California Legislature Amends the Healthy Workplaces, Healthy Families Act of 2014
August 25, 2015
California employers have spent a lot of time this year wrestling with the challenges and ambiguities presented by the Healthy Workplaces, Healthy Families Act of 2014 (“Act”). Due to various ambiguities in the legislation, employers and law practitioners had difficulty drafting sick leave policies that allowed employers to comply with the Act, control cost and effectively run a business. After numerous requests for clarification and countless Department of Labor Standards Enforcement (“DLSE”) FAQs, the California legislature finally responded by amending the Act. On July 13, 2015, Governor Jerry Brown signed the amendments into law.
Due to the need for clarification and the compliance deadline, the Legislature classified the amendments as urgency legislation. Consequently, the amendments became operative on July 13, 2015, which means employers must comply immediately. Key issues addressed by the amendments to the Act include the following:
- New Method For Providing Sick Leave: Employers may now provide for sick leave accrual on a basis other than one hour for every 30 hours worked, if the accrual is on a regular basis and the employee will have 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment of each calendar year, or in each 12-month period.
- New Method for Pre-January 1, 2015 Policies: Employers that had paid sick leave policies prior to Jan. 1, 2015 may continue to use such plans so long as employees earn no less than 1 day or 8 hours of accrued sick leave or paid time off within 3 months of each year of employment, and are eligible to earn at least 3 days or 24 hours of paid time off within 9 months.
- Clarification on “Same Employer”Standard: An employee must work for the same employer for at least 30 days in California in order to qualify for paid sick leave. Prior to the amendment, it was unclear whether an employee could meet the 30-day obligation with work for multiple employers.
- Clarification on Pay Rate Calculation: Employers may calculate sick leave pay for non-exempt employees using: (1) regular rate of pay for the workweek in which the employee uses sick leave; or (2) total wages, excluding overtime premiums, divided by total hours worked in the full pay periods of the prior 90 days of employment. The usual rules for calculating wages for other forms of paid time off apply to calculating sick leave pay for exempt employees.
- Clarification on Reinstatement Rights: Employers do not have to reinstate any accrued sick leave time that the employee cashed out at termination, resignation, or separation. Please note, however, that it remains the case that an employer is not required to provide payment for sick leave upon termination unless the employer has a policy providing for such payments.
- Clarification on Recordkeeping: Employers have no obligation to inquire into or record the purposes for which an employee uses sick leave or paid time off.
The amendments are a welcome clarification, and should help with the implementation and amendment of sick leave policies. The DLSE is currently updating its FAQs, which will ideally provide guidance on the remaining ambiguities in the Act. However, given the potential impact of the amendments on sick leave policies, prudent employers should seek guidance from counsel to ensure compliance.