California employers must once again review their current paid time off and paid sick leave policies. On July 13th Governor Brown signed into law emergency legislation that amended and clarified certain provisions of the Healthy Workplaces, Healthy Families Act, also known as the Paid Sick Leave Law.

These new went into effect immediately.

The original legislation has only been in effect since July 1st of this year, but the lawmakers have already determined that "fixes" were needed to key components of the law.

What's Been Changed in the California Paid Sick Leave Law

Among other changes, AB 304 amends the Act as follows:

Employee Eligibility

• Clarifies that the 30-day eligibility period applies to time worked “with the same employer.” An employee who, on or after July 1, 2015, works in California for the same employer for 30 or more days within a year from the commencement of employment is entitled to paid sick days.

Sick Leave Accrual

• Provides that an employer may use a different accrual method, other than providing one hour per every 30 hours worked, as long as the accrual is on a regular basis and an employee has at least 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period.
• Provides that an employer may satisfy the accrual requirements of this section by providing 24 hours of paid sick leave that is available for use by the 120th calendar day of employment.
• Clarifies that the “full amount of leave” means three days or 24 hours for an employer who chooses to "front load" leave.

Employee Use of Paid Sick Leave

• An employer may limit an employee's use of paid sick days to 24 hours or 3 days in each year of employment, calendar year, or 12-month period, rather than just year of employment.

Sick Leave Payment 

Three alternative methods for calculating how sick leave is paid are now permitted:

• Paid sick time for nonexempt employees can be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek;
• Paid sick time for nonexempt employees can 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; and
• Paid sick time for exempt employees is calculated in the same manner as the employer calculates wages for other forms of paid leave time.

Employee Reinstatement

• An employer is not required to reinstate accrued paid time off to an employee, rehired within one year of separation from employment, that was paid out at the time of termination, resignation or separation.
• The reinstatement of paid sick leave upon rehiring is “subject to the use and accrual limitations set forth in this section” and confirms that an employer who cashes out sick leave/PTO upon termination of employment is not obligated to restore any sick leave/PTO upon rehiring

Employer Notification

• An employer that provides unlimited sick leave to its employees may satisfy certain notice requirements by indicating "unlimited" on the employee's itemized wage statement, or a written notice provided to the employee each pay period.

Employer Recordkeeping

Although an employer must keep records for three years documenting the hours worked and paid sick days accrued and used by an employee, employers do not need to inquire or record the purposes for which an employee uses sick leave or paid time off.

Existing Paid Leave Policies or Grandfather Provision

• Satisfies the accrual, carry over, and use requirements of the law.
• Provided PTO to a class of employees before January 1, 2015, pursuant to a policy that used an accrual method different than providing one hour per every 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 leave within three months, and the employee was eligible to earn at least three days or 24 hours within nine months.
• If the employer decreases the accrual amount or rate for employees covered under the policy, it must comply with the sick leave law (i.e., either meet the accrual requirements or provide 24 hours of leave at the beginning of each year of employment, calendar year, or 12-month period).

Careful Review is Required to Maintain Compliance with the Paid Sick Leave Law

With a number ambiguous passages and impractical requirements in the law, employers have struggled to implement the California Paid Sick Leave Law. The law is unusual in that it contains stipulations not typically required for how employers have provided paid sick leave in the past,

These recent amendments seem to have corrected some of those problems, but employers should carefully analyze their sick leave or paid time off policies to ensure they are in compliance with these new requirements. California employers, particularly those intending to use existing PTO policies to comply with the Act, should review AB 304 carefully to ensure their policy is in compliance.

Finding the Help You Need

Compliance by employers, especially with issues such as California sick leave law requirements, means having an ongoing and up-to-date process for tracking, understanding, and implementing the provisions of these laws.

There are a number of resources that can assist with this process such as CalChamber’s HRCalifornia site. A good payroll management services company that also provides Human Resources and Insurances services, such as Accuchex Payroll Management Services, is a great option to consider.

Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.