Are You Ready to Implement Mandatory Paid Sick Leave on July 1?

Remember, remember the FIRST of JULY ! (Apologies to Guy Fawkes for butchering the quote). July 1, 2015, is the critical date on which the right to accrue and, in some instances, to use paid sick leave under the “Healthy Workplace, Healthy Family Act of 2014” takes effect. As that deadline rapidly approaches, here are five key concepts to keep in mind:

  1. There are two methods for providing sick leave under the new law:

    The Accrual Method: Under this method employees earn paid sick leave on a prorated basis at a rate of not less than 1 hour for every 30 hours worked (including overtime hours). Employers can set a cap on the sick leave accrual at 48 hours or 6 days (whichever is higher) and, employers can also set a cap on the usage of sick leave at 24 hours or 3 days (whichever is higher) in any year. Using the accrual method, sick leave carries over from year to year.

    The Front-Loaded Method: Under the front-loaded method, an employer provides its employees with the full allotment of 3 days or 24 hours (whichever is higher) at the start of each year. For this first year, the 24 hours or 3 days would need to be provided in full on July 1 (Do not prorate it!). At the start of each subsequent 12-month period, the employee again receives a full allotment of 24 hours or 3 days of sick leave. Employers can set any 12-month period they choose – calendar, fiscal, July 1st – June 30th, etc. Using the front-loaded method, sick leave does not carry over from year-to-year and you don’t have to track accrual.
  2. It’s either 3 days OR 24 hours, whichever amount is most beneficial to the employee:

    If you have a part-time employee working 6-hour shifts, that employee will be able to take up to 4 days of sick leave (6 hours x 4 days = 24 hours) in a year. If your employee works ten hours per day, that employee will be able to take three days of leave, even though this would equal 30 hours instead of 24.
  3. Your current PTO plan may not be compliant. It’s time for a check-up!

    The new sick leave provides in part:

    . . .an employer is not required to provide additional paid sick days pursuant to this section if the employer has a paid leave policy or paid time off policy, the employer makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in this section, and the policy does either of the following:
    1. Satisfies the accrual, carry over, and use requirements of this section.
    2. Provides no less than 24 hours or three days of paid sick leave, or equivalent paid leave or
    3. paid time off, for employee use for each year of employment or calendar year or 12-month basis.

    The two common errors we see in the PTO policies we review are:

    1. the accrual rate does not meeting the minimum standard of at least 1 hour of PTO for every 30 hours worked (remember this includes overtime hours); and,
    2. the plan does not address the proper rate of pay for employees with different hourly rates of pay (i.e., commission, piece rate, etc.). For those employees, in order to calculate the correct rate of pay for sick leave hours used, the new law provides, “If the employee in the 90 days of employment before taking accrued sick leave had different hourly pay rates, was paid by commission or piece rate, or was a nonexempt salaried employee, then the rate of pay shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.”
  4. All employees, even your current employees, have to receive a NEW notice referencing the new sick leave law. Remember to do two things:

    As of January 1, 2015, post the new sick leave poster. If you do not have the sick leave poster it can be found at: http://www.dir.ca.gov/dlse/Publications/Paid_Sick_Days_Poster_Template_(11_2014).pdf;

    All of your employees (current and new) must get a new “Wage Theft Prevention Notice.” For your current employees (and depending on when you instituted your new sick leave policy), each must be notified of any change between the period from January 1, 2015, to no later than July 8, 2015. New employees hired after July 1, 2015, should be given this notice at time of hire with your new hire packet. The DLSE form notice can be found at: http://www.dir.ca.gov/dlse/LC_2810.5_Notice.pdf. Note that employers can create their own forms so long as the requisite information is contain therein.

For a review of your existing PTO or sick leave policies, or for assistance with creating a compliant policy, contact Jon Light, Karen Gabler or Ryan Haws.