Governor Signs Paid Sick Leave Law

Today, Governor Brown signed AB 1522 (Gonzalez), the “Healthy Workplaces, Healthy Families Act of 2014.”  The law requires, effective July 1, 2015, that employers provide at least three days of paid sick leave per year.  So what is the effect of this law on public employers?  Here are some key things you need to know:

  • “Employer” is defined to include the “state, political subdivisions of the state, and municipalities.”  (Lab Code 245.)  Thus, AB 1522 applies to virtually all public sector employers in California.
  • The definition of “employee” specifically excludes:  1) Any employee covered by a collective bargaining agreement (CBA) if the CBA “expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for paid sick days or a paid leave or paid time off policy that permits the use of sick days for those employees, final and binding arbitration of disputes concerning the application of its paid sick days provisions, premium wage rates for all overtime hours worked, and regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate.” and; 2) In-Home Supportive Services employees.
  • A “paid sick day” means time that is compensated at the same wage as the employee normally earns during regular work hours.
  • Who is covered?  Any employee whom, after July 1, 2015, works in California for 30 or more days within a year.  An employee can begin using paid sick days after the 90th day of employment.
  • Paid sick days accrue at the rate of not less than 1 hour per every 30 hours worked.  Paid sick days carry over from year-to-year, but the employer can limit its use to 3 days per year.  An employer can also limit accrual to 6 days.  An employer is not required to “cash-out” paid sick leave upon an employee’s separation.
  • Employers with existing policies that are as generous as AB 1522 (i.e. provides 3 paid sick days per year) can keep their existing policies.
  • Employers must give notice to employees of available sick leave on the employee’s itemized wage statement under Labor Code section 226 or in a separate writing on payday.
  • Employees can decide how much sick leave to use at a time although the employer can set a two hour minimum increment.
  • Employees must give reasonable advance notice if the use of sick leave is foreseeable.  Otherwise the employee must give notice as soon as practicable.
  • The Labor Commissioner and/or the Attorney General has jurisdiction to enforce this new law and impose various penalties.  There is no private right of action.  The Labor Commissioner will also develop a poster which employers will have to post in workplaces.

Comments:

  1. The vast majority of public employees already have sick leave benefits that are better than AB 1522.  So this new law should not have a dramatic impact on most public employers.  However, there are some tricky issues that public employers will have to deal with.
  2. One big question concerns the exemption of employees covered by a CBA.  The bill excludes from the definition of employee anyone covered by the CBA that “expressly provides for the wages, hours of work, and working conditions of employees, and expressly provides for paid sick days or a paid leave or paid time off policy that permits the use of sick days for those employees, final and binding arbitration of disputes concerning the application of its paid sick days provisions, premium wage rates for all overtime hours worked, and regular hourly rate of pay of not less than 30 percent more than the state minimum wage rate.”  Do all these things have to be in the CBA for the employees covered to be exempt?  It appears so.  While most CBAs contain all of the items mentioned, not all do.  For example, while final and binding arbitration is common in CBAs, it is not universal.
  3. As noted above, most “permanent” employees will already have benefits that are better than those provided in AB 1522.  However, by defining “employee” to include anyone working 30 or more days in a year, this law appears to apply to temporary, seasonal, and extra-help employees.  It is common that these types of employees do not earn vacation and/or sick leave benefits.  So public employers will need to be aware of this potential change.
  4. Accrual.  At 1 hour per 30 hours worked, it will take 720 hours (or a little more than 4 months of full time work) to accrue 3 paid sick days.  This is an accrual rate of about 8.6 paid sick leave days per year.  Most public employers have a system more generous than this already in place.  But if you don’t, you may have to change your accrual rates.
  5. Itemized Statement.  The law requires that employees be given notice of available paid sick days on an itemized statement as provided by Labor Code section 226 or an equivalent separate statement.  This is interesting since public employers are generally not subject to the itemized wage statement requirements of Labor Code section 226.  (Labor Code 226(i).)  However, this shouldn’t be too much of a problem since most public employers already provide an itemized wage statement listing vacation and sick leave balances.
  6. 2-Hour Minimum Increment.  The employee gets to decide how much sick leave to use although the employer can set an increment not greater than two hours.  This could be a problem for some public employers since it’s not uncommon to have a 4-hour minimum for vacation or sick leave use; many times this requirement is in a CBA.  So query, if a CBA provides for a 4-hour minimum use of sick leave, can the Legislature “impair” that contract by imposing a maximum 2-hour increment?  Without delving too deeply into Constitutional law, contracts can generally be impaired if reasonable and necessary to serve an important public purpose and/or using the state’s police powers.  So is that the case here?  It’s unclear to me but this potential issue should only affect a small subset of public employers.  The increment issue may also cause some operational headaches when dealing with temporary, seasonal and extra-help employees.  In some situations, if an employee wants to use sick leave for part of the day, it may be difficult to find a replacement for only the remaining portion of the day.
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