Hunton Employment & Labor Perspectives

On the morning of September 10, in a signing ceremony held in Los Angeles, Governor Jerry Brown officially signed AB 1522 into law.  This law makes California the second state to guarantee paid sick leave to employees. Statewide studies reported that 44% of employees in the state of California did not have access to paid sick leave. This will change under the new law for the vast majority of these approximately 6.5 million employees.

Although employers often provide paid time off for illness as a benefit to full-time employees, mandating that sick leave be paid is a recent phenomenon. San Francisco passed the first such ordinance in 2006, but further victories for the paid sick leave movement have been limited to local ordinances in New York, Portland (Oregon), San Diego, Seattle, and Washington, D.C. In 2011, Connecticut became the first state to enact a statewide paid sick leave measure, although the Connecticut law was limited to “service employees” of large (more than 50 employees) employers, and it generally exempted manufacturers and nonprofits.

A paid sick leave bill failed to win approval from the California legislature in 2011, largely because the bill included state and local employees and thus raised issues of funding the mandate.  But this time around, the bill was able to win approval and was enacted over strong opposition from the business and industry community, with many groups calling it a “job killer.” Employers were able to win some protections before the legislature passed the bill, including an exemption for providers of in-home supportive services. But that is one of the very few exemptions, as the law applies to “any person employing another under any appointment or contract of hire,” including the state, political subdivisions, and municipalities.  Besides in-home supportive services providers and certain employees subject to the federal Railway Labor Act, the law also exempts employees covered by valid collective bargaining agreements as long as the CBA already expressly provides for paid sick leave, final and binding arbitration of disputes over sick day provisions, premium wage rates for overtime, and regular pay at least 30 percent more than state minimum wage. Employers in the construction industry should especially note that CBAs for their employees provide the exemption only if the CBA was entered into before January 1, 2015, or it expressly waives the paid sick leave requirements in clear and unambiguous terms.

So what will this mean for employers? After July 1, 2015, an employee who works in California for 30 or more days within a year from commencement of employment will be entitled to accrue and use paid sick days. Accrual is at a rate of no less than 1 hour per every 30 hours worked, with an accrual cap allowed of no less than 6 days or 48 hours. Employees are entitled to use accrued paid sick days beginning on the 90th day of employment, although employers can “lend” paid sick days in advance of accrual if they choose to do so. Employees are allowed to determine how much paid sick leave they need to use, but employers can limit employees’ use of paid sick days to 24 hours or 3 days in each year of employment and can set a “reasonable minimum increment” (not to exceed 2 hours). The law borrows the “reasonable advance notification” or “as soon as practicable” notice approach employers know from the leave laws.

For the most part, the law weaves paid sick leave into the myriad requirements already imposed on employers by the Labor Code and Fair Employment and Housing Act. Employers will be relieved to know that unused paid sick leave does not have to be paid out at termination (unlike vacation time). Notices of paid sick leave rights, policies, balances, and usage have been added to the initial notices giving upon hiring and the wage statement requirements of Labor Code § 226, and of course there will be a new poster for the break room. Employees who use or attempt to use paid sick leave are protected from adverse employment action, as are those who file complaints with the Labor Commissioner, cooperate in investigations or prosecutions, or oppose prohibited policies, practices, or acts. The law establishes a rebuttable presumption of unlawful retaliation for adverse employment action taken within 30 days of filing a complaint, cooperating in an investigation or prosecution, or opposing a prohibited policy, practice, or act. The Labor Commissioner is authorized to enforce the law with “any appropriate relief,” including reinstatement, backpay, payment of sick days unlawfully withheld, and payment of an additional administrative penalty based on the number of days that the violation occurred or continued and up to an aggregate penalty of $4,000. Enforcement also appears to be authorized by private parties under California’s Private Attorneys General Act, but the law does not appear to authorize a private party to collect the administrative penalties. It does, however, provide for recovery of “reasonable attorney’s fees and costs.”