Healthy Workplaces, Healthy Families Act of 2014
Yes, another California employer mandate – paid sick leave. California is only the second state in the nation to institute mandatory paid sick leave. On September 10, 2014, Governor Brown signed AB 1522, the “Healthy Workplaces, Healthy Families Act of 2014. Effective July 1, 2015, the law requires employers of all sizes to provide at least three days of paid sick leave per year. Here is what you need to know.
Overview
The Act provides that employees who work in California for 30 or more days within a year from the commencement of employment are entitled to paid sick days for certain prescribed purposes. The paid sick days accrue at a minimum rate of one hour for every 30 hours worked. Employees may use accrued sick days beginning on the 90th day of employment. Employers are allowed to limit employees’ use of paid sick days to 24-hours or 3 days in each year of employment. The act prohibits employers from discriminating or retaliating against an employee who requests paid sick days.
Covered Employers
The Act defines “employers” as “any person employing another under any appointment or contract of hire and includes the state, political subdivisions of the state, and municipalities.” Thus, regardless of whether you employ one person or one hundred, you are covered by this Act. There is no small business exception.
Covered Employees
The Act covers all employees, who as of July 1, 2015, work in California for 30 or more days within a year from the start of their employment. This means as of July 1, 2015, all employees who have already worked 30 or more days are immediately entitled to paid sick leave. All employees hired on or after July 1, 2015, are entitled to paid sick leave once they have worked 30 or more days.
The Act does exclude certain employees. For example, employees covered by valid collective bargaining agreements that expressly provide for and meet certain criteria. The Act also specifically excludes providers of in-home supportive services and individuals employed by air carriers as flight deck or cabin crewmembers.
Use of Paid Sick Leave
Employees can use accrued paid sick days beginning on the 90th day of their employment. Employers are required to allow employees to use the paid sick days 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 the victim of domestic violence, sexual assault, or stalking.
“Family member” is defined very broadly to include:
• A child, regardless of age, including a biological, adopted, or foster child, legal ward, or a child to whom the employee stands in loco parentis;
• A biological, adoptive, or foster parent, stepparent, or legal guardian of an employee or the employee’s spouse or registered domestic partner, or a person who stood in loco parentis when the employee was a minor child;
• A spouse;
• A registered domestic partner;
• A grandparent;
• A grandchild; or
• A sibling.
The Act’s definition of “family member” is broader than the Family and Medical Leave Act or California Family Rights Act. This creates the possibility that employees will be entitled to paid sick leave for time that is not chargeable to their FMLA or CFRA entitlements.
The Act expressly authorizes employees to determine how much paid sick leave they need to use on any given occasion. However, employers can set a “reasonable minimum increment, not to exceed two hours.” Employers should take note of this limitation as it is common for sick leave or PTO policies to have a half-day (4-hours) minimum requirement.
The Act prohibits an employer from requiring employees to search for or find a replacement worker to cover the days during which the employees use paid sick leave.
If the need for paid sick leave is foreseeable, employees must provide reasonable advance notification. However, if the need for paid sick leave is not foreseeable, the employee need only provide notice of the need for leave as soon as practicable.
Determining Amount of Pay
Employees will be paid for sick leave at their hourly wage. However, if an employee has had different rates of pay within the 90-day period before taking the accrued sick leave or if an employee is paid on commission or piece rate, then a rate of pay shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the total hours worked in the full pay periods of the prior 90-days of employment.
Accrual
The Act states that employees shall accrue paid sick days at a rate of not less than one-hour per every 30-hours worked. Accordingly, one-hour per every 30-hours worked is the minimum accrual rate. Accrual of paid sick leave begins on the operative date of the Act (July 1, 2015) or at the commencement of employment.
When determining the number of hours worked, all hours (regular, overtime, double-time) will be considered. Employees exempt under the administrative, executive, or professional exemptions will be deemed to work 40-hours per workweek unless their normal workweek is less than 40-hours. If their normal workweek is less than 40-hours per week, the exempt employees shall accrue paid sick days based upon the normal hours they actually work.
It is important to note that although employees must work at least 30-days within the year to be entitled to paid sick leave, they begin to accrue it immediately. For example, all employees employed as of July 1, 2015, will begin accruing sick leave immediately, regardless of whether they have worked for 30-days within the year. Employees who begin on or after July 1, 2015, will begin accruing sick leave on their first day of work. Thus, although employees must work at least 30-days within the year and cannot use the sick leave until the 90th day of employment, they accrue it immediately.
Carry-Over/Cap
All unused sick leave will carry over from year to year. However, sick leave accrual may be capped at 48 hours or 6 workdays.
If an employer does not want to track accruals and carryovers, the Act permits them to simply provide employees with the full allotment of sick leave at the beginning of each year. (The Act does not state whether “the beginning of the year” means a calendar year or employment year.)
Accrued but unpaid sick leave does not need to be paid out upon termination, resignation, retirement or any other separation from employment (unless employer provides these benefits pursuant to a PTO policy). However, if an employee separates from his employment but is rehired within one-year, any previously accrued and unused paid sick leave must be reinstated and the employee will be able to use the restored leave without satisfying the 30-working-days requirement or the 90-day waiting period.
Notice to Employees
The Act requires employers to provide employees with written notice that sets forth the amount of paid sick leave available for use on either the employees’ itemized wage statement or a separate writing provided to the employees on the designated pay date with the employees’ payment of wages.
Employers will also have to display a poster in a visible location. The Labor Commission will create a suitable poster and make it available to employers. The poster will include the following information:
• Employees entitlement to accrue, request, and use paid sick leave;
• The amount of paid sick leave provided for by the Act;
• The terms of use for paid sick leave;
• The prohibition of retaliation and/or discrimination against employees who request or use paid sick leave; and
• Employees right to file a complaint with the California Labor Commissioner for retaliation or discrimination in violation of this Act.
A willful violation of the posting requirement carries with it a civil penalty of $100.00 per each offense.
Record Keeping Requirements
The Act requires employers to maintain records documenting the hours worked, and paid sick leave accrued and used by employees for a period of at least three years. Similar to other time records, employers must make such records available to the Labor Commissioner upon request. Employers must also make these records available to employees upon request. If employers fail to maintain these records, it will be presumed that employees are entitled to the maximum number of hours accruable under the Act.
Amendment of Wage Theft Protection Act Notice
The Act adds to the information required in the Wage Theft Protection Act Notice. The Wage Theft Protection Act of 2011 requires employers to provide employees with a written notice containing certain information such as rates of pay, regular paydays, name, telephone and address of employer, etc. The Notice must now also include language confirming employees’ rights to paid sick leave pursuant to this Act. The Notice must also include language confirming that employees may not be terminated or retaliated against for using or requesting the use of accrued paid sick leave, and that they have the right to file a complaint against an employer who retaliates/discriminates against them for exercising these rights.
Discrimination/Retaliation
The Act creates a “rebuttable presumption” of unlawful retaliation 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:
• The filing of a complaint by an employee with the Labor Commissioner;
• The cooperation of an employee with an investigation or prosecution of an alleged violation of this Act; or
• Opposition by the employee to a policy, practice, or act that is prohibited by this Act.
This is a very dangerous provision. The “rebuttable presumption” assumes the existence of discrimination or retaliation and places the burden on employers to establish that they did not retaliate/discriminate, but had a legitimate reason for the adverse employment action taken. Employers should diligently document the reasons for any adverse action taken against an employee within the 30-day period after the employee requests or takes sick leave or after the employee engages in any of the activities listed above.
Enforcement and Penalties
The Act authorizes the Labor Commissioner to enforce the new law, investigate alleged abuses or violations, and to order appropriate relief for violations. Either the Labor Commissioner or the Attorney General will be able to bring a civil action against persons violating this Act. Although employees can file a complaint with the Labor Commissioner, they cannot file a private civil action. However, I am confident that this Act can (and will) be the basis of a wrongful termination in violation of public policy claim.
There are numerous monetary penalty provisions for violating the requirements of the Act. For example, employers who unlawfully withhold paid sick days will be penalized the dollar amount of the paid sick days withheld multiplied by three or $250.00, whichever amount is greater. Wrongfully terminated employees are entitled to reinstatement, back pay, the payment of sick days unlawfully withheld and the payment of liquidated damages.
Do You Need A New Sick Leave Policy?
Before you rush out and create a new paid sick leave policy, let’s determine if you need one. Employers may satisfy the requirements of the paid sick leave through an existing paid leave policy or PTO policy. However, the existing policy must:
• Satisfy the accrual, carryover, and use requirements of the Act; and
• Provide no less than 24 hours or three days of paid sick leave, or the equivalent paid leave or paid time off, for employees’ use during each year of employment (calendar year of 12-month basis)
Conclusion
Supporters of this Act argue that millions of workers in California cannot take a day off when they or someone in their family falls ill. They claim that workers are forced to either work while sick or stay home and forego wages. However, opponents argue that mandating all employers to provide paid sick leave for all employees will create a huge burden on employers and will result in less hiring. There is no doubt that this Act will cause serious headaches for business, both large and small.