In this episode of The Workplace podcast, CalChamber Associate General Counsel Matthew Roberts and CalChamber employment law expert Ellen Savage discuss what employers need to know about the latest expansion of the California Healthy Workplaces, Healthy Families Act (SB 616), also known as the paid sick leave law.
Since 2015, the California Healthy Workplaces, Healthy Families Act has required all employers in California to make available at least three workdays, or 24 hours, of paid sick leave (PSL) to employees each year as long as the employee has earned the time. Starting January 1, 2024, employers will generally be required to increase this to five workdays, or 40 hours (whichever is greater) of paid sick leave, Roberts explains.
While the actual changes that SB 616 made to the Healthy Workplaces, Healthy Families Act appear relatively straightforward, in practice, implementing the changes has proven far more difficult, he says.
Methods to Calculate Paid Sick Leave
Savage explains that there are three main methods that California employers may choose from to provide paid sick days:
- “Lump sum” (or “upfront”) method: An employer dumps the full amount of sick leave (40 hours/5 days) into an employee’s bank right away. The employee must wait 90 days to use it, and they may use it throughout the year. At the end of the year, any remaining sick leave time is lost. Under this method, it’s common to see many employees calling out sick the last week of December. Also under this method, there are no caps and no accrual that is carried over. It is the most “easy peasy — super easy for employees to understand,” Savage says.
- “One for 30” (or “statutory accrual”) method: Under this method, employees accrue their sick leave as they work, at a rate of one hour of sick leave for every 30 hours worked. The accrual is now capped at 80 hours or 10 days, and an employer may cap an employee’s use of sick leave at 40 hours or five days each year. Time left in the bank must be rolled over to the next year. The employee must wait 90 days to use the sick leave, but may use however much time they’ve accrued as they want after those 90 days.
- “Regular” (or “alternative accrual”) method: Under this method, employers have more flexibility in establishing their own accrual rules. However, under this rule, they must ensure that employees accrue 24 hours of sick leave by their 120th day of employment each year, and at least 40 hours by the 200th day.
Savage says there is another method: the grandfathered plan. If an employer is using a grandfathered plan, Savage recommends they talk to their legal counsel as the rules on this method have gotten trickier this year.
Benchmarks
One point of confusion surrounding the PSL law is the establishment of certain benchmarks depending on which method is used to accrue time.
Savage clarifies that the “one for 30” (“statutory accrual”) method does not require benchmark days to be met, unlike the “regular” (“alternative accrual”) method which does require the benchmarks to be met.
Part-Time Employees
Another point of confusion for some employers is how to calculate sick leave time for part-time employees.
Savage explains that under the “regular” and “lump sum” accrual methods, employers need to guarantee all employees receive a minimum of 40 hours or five days of paid sick leave.
Under the “one for 30” method, however, employers are not required to guarantee these hours, Savage tells Roberts.
“[If] I just work one hour a week, it’s going to take me 30 weeks to accrue an hour of sick leave under the ‘one for 30’ method. And guess what? I’m going to have less than two hours of sick leave over the course of a whole year, and that is just fine under this law,” she says.
Questions on Lump Sum Method
Some common questions Roberts has encountered on the “lump sum” method pertain to when the lump sum of paid sick leave can be given to an employee. Some employers, for example, use an employee’s work anniversary to give the lump sum. So, what do they do now that the latest expansion came into effect on January 1?
Savage replies that the Labor Commissioner has issued an FAQ that provides two options:
- If an employer wants to keep the anniversary date approach, they needed to give employees two extra days or 16 hours on January 1, 2024. When the employee’s anniversary date comes up, unused time is lost, and the new 5-day lump sum is reloaded to the employee’s bank. Also, employers should keep in mind that the new usage cap is five days, not three days/24 hours as it was in 2023.
- Employers may also opt to take a one-time opportunity to move everyone from an anniversary to a January 1 reset. This means that an employer would wipe out everyone’s bank as of New Year’s Eve 2023 and put five days in employees’ banks on January 1, 2024, and moving forward the reload would happen on January 1 instead of an employee’s anniversary date.
Changing Accrual Methods
In general, can an employer swap their method of PSL accrual, Roberts asks Savage?
Nothing in the PSL law prevents employers from changing their method of accrual, but there also is nothing in the law that guides employers on how to do it. If an employer is planning on changing their method, Savage recommends that they consult with their legal counsel.
“If you’re going to change methods, you don’t want to be the next big lawsuit that we get to write about on HRCalifornia or talk about in a seminar. So, you want to make sure that nobody loses out on any benefit they would have been entitled to,” she says. “Don’t take away anything that could be in violation of the law. And that might mean that this year, you’re going to have some added expense for your sick leave as you transition over.”
Notice Requirements, Doctors’ Notes
Under SB 616, employers are required to post an updated sick leave poster. Additionally, under Labor Code Section 2810.5, employers need to send out a notice that their sick leave plan has changed within seven days of the new law taking effect on January 1, Savage explains.
Employers who already offered more paid sick leave days than required by SB 616 or who were already complying with a local ordinance may not need to send out a notice, Savage points out. The 2810.5 notices are required to be issued only if an employer’s PSL policy has changed.
Savage recommends that employers also update their sick leave policies in their handbook. They should also make sure to provide those changes to their employees and procure an acknowledgement as soon as they can.
Under SB 616, an employer may not request a doctor’s note when an employee uses California Healthy Workplaces, Healthy Families Act leave. However, the Labor Commissioner recently issued an FAQ that states than an employer may request documentation if they have information indicating that the employee is not using the paid sick leave for a valid purpose.
“Let’s say your employee says, ‘Hey, next week, I want to go on vacation to Hawaii,’ and you say, ‘Hey, things are too busy. You can’t go.” The next week, guess what the employee does? Calls out sick all week, but they’re dumb enough to post pictures of themselves on Facebook surfing in Waikiki. Now we’re going to ask for a doctor’s note. Otherwise, not,” Savage says.
