CA PAID SICK LEAVE — EFFECTIVE JULY 1, 2015

 

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CA Employers should take action to ensure compliance with new employment laws that take effect July 1, 2015.

California has a new Paid Sick Leave law (AB 1522) that goes into effect on July 1, 2015. While the law itself was enacted on January 1, 2015, the implementation of the actual paid sick leave provisions for employees is not effective until July 1, 2015.

California law requires all employers to provide Paid Sick Leave to virtually all employees.  Unlike several other California leave laws, there is no exemption for small employers. The new law applies to employees (**exempt and non-exempt) who work in California 30 days or more in a year. This includes temporary, part-time, and seasonal employees, as well as out-of-state employees who work in California 30 or more days in a calendar year.

Sick leave is accrued at the rate of 1 hour per 30 hours worked with an annual accrual cap of 24 hours.  In most cases, unused sick leave will carryover to the next year subject to a carryover cap of 48 hours.

California AB 1522: Healthy Workplaces, Healthy Families Act of 2014: “An employee who, on or after July 1, 2015, works in California for 30 or more days within a year from the beginning of employment, is entitled to paid sick leave. Employees, including part-time and temporary employees, will earn at least one hour of paid leave for every 30 hours worked. Accrual begins on the first day of employment or July 1, 2015, whichever is later.”

Four practical impacts of this law :

  1. Most employees who do not currently receive any paid sick leave, will now be eligible for paid sick leave under this law and employers need to be prepared to apply the Paid Sick Leave law provisions to these uncovered employees.  Almost all employees are covered under the new Paid Sick Leave law.  There are very limited exceptions from the law for the following types of employees:
  • In-Home Supportive Services (IHSS) employees;
  • Certain airline cabin crew and flight deck employees;
  • Construction Industry employees covered under a valid collective bargaining agreement with regular hourly pay of not less than 30 percent more than the state minimum wage and premium overtime wages; or
  • Any employee covered by a collective bargaining agreement if the agreement provides a regular hourly pay of not less than 30% more than the state minimum wage ($11.70/hour based on the current $9/hour minimum wage; $13/hour based on $10/hour minimum wage effective January 1, 2016), premium overtime wages, paid sick leave, and final and binding arbitration of paid sick leave disputes.

Absent one of these exceptions, all other employees are covered under the Paid Sick Leave law.  This includes part-time, seasonal, and temporary employees.

  1. Employers will need to modify their current policies and practices regarding paid sick leave to implement the provisions of the Paid Sick Leave law.
  2. Employers should work with their Payroll and Human Resources Departments to ensure they are aware of the new Paid Sick Leave law and are properly tracking its use by employees and ensuring that paid sick leave accrual information is provided to employees.
  3. For employers who already provide paid sick leave for their employees, the Paid Sick Leave law will not likely provide additional leave to those employees, but additional restrictions (e.g., the entitlement to allow use for familial relationships not typically permitted by sick leave provisions) will likely apply for the first 3 days or 24 hours in a 12-month period.

Accrual vs. Lump Sum Methods

Accrual method: the rules that apply to accrual are:

  • The employee earns 1 hour of sick time for each 30 hours worked. There does not appear to be a required cap on accruals.
  • Requires notification to the employee each pay period of the available number of hours accrued.
  • Sick leave balance is carried over to the next year.
  • The employer may cap the total accrued time balance at 48 hours (or 6 days).

OR, as an alternate –

Lump Sum method:

  • Give every employee 24 hours paid sick leave at the beginning of each year.
  • No accrual calculations required.
  • Total is LESS than MAX accrual (48 hours) under the accrual method.
  • NO CARRYOVER to next year, use it or lose it.
  • 90 day probation still applies.

The LUMP SUM method is simpler and in most cases the less expensive OPTION, however, it does not favor employers with many part time employees/turnover.  An example is restaurants and seasonal businesses.

Mandatory Sick Leave Posting and Notice Requirements

  • For non-exempt employees hired before January 1, 2015, the employer is required to provide information regarding paid sick leave using any of the alternative methods specified in Labor Code section 2810.5(b).
  • Employers should also review their current vacation, paid time off, and sick leave policies and make necessary updates in anticipation of the new paid sick leave law that goes into effect on July 1, 2015. Note, although the notice requirements of Labor Code section 2810.5 do not apply to exempt employees, employers will need to convey their sick leave policies to all employees through links to updated policies or an email message.

Below are links for more information, compliance posters, and notices:

**Exempt or Nonexempt.

  • Employees whose jobs are governed by the FLSA are either “exempt” or “nonexempt.” Nonexempt employees are entitled to overtime pay. Exempt employees are not. Most employees covered by the FLSA are nonexempt. Some are not.
  • Some jobs are classified as exempt by definition. For example, “outside sales” employees are exempt (“inside sales” employees are nonexempt). For most employees, however, whether they are exempt or nonexempt depends on (a) how much they are paid, (b) how they are paid, and (c) what kind of work they do.
  • With few exceptions, to be exempt an employee must (a) be paid at least $23,600 per year ($455 per week), and (b) be paid on a salary basis, and also (c) perform exempt job duties. These requirements are outlined in the FLSA Regulations (promulgated by the U.S. Department of Labor). Most employees must meet all three “tests” to be exempt.

 

Steven Z. Freeman, CPA provides professional Business and Individual Tax Preparation and can assist you with these services. If you have any questions on this matter, or to schedule an initial consultation, Please call us at (805) 495-4211.

 

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