As the deadline approached for the implementation of the Healthy Workplaces Healthy Families Act of 2014, employers found some of the provisions to be ambiguous and/or burdensome. California Legislature passed an emergency revision to address these concerns. Klinedinst Attorney Kristin Blake discusses the recent changes to the Healthy Workplaces Healthy Families Act, and how they will affect California employers.

By Kristin N. Blake, Esq.

The Healthy Workplaces, Healthy Families Act of 2014 (A.B. 1522) (“the Act”) amended Labor Code section 245.5 to provide paid sick leave to most California employees, effective July 1, 2015.  As the compliance deadline approached, however, employers found some of the requirements ambiguous and/or burdensome.

As a result, on July 13, 2015, the California Legislature amended the new law with a “clarifying” measure- A.B. 304- to clarify eligibility of employees and how paid time off (PTO) is accrued.  The new measure, which took effect immediately, provides new methods for accrual of paid sick leave that apply to all California employees.

The new measure clarifies the definition of “employees”.  A covered employee is someone who works for the same employer 30 or more days within a year.

Additionally, employers who already provided PTO plans need not provide additional paid sick days if their policy meets at least one of the following conditions:

• Accrual, carry-over, and use provisions meet the minimum requirements of the Healthy Workplaces, Healthy Families Act of 2014 (A.B. 1522);
• As of January 1, 2015, the PTO policy provided paid sick leave “to a class of employees pursuant to a sick leave policy or paid time off policy that used an accrual method different than providing one hour per 30 hours worked, provided that the accrual is on a regular basis so that an employee, including an employee hired into that class after January 1, 2015, has no less than one day or eight hours of accrued sick leave or paid time off within three months . . . , and the employee was eligible to earn at least three days or 24 hours of sick leave or paid time off within nine months of employment. If an employer modifies the accrual method used in the policy it had in place prior to January 1, 2015, the employer shall comply with the accrual method of the paid sick leave law.

The amendment also clarifies acceptable methods of calculating the accrual of paid sick leave.  For instance, employers may use either the traditional accrual method of one hour for every 30 hours worked or a method whereby at least 24 hours of paid sick leave is accrued by 120^th day of employment within each calendar year or in a 12-month period.  The latter method is helpful to employers that do not track employees on an hourly basis.

For employees that work on commissions or other variable rate of pay, the employer may calculate paid sick leave compensation using a 90-day look back period.  For nonexempt employees, employers may use the same manner as calculating overtime, or by dividing total wages (not including overtime) by total of hours worked in a pay period of the prior 90 days of employment.  For exempt employees, same manner as used to calculate PTO or vacation or other forms of paid leave.

The new measure also clarifies that accrued PTO need not be reinstated to a rehired employee who was paid out at termination, resignation, or other separation.  Additionally, if the  employer provides unlimited paid sick leave, written notice of available sick leave may be indicated employees itemized wage statement such as leave is “unlimited”.

Finally, the employer is not required to inquire or record purpose for which PTO or sick leave is used.  With this clarification, an employer who provides paid sick leave as part of a general PTO policy, may deduct available paid sick time if PTO is taken without the need to inquire whether time off was for a reason covered by paid sick leave.

To ensure compliance, employers should select a method to calculate accrual and meet the minimum 24 hours/3 days accrued over 120 days and review their policies to ensure calculations and payments are compliant.