Payroll Blog

Payroll Training, Tips, and News

New laws for mandatory sick pay

What Is California’s Sick Leave Law?

State-mandated paid sick leave is required in some states, like California. The Healthy Workplace Healthy Family Act of 2014 (AB 1522), along with its amendments (AB 304), changed how employee sick leave works. Effective July 1, 2015, the law affects current employers and employees in regard to earned paid sick leave. There are a few exceptions to the law, but the majority of all employers in California will now need to give their employees mandatory paid sick leave. What is sick pay like in California?

California’s Paid Sick Leave Law Details

The main function of the Healthy Workplace Healthy Family Act is to provide employees with a certain amount of mandatory paid sick time per year. To that end, it lays out the following regulations:

  • In addition to providing full-time employees with PTO, employers must now offer PTO to half-time, temporary, and seasonal employees.
  • When determining how available sick time accrues, employers can choose whatever accrual methods works best for them as long as they follow two stipulations: the sick leave accrues on a regular basis and the employee must have 24 hours of sick leave available in each calendar year.
  • Employers can limit the amount of paid sick time an employee takes to three days (or 24 hours) per year.
  • Employers may impose an accrual cap that limits employees from accruing more than six days (48 hours) of sick leave from one year to the next.
  • A year is to be defined as running from the date of hiring or July 1, 2015, whichever is later. Current employees will use July 1 as their beginning calendar year. Employers will have to track the anniversary date for each employee hired after July 1.
  • Employees must work at least 30 days in California to be eligible for paid sick leave. This can be calculated based on work for the same employer.
  • Employers may still require employees to work for a probationary period of no more than 90 days before requesting paid time off.
  • For exempt employees, employers can calculate the rate of pay the same way they do for other types of paid leave. However, San Francisco and Oakland have different rules. To find the the rate of pay for employees in these two cities, divide the annual salary by 52 to get the weekly salary. Then divide the weekly salary by the number of hours in a regular workweek to get the hourly rate.
  • If an employee has a variable rate of pay, (or paid commission or piece rate), employers have two options to calculate how much to pay for the sick time off. The first option allows employers to use the regular base rate of pay at the time when the employee takes sick time off. With the second option, employers must pay the sick time off at the average rate of pay based on a 90-day average.
  • Employees can use the accrued sick time pay for new or existing illnesses for themselves or family members such as parents, grandparents, siblings, children, spouses, or registered domestic partners.
  • Employees can  use their paid sick time to recover from events such as sexual assaults, domestic violence, or stalking.
  • If the employer had PTO in place before January 1, 2015, they can still use their old policy as long as it meets the following guidelines: accrual must happen on a regular basis, the employee should have at least one day (eight hours) of PTO within 3 months of employment or of each 12 month period, and the employee should be able to accrue three days (24 hours) of PTO within nine months.

Note that in some cities, including Oakland, San Diego, San Francisco, and Emeryville, the laws regarding paid time off are stricter. Employees in these cities earn more paid sick leave per year than the new law requires. Current city laws that require employers to provide more sick leave take precedence over the new state law.

Employers affected by California’s Sick Leave Law

Any employer in the state of California with employees who work for at least 30 days must comply with this law. There are no size exemptions to this law: all employers, no matter how large or small their business is, must offer paid sick leave as outlined.

There are a few exceptions to the law:

  • Those covered by a qualifying collective bargaining agreement
  • Providers of In-Home Supportive Services
  • Some employees of air carriers

How to comply with California’s Sick Leave Law

Employers must first examine their current PTO plan to see if it complies with the new laws. If it does not, they will need to create a new PTO plan that satisfies all areas of the new law, including accrual rate, restrictions, who receives PTO, etc.

One area that many employers may need to change is who is eligible for paid time off. Currently, many employers only provide PTO to full-time employees, but the law now requires part-time, seasonal, and temporary employees receive this benefit.

Once an employer has determined their current plan is in compliance or has created a new plan that complies with the law, they must notify all employees of the new law:

  • Employers are required to post a poster with information about the new sick leave policy, as of July 1, 2015.
  • Next, all employees must receive an individual Note to Employee that outlines the new policy. Current employees must receive this notice by July 8, 2015.

Employers must also implement the new accrual requirements and begin providing employees with the new amount of paid time off.

  • A method of tracking employee anniversary dates in conjunction with sick leave accrual will need to be implemented if no such method currently exists. However, employers may choose to offer a lump sum of no less than 24 hours by the end of the 120th calendar day of employment.
  • Employers must provide employees with a total amount of sick leave they have available on their regular pay stub or on a document provided with their paycheck. Electronic reports for employees are also acceptable. If the employer offers unlimited PTO, they must also indicate this.
  • Employers must keep records showing how many hours were used and earned by employees for at least three years. They do not have to record the reason the employee used PTO.

Employees and the California Sick Leave Law

As mentioned before, all full-time employees who have worked at least 30 days in the state of California are eligible for paid sick leave. Employers can impose a probationary period of 90 days before an employee can ask for paid time off.

Exempt and non-exempt employees

  • Salaried, exempt employees will accrue paid sick time and may be required to use PTO to cover any time they take off work for part of the day, no matter how long the absence is.
  • Non-exempt or hourly employees will use paid sick leave any time they are absent from work. The rate of pay is calculated based on a 90-day average of the salary.

Part-time and seasonal employees

  • All temporary, part-time, half-time and per diem employees are covered by the law. However, employees must work at least 90 days for the employer to begin accruing paid sick leave.
  • Seasonal employees who work for the same employer within 12 months will have their working hours accrued. For example, an employee may work June and July (60 days) one season. If the next June the seasonal employee begins working again for the same employer, the 60 hours worked from the previous season are not lost to the employee. Paid sick time hours should be accrued after a total of 90 days are worked. In this case, after working 30 more days in the second season.

Rehired employees

  • For employees rehired within one year of leaving the company, the law requires employers to give them their accrued but unused sick leave.
  • Any unused sick leave that was payed out to the employee when they left, there is nothing to reinstate upon rehire.

If you are looking for a way to stay in compliance with the California’s Sick Leave Law, consider trying Patriot Software’s Online Payroll. You can track all employee PTO (including sick time) and pay employees in just minutes. Your employees’ time accrual report is automatically updated and accessed in their free employee portal. Sign up today and your first 30 days are free!

[Related Article: What Is Third Party Sick Pay?]

Comments are closed.

Explore our payroll software with our sample account!

See how you can easily run payroll in just 3 easy steps.

Access the demo

Or you can START A FREE TRIAL!