Recently, California became the second state to require private employers to provide paid sick leave. The new law, called the Healthy Workplaces, Healthy Families Act (“A.B. 1522”), goes into effect on July 1, 2015, and will affect private employers of every size operating in the state.

Eligibility

A.B. 1522 applies to all private and public employers, regardless of size. Employees who work 30 or more days per year within the state are eligible for paid sick leave, including part-time, temporary, and out-of-state employees working the minimum number of days in California. Certain employees covered by collective bargaining agreements, flight crew members, and providers of in home support services are not entitled to paid sick leave under the new law.

Accrual

Sick leave accrues at the rate of one hour for every 30 hours worked, and is paid at the employee’s base hourly wage. (White collar, exempt employees accrue sick leave based on a 40-hour workweek.) Employers may limit accrual to a maximum of 48 hours, and may limit employees to using 24 hours of sick leave in a 12-month period.

Unused sick leave need not be paid out at termination of employment. But if an employer rehires a former employee within one year of termination, the employee is entitled to use previously accrued sick leave.

Use

Employees may begin using sick leave 90 calendar days after commencing employment. An employer may require employees to use sick leave in minimum increments of no greater than two hours. An employee must give reasonable advanced notice of the need to use sick leave when foreseeable; otherwise, the employee must give notice as soon as is practicable.

An employee may use sick leave for a personal health condition, or the health condition of a qualifying family member, including a child (regardless of age), parent, spouse, registered domestic partner, grandparent, grandchild, or sibling. While the law does not define “health condition,” it appears to encompass any absence related to illness or injury. Employees may also use sick leave for certain reasons related to domestic violence, sexual assault, or stalking.

Notice Requirements

A.B. 1522 also includes notice requirements. In addition to putting up a poster explaining an employee’s rights (the Labor Commissioner will create one), an employer must include information about sick leave in the written “Wage Theft Prevention Act” notice it is already legally obligated to provide to non-exempt employees. Finally, employers must include accrued, available sick leave balances on employee wage statements.

Enforcement and Penalties

An employee who believes an employer has violated the law may bring a complaint to the Labor Commissioner. There is a rebuttable presumption of retaliation if an employer takes an adverse action within 30 days of an employee complaint, participation in an investigation or prosecution of an alleged violation, or other opposition by an employee to a policy, practice, or act prohibited by A.B. 1522. The Labor Commissioner can award unlawfully withheld sick pay and can require reinstatement and back pay at an administrative hearing.

A.B. 1522 does not include a private right of action allowing an individual employee to sue for an alleged violation, however. Instead, the Department of Labor Standards Enforcement and California Attorney General are responsible for enforcing the law. But, the law potentially may allow employees to bring a suit on behalf of the public (i.e., a claim under the Private Attorney General’s Act) for equitable, injunctive, or restitutionary relief, and attorney’s fees and costs.

Finally, the law allows allow various penalties to be paid to employees for violations, up to $4,000 per employee.

Creating Compliant Policies and Practices

Employers with existing, qualifying, paid time off (PTO) policies do not need to provide additional sick leave if these policies are at least as generous as the new law. However, even employers with existing PTO policies likely must amend them to comply with the new law. Many PTO policies do not comply with the law’s required accrual rate of one hour for every 30 hours worked, and instead base accrual on the pay period, without accruing the benefit on overtime hours. Similarly, many employer PTO policies do not comply with eligibility requirements, providing benefits only to full-time employees or certain other qualifying groups.

Employers with existing PTO or sick leave policies must decide whether to amend their current policies to comply or to create additional, compliant policies. If an employer elects to provide PTO instead of sick leave, it should also consider the increased fiscal impact, because PTO must be paid out at the termination of employment.

Fortunately, the law provides adequate opportunity for employers without sick leave policies to develop them. While the law does not specifically require employers to create policies, doing so enables employers to clearly communicate expectations sick leave use to employees. It also allows employers to evaluate the practical implications of administering sick leave, such as training supervisors, amending payroll practices, and conforming attendance policies and absence reporting to ensure compliance with the law.

Remaining Questions

A.B. 1522 leaves some questions unanswered, particularly as it relates to the application of other related laws or rules. For example, the law does not address what, if any, medical paperwork an employer may require an employee to provide in conjunction with a sick leave absence, or what steps an employer may take if it believes an employee is using sick leave dishonestly or fraudulently. Similarly, while the law states that an employee determines how much sick leave to use, it does not address whether an employer may require the use of sick leave according to the terms permitted under various leave laws such as the Pregnancy Disability Leave law or the California Family Rights Act.

Because the law is still new, additional guidance may be forthcoming from the Labor Commissioner. In the meantime, employers should review their current practices and policies and prepare to offer sick leave consistent with the new requirements by July 2015.