than the payday for the next payroll period after the sick leave was taken.

Upon termination of employment, employees are generally not entitled to accrued sick leave payments unless the employer’s existing sick leave or “personal time off” (“PTO”) plan is treated as equivalent tovacation pay under California law. Under such plans, accrued, unused sick leave must be paid upon termination of employment.
Employee Requirements:
• Reasonable advance notice of the use of paid sick leave must be provided should the event be foreseeable.
• Notice for unforeseeable paid sick leave must be provided as soon as practicable.
Employer Requirements:
• At time of hire, provide written notice to employees of their paid sick leave rights.
• Provide written notice on the designated pay dates that sets forth the amount of paid sick leave benefits available to employee (on itemized wage statement or separate written document).
• Conspicuously display a poster informing employees of their paid sick leave rights, which the Labor Commissioner is required to create and make available.
• For at least three years, maintain adequate records of hours worked, paid sick days accrued and used by each employee. Failure to do so results in a presumption that the employee is entitled to the maximum number of hours accruable under this law.

Existing Paid Sick Leave or Paid Time Off Policy:
An employer is not required to provide additional paid sick days if the employer’s existing sick leave or PTO plan makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in AB 1522. Existing plans must comply with the accrual, carryover and use requirements of AB 1522, or provide at least 24 hours or three days of paid sick leave per year of employment, no less favorable than required by the statute.

Potential Employer Penalties for Non-Compliance:
• Legal or equitable relief brought by the Labor Commissioner or the Attorney General
• Reinstatement
• Back pay
• Reasonable attorneys’ fees
• Payment of sick days unlawfully withheld, whereby the employer must pay the withheld amount multiplied by three, or $250, whichever is greater, but capped at an aggregate penalty of $4,000.
• Payment of an administrative penalty

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Roger Royse
rroyse@rroyselaw.com

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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