On July 13, 2015, Governor Brown signed Assembly Bill 304 – an amendment to California’s recently effective (as of July 1, 2015), statewide sick-leave law, known as the California Healthy Workplaces, Healthy Families Act of 2014 (the Act). The Amendment is effective immediately. It adds significant new compliance options for employers, in addition to clarifying various ambiguities in the original Act. Below, we highlight the Amendment’s most important changes for employers.
Additional Accrual Options
The Amendment adds a third sick-leave accrual option for all employers: employers may accrue an employee’s sick-leave entitlement on a regular basis as long as it results in the employee earning at least 24 hours of sick leave by his or her 120th day of employment (or other 12-month accrual period).
- Before the Amendment, employers were only permitted to accrue employee sick leave either (1) at an hourly rate (one hour for every 30 hours worked), or (2) granting a full 24 hours all at once at the start of the 12-month accrual period (i.e., frontloading)
Although the two pre-Amendment accrual options are still available to employers, the new, third option obviates employers’ need to tie sick-leave accrual to hours worked; sick leave can instead be tied to pay periods or other easy-to-measure benchmarks. The new accrual option will be particularly helpful for employers that wish to combine sick-leave policies with new Paid Time Off (PTO) policies, as most employers do not have PTO accrue on an hourly basis. For employers that had PTO policies in effect before January 1, 2015, the Amendment also allows for a fourth accrual option: such employers may continue existing PTO accrual methods as long as: (1) the accrual occurs on a regular basis; (2) the accrual results in each employee earning no less than one day (or eight hours) of sick leave or PTO within each three-month period of employment; and (3) employees are eligible to earn at least three days (or 24 hours) of sick leave or PTO within each nine-month period of employment. Note, however, that if an employer changes its accrual method under a pre-existing PTO policy (other than changes that merely increase the employee’s accrual amount or rate), it must then use one of the other accrual options going forward.