If you are one of many Sacramento area residents who commute to San Francisco to work, or you are in the process of weighing the pros (more money!) and cons (REALLY long days) of commuting to “The City,” the San Francisco electorate just provided one big item to add to the “plus side” of the equation.

In a ground-breaking measure, San Francisco voters passed a local initiative which requires all local employers to provide paid sick leave to every employee who works in the City. (“Proposition F”). Although many large employers now provide paid time off, Measure F applies to all employers, regardless of the number of employees. Measure F also includes several provisions that may impact even large employers’ sick time policies. The highlights of the new law are summarized below.

Paid Sick Leave Requirements

“Employees” covered by Proposition F include any persons employed within the geographic boundaries of San Francisco. It is important to keep in mind that part-time and temporary employees are included in this definition.

“Small employers” with fewer than 10 employees (that is, any 10 employees who perform any work in a week) must provide at least 40 hours of paid sick leave. Larger employers must provide at least 72 hours of paid sick leave. Employers are invited, but not required, to be more generous.

Sick leave begins accruing after 90 days of employment. An employee accrues one hour for each 30 hours worked. The sick leave continues to accrue until it reaches a cap of 40 hours for small businesses, or 72 hours for large businesses. Sick leave “carries over” from year-to-year if not used, but need not be paid out at separation of employment. The accrual stops when an employee reaches the mandated caps (40 hours for “small employers” and 72 hours for larger employers).

Employers with existing policies that provide more paid time off (“PTO”) or sick leave than required by Proposition F are deemed to be in compliance with the new law. There is no question those employers are way ahead of the game, and need not provide additional time off to meet the requirements of Proposition F. However, all employers should review and, if necessary, revise their policies to ensure compliance with Proposition F. This includes re-vamping language in policies relating to sick leave, attendance, no retaliation, compensation and all other leave-related policies. More on this in a minute . . . .

Under Proposition F, sick leave may be used either for the employee’s own illness, or for the illness of a “covered person.” Covered persons include most immediate family members: child, parent; legal guardian or ward; sibling, grandparent, grandchild, spouse, registered domestic partner and any other “designated person.” These relationships need not be biological, and can be the result of adoption, step-relationships and foster care relationships. Also, a “child” can include the child of a domestic partner and the child of a person standing in loco parentis.

In an addition to the lengthy list of specifically identified “covered persons,” Proposition F specifies that employees who do not have any covered relations may designate one “designated person” for whom the employee may take paid sick leave. In this regard, Proposition F is substantially broader than existing state and federal family and medical leave laws.

The sick leave available to employees under Proposition F can be used for full-day absences. It also appears to be available for absences of less than one day, including medical appointments. Employees must provide “reasonable advance notice” of the need for time off, presumably on occasions when it is used to care for others or for medical treatment. Employers may take “reasonable measures” to verify or document the time off.

When an employee takes sick leave, the time off may not be counted as an attendance violation under the employer’s policy. Employers also are not permitted to take any other type of retaliatory measures against employees who take sick leave.

Any adverse employment action taken by an employer within 90 days of an employee’s engaging in “protected activities” relating to sick leave will create a rebuttable presumption of retaliation for which an employer can be held liable. “Protected activities” can include a number of things, including filing a complaint, participating in an investigation of a complaint or telling other employees about the availability of paid sick leave. Adverse employment actions can include discharging, threatening to discharge, demoting or suspending an employee, as well as numerous other detrimental measures.

Proposition F includes a provision for private civil enforcement. This includes penalties of up to three times the amount of sick pay denied for any violations of the measure, or $250, whichever is greater. Other possible damages to an employer include liquidated damages of $50, interest, costs and attorneys’ fees. In a bit of good news for employers, class actions are authorized only for equitable relief, costs, and attorneys’ fees.

Employers must maintain records of all paid sick leave used by employees for a period of four years. These records must be made available to the City for inspection whenever they are requested.

Finally, employers must display a new poster, which is available from the San Francisco Office of Labor Standards Enforcement.

Paid Sick Leave “To-Do” List

Proposition F goes into effect 90 days from November 7, 2006, or about February 5, 2007. So, employers that do business in San Francisco must address the many administrative and payroll issues attendant to this new law as quickly as possible.

While Proposition F liberally “borrows” from other family and medical leave and discrimination laws, it is different in a number of ways that will require employers to closely scrutinize all related personnel policies. For example, California Labor Code section 233 requires employers who offer paid sick leave to allow employees to take up to one-half of their accrued sick leave to care for specified family members (“kin care”). However, Proposition F is substantially broader because it includes a “designated person.”

Also, section 233 only requires that employees be permitted to use up to one-half of their accrued sick leave to care for someone else. Proposition F allows employees to use a larger percentage of their sick leave for another person’s illness or injury. For example, a “small employer” who provides 40 hours of paid sick leave must allow employees to use one hundred percent of that time to care for a “covered person.”

Other potential policy pitfalls include the accrual of sick leave/paid time off. Under Proposition F, an employee must begin accruing paid sick leave within 90 days of commencing employment. Any existing policies that delay accrual for longer than 90 days will be invalid. Also, Proposition F applies to part-time employees, and most employers do not include part-timers in regular sick leave policies.

Finally, because Proposition F allows year-to-year carryover of accrued sick leave, policies that are contrary must be revised.

In addition to reviewing and revising policies that may be affected by Proposition F, employers who presently do not provide PTO or paid sick leave should pay close attention to their 2007 budgets and include the expenses associated with paid time off. This should include not only the cost of paying employees for the time off, but also the costs of temporary employees to fill-in during absences. Given the potentially significant investment involved, all employers should communicate the new benefit to employees as a positive change in their benefits package.