Governor Brown, on July 13 signed AB 304 into law thereby amending the Healthy Workplaces Healthy Families Act (the California Paid Sick Leave law).  The changes address needed clarifications in the original text of the law and implement some significant changes.  These are immediately effective as the law contains an urgency clause.

The Healthy Workplaces, Healthy Families Act requires employers to provide a limited amount of paid sick leave for most employees in California.  Our earlier post that provides details of the original Act can be read here.

Individuals who are retired annuitants and working for the State, Cities, Counties, Special Districts or other subdivisions of the State are no longer defined as employees under the act.  As a result, those individuals are not entitled to Paid Sick Leave.  This is consistent with the provisions of the Public Employment Retirement Law (PERL) and Public Employees Pension Reform Act of 2013 (PEPRA) that bar benefits for post-retirement employment with the same or another contracting agency from which a retiree receives retirement benefits.

Other changes to Paid Sick Leave are:

  • Employees must work for 30 days within one year for the same employer to qualify for paid sick leave.
  • Employers with “unlimited leave” policies satisfy the Act if they indicate “unlimited” next to sick leave on employee itemized wage statements.
  • Different formulas are allowable when using an accrual method other than one hour for every 30 hours worked, so long as the accrual is on a regular basis so that an employee has NO LESS than 24 hours of accrued leave or paid time off, by the 120th day of their employment, OR each calendar year, OR in each 12-month period.
  • An employer that provides 24 hours or three days of paid sick leave for use by an employee on or before their 120th day of employment is compliant with the law.
  • Employers can limit use to the 24 hours of accrued leave within the year of employment (based on hire date) OR, calendar year, OR any 12-month period. This also applies to the rule on carryover (it can be based on either year of employment, calendar year or any 12-month period).  No carryover is required if the leave is provided in a lump-sum at the beginning of a year of employment, calendar year or 12-month period.
  • If an employer had a paid sick leave policy before January 1, 2015 that permitted at least 24 hours of paid leave could be accrued within nine months of employment and at least one day (8 hours) within the first three months of any year (year of employment, calendar year or 12-month period), and this policy is still in effect; the policy will satisfy the amended Act. (Grandfathering provision)

The new amendments clarify that paid sick time for exempt employees is calculated in the same manner as the employer calculates wages for other paid leave time.  For non-exempt employees paid sick leave is calculated by dividing the total wages (excluding overtime pay) from the total hours worked in the full pay periods of the prior 90 days or in the same manner as calculating the “regular rate of pay” for overtime.

Employers are reminded to closely review policies related to Paid Sick Leave and to ensure the proper notices are posted and provided to employees if they have not done so already, or if any changes to policy have been made on or after January 1, 2015.