December 2, 2014
The California Legislature recently enacted the Healthy Workplaces, Healthy Families Act of 2014 (AB 1522), which will require employers to provide paid sick leave each year for most California employees. AB 1522 establishes the minimum requirements pertaining to paid sick days in California. It does not preempt, limit, or otherwise affect the applicability of any other law, regulation, requirement, policy, or standard that provides for greater accrual or use by employees of paid or unpaid sick days.
Under AB 1522, exempt and non-exempt employees who, on or after July 1, 2015, work in California for 30 or more days within a year from the commencement of employment, will be entitled to paid sick days. Employees will be entitled to use accrued paid sick days, upon oral or written request, for (1) the diagnosis, care, or treatment of an existing health condition of, or preventative care for, an employee or an employee’s family member, and (2) an employee who is a victim of domestic violence, sexual assault or stalking.
For purposes of the Act, a "family member" includes a child, parent, spouse, registered domestic partner, grandparent, grandchild, and sibling.
AB 1522 applies very broadly to employers, including employers of one or more employees and any person employing another under any appointment or contract of hire and state and local government employers.
AB 1522 will not apply to employees covered by collective bargaining agreements that meet certain conditions outlined in the statute, including a provision for paid sick days or a paid time off policy and also an hourly pay rate not less than 30% more than the state minimum wage. It also will not apply to providers of in-home supportive services and certain individuals employed by an air carrier as a flight deck or cabin crew member.
Sick Leave Accrual and Use
A covered employee will accrue paid sick days at the rate of not less than one hour per 30 hours worked, beginning at the commencement of employment or the operative date of the Act, whichever is later. A salaried exempt employee is deemed to work 40 hours per workweek for accrual purposes, unless the exempt employee’s normal workweek is less than 40 hours, in which case the exempt employee will accrue paid sick days based upon the normal workweek. AB 1522 does not specifically define what constitutes "hours worked" and, therefore, an employer may want to define hours worked, including at least all hours actually worked, in its sick leave accrual policy.
Accrual of sick leave at one hour for each 30 hours worked would amount to a substantial amount of sick leave (e.g., an employee who actually works 1,860 hours in a year would accrue 62 hours or almost 8 days of sick leave that year).
However, the new law permits an employer not to comply with the accrual formula of one hour for each 30 hours worked, IF AND ONLY IF the employer has a paid leave policy or paid time off policy that gives the employee no less than 24 hours or three days of paid sick leave at the beginning of each year, and allows the employee to use the sick leave for the same purposes and under the same conditions as specified in the Act. In that event, no accrual or carry over is required under the Act.
An employee will be entitled to use the paid sick days beginning on the 90th day of employment. An employer may, but is not required to lend paid sick days to an employee in advance of accrual. The rate of pay shall be the "employee’s hourly wage." AB 1522 provides a method for calculating the hourly wage where an employee, within the prior 90 days of employment, has more than one rate of pay, was paid by commission or piece rate, or was a nonexempt salaried employee. Payment for sick leave must be provided no later than the payday for the next regular payroll period after the leave was taken.
Accrued paid sick days shall carry over to the following year of employment. However, an employer has no obligation to allow an employee’s total accrual of paid sick leave to exceed 48 hours or 6 days, provided there are no other limits on the employee’s right to accrue and use the paid sick leave. If an employer desires to place a maximum limit of 48 hours (or more) of sick leave accrual, the employer should clearly state that limit to the employees in writing.
An employee may determine how much sick leave he or she needs to use, but the employer may set a reasonable minimum increment–not to exceed two hours–for the use of paid sick leave. Under the Act, the employee can be required to provide "reasonable advance notification" if the need for paid sick leave is foreseeable, but if the need for paid sick leave is unforeseeable, the employee need only provide notice of the need for leave as soon as practicable. The employer may not require as a condition of using paid sick leave that the employee search for or find a replacement worker. The employer may limit an employee’s use of paid sick days to 24 hours or three days in each year of employment.
If the employer chooses to give the employee no less than 24 hours or three days of paid sick leave at the beginning of each year, and allows the employee to use the sick leave for the same purposes and under the same conditions as specified in the Act, then no accrual or carry over is required under the Act.
If an employer has a paid leave policy or paid time off policy, an employer is not required to provide additional paid sick days under AB 1522 if (1) the employer’s policy makes available an amount of leave that may be used for the same purposes and under the same conditions specified in Section 246 of the Act AND (2) the employer’s policy either (a) satisfies the accrual, carry over, and use requirements of the Act OR (b) provides no less than 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. Thus, the employer’s policy must either accrue sick leave at a rate of at least one hour every 30 hours worked, with the right to carry over to the next year, OR it must provide no less than 24 hours or 3 days paid sick leave in each year. Some employers may choose the latter policy.
An employer is not required to provide compensation to an employee for accrued unused paid sick days under AB 1522 upon separation from employment. However, if an employee separates from an employer and is rehired within one year, previously accrued and unused paid sick days shall be reinstated and available for use.
Required Notices to Employees
AB 1522 also requires an employer to provide employees with written notice that sets forth the amount of paid sick leave available, or paid time off leave an employer provides in lieu of sick leave, on either (1) the employees’ itemized wage statement or (2) in a separate writing provided on the designated pay date with the employee’s payment of wages.
AB 1522 also amends Section 2810.5 of the Labor Code, which currently sets forth information that an employer must include in a written notice to certain employees at the time of hire. In addition to the existing requirements, under AB 1522, an employer must also provide written notice to certain employees at the time of hire that the employee may accrue and use sick leave; has a right to request and use accrued paid sick leave; may not be terminated or retaliated against for using or requesting the use of accrued paid sick leave; and has the right to file a complaint against an employer who retaliates. The Labor Commissioner is tasked to provide and make available a template that complies with these requirements. The Labor Commissioner’s notice template will be available on its website through this link: http://www.dir.ca.gov/DLSE/Publications/LC_2810.5_Notice_(Revised-11_2014).pdf. The DLSE has taken the position that employers must comply with the notice and posting requirements of the Act beginning on January 1, 2015.
Record Keeping Requirements
An employer must also keep for at least three years records documenting the hours worked and paid sick days accrued and used by the employee, and shall allow the Labor Commissioner and the employee access to those records. If an employer does not maintain adequate records, it shall be presumed that the employee is entitled to the maximum number of hours accruable, unless the employer can show otherwise by clear and convincing evidence. Thus, it is critical to maintain good records of each employee’s sick leave accrual and usage.
AB 1522 contains broad anti-discrimination and anti-retaliation provisions, and includes a rebuttable presumption of unlawful retaliation under certain circumstances. Specifically, if an employer denies an employee the right to use accrued sick days, discharges, threatens to discharge, demotes, suspends, or in any manner discriminates against an employee within 30 days of: (1) the filing of a complaint by the employee with the Labor Commissioner or alleging a violation of the Act; (2) the cooperation of an employee with an investigation or prosecution of an alleged violation of the Act; or (3) opposition by the employee to a policy, practice, or act that is prohibited by the Act, there shall be a rebuttable presumption of unlawful retaliation.
AB 1522 authorizes a range of substantial penalties for violations of the requirements set forth in the Act, as well as attorney’s fees, costs and interest. The Labor Commissioner is authorized to enforce the Act, including investigation, mitigation, and relief of violations of the requirements set forth in AB 1522. If the Labor Commissioner determines, after a hearing, that a violation of the Act has occurred, he or she may order appropriate relief, including reinstatement, backpay, and the payment of sick days unlawfully withheld. In addition, employers can face administrative penalties, which shall be paid to an employee or other person whose rights under the Act were violated. The amount of the administrative penalty may be, if paid sick days were unlawfully withheld, the dollar amount of the paid sick days withheld, multiplied by three, or $250, whichever is greater, not to exceed an aggregate penalty of $4,000. In addition, if the employer’s actions resulted in other harm to the employee, such as discharge from employment, the administrative penalty shall include $50 for each day the violation occurred or continued, not to exceed an aggregate penalty of $4,000. If prompt compliance is not forthcoming, the Labor Commissioner may take appropriate action to secure compliance, including filing a civil action, and may order the employer to pay the state up to $50 for each day a violation occurs or continues for each employee of other person whose rights under the Act were violated.
The Labor Commissioner or the Attorney General may also bring a civil action against an employer in court. Upon prevailing in a civil action, the Labor Commissioner or Attorney General shall be entitled to collect legal and equitable relief on behalf of the aggrieved as may be appropriate to remedy the violation, including reinstatement, backpay, the payment of sick days unlawfully withheld, and the payment of an additional sum as liquidated damages. The Labor Commissioner and Attorney General may also be awarded reasonable attorney’s fees and costs.
The Act also provides that any person enforcing this Act on behalf of the public under applicable state law shall, upon prevailing, be entitled to only equitable, injunctive or restitutionary relief and reasonable attorney’s fees and costs. Thus, the Act itself does not appear to explicitly authorize employees to bring private civil lawsuits against employers for violations of the Act, but California employees may attempt to bring claims against employers under California’s Private Attorneys General Act (PAGA).
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This new California sick leave law establishes extensive and quite detailed requirements for employers and provides significant sanctions for failure to comply with its specific requirements. California employers will need to review and revise their sick leave or paid time off policies to come into compliance with this law or, if an employer does not presently have such written policies, they will need to establish them. We would be pleased to assist you in doing so.
Gibson, Dunn & Crutcher’s lawyers are available to assist with any questions you may have regarding these issues. For further information, please contact the Gibson Dunn lawyer with whom you usually work or any of the following lawyers in the firm’s Labor and Employment Practice Group:
Eugene Scalia – Co-Chair, Washington, D.C. (202-955-8206, firstname.lastname@example.org)
Catherine A. Conway – Co-Chair, Los Angeles (213-229-7822, email@example.com)
Scott A. Kruse – Los Angeles (213-229-7970, firstname.lastname@example.org)
Michele L. Maryott – Orange County (949-451-3945, email@example.com)
Jesse A. Cripps – Los Angeles (213-229-7792, firstname.lastname@example.org)