What Happens If You Don’t Have a Written Paid Sick Leave Policy?
Beginning July 1, 2015, California employers will be required to begin providing paid sick leave benefits to their eligible employees.
We often hear the question: Do I need a written paid sick leave policy that I hand out to employees? With all the complexities of this new law, the answer is “yes.”
A written policy allows you to specifically describe and clearly communicate your company’s approach to providing the mandatory benefit. A written policy should also be used if you place any limits on paid sick leave that are allowed within the law, such as a cap on accrual.
The Labor Commissioner has specifically stated that if an employer provides any additional terms such as caps on maximum use , they must inform employees of those additional terms.
What are some of the consequences of not having a written paid sick leave policy?
- Without a written policy, your company will be stuck using the statutory mandated accrual rate of one hour of sick pay for every 30 hours worked. This can result in a full time employee potentially accruing over 69 hours of paid sick leave per year and being allowed to carry that over to the next year, and so on. This is nearly 9 days per year if the employee works a 40 hour workweek.
Example: 40 hours a week x 52 weeks in a year = 2080 hours worked per year. Accrue one hour for every 30 hours: 2080 hours/30= 69.33 hours accrued per year. 69.33 hours/8 hours worked a day = 8.67 days per year.
But, with a written policy you can cap the employee’s total accrued amount at 48 hours or six days. The employee could not earn any more paid sick leave until he or she used up some of what the employee has already accrued.
- Without a written policy, you can’t use the lump-sum approach. Employers can avoid the statutory accrual method in its entirety if they have a policy in place that uses a “lump-sum” method. Under the lump-sum method, the employer grants the full amount of leave (three days or 24 hours) at the “beginning of each year” under an employer’s policy.
This lump-sum method allows an employer to avoid tracking accrual and carry-over, and is less administratively burdensome.
In this lump-sum situation, an employee will not be able to carry over unused sick days, but will get three new sick days at the beginning of the following year.
You can’t use the lump-sum method without a policy in place.
- Without a written policy, you can’t limit the amount of paid sick leave that an employee can actually take each year. Under the law, an employer can limit the amount of paid sick leave an employee can actually take to three days or 24 hours per year. This limitation applies regardless of how much time the employee has accrued.
Example: An employee has 6 days of accrued paid sick leave on the books, but, with a policy, you can limit the employee to only using three of those days per year.
You have to communicate this limitation on use to employees — preferably in writing.
Need another reason why you should have a written paid sick leave policy? Let’s say you are faced with an allegation that you did not comply with the requirements of the paid sick leave law. A compliant policy will help you defend against these allegations. In fact, the law specifically states that when determining whether or not an employer has complied with the law, a fact finder may consider whether the employer has adopted compliant policies (Labor Code section 248.5).
CalChamber provides several resources for employers. The Employee Handbook Creator can help you convey the mandatory paid sick leave benefit to your employees.
CalChamber also offers a Paid Sick Leave Policy Template ($124.99 value, free to members).
Note: The California State Legislature is currently considering changes to the paid sick leave law. CalChamber will update applicable content if the pending legislation is passed and signed into law.