Since 2015, the California Labor Code requires all employers to provide their employees with a minimum number of paid sick days. This requirement applies regardless of whether the employer establishes a paid sick leave policy or a paid time off (“PTO”) policy. Effective January 1, 2024, Senate Bill 616 amended the Labor Code by, among other things, increasing the required minimum amount of annual paid sick leave from 24 hours or three days to 40 hours or five days.
The complexity of this legislation can make it challenging for employers to ensure that their sick leave or PTO policies are legally compliant. To provide guidance, below is a summary of what we believe most California employers need to understand and integrate into their 2024 employment policies going forward.
First, a brief overview of the law- California employees’ right to paid sick leave is established under the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”).1 The Act states that an employee who works for the same employer for at least 30 days within a year is entitled to a minimum amount of paid sick leave. SB 616 expands the Act by amending Sections 245.5, 246, and 246.5 of the California Labor Code and increases the required amount of annual paid sick leave from 24 hours or three days to 40 hours or five days.
Employers are required to provide paid sick leave upon an employee’s oral or written request for the following purposes:
- diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or an employee’s family member; or
- time for an employee who is a victim of domestic violence, sexual assault, or stalking, to obtain relief to help ensure their or their child’s health and safety from crime or abuse.2
One of the most important aspects of this legislation is the extremely broad definition of who qualifies as suffering from the health condition that justifies paid sick leave. The law states that it applies to an employee or an employee’s “family member.” Family members include an employee’s spouse, registered domestic partner, child of any age (whether adopted, foster, or biological), parent, stepparent, foster parent, and legal guardian of either the employee or of the employee’s spouse. It also applies to a grandparent and to any sibling of the employee. Finally, it applies to whom the law refers to as a “designated person.” Employees are entitled to designate one person in any 12-month period to become a family member. There is no requirement that the designated person be living with the employee, and there is no requirement that the designated person be ill or injured since the definition of family member applies for the “preventative” care of designated persons as well.3
When establishing a paid sick leave policy, an employer is free to adopt one of two approaches: accrual or frontload. Each approach has unique aspects which are summarized below.
Accrual Approach
Under an accrual approach, employees earn (or accrue) paid sick leave throughout the year. The employee has the choice of three accrual approaches:
- The employer may provide the employee with one hour of sick time for every 30 hours worked, beginning either at the commencement of employment or January 1, 2024, whichever is later, subject to the accrual limits provided in the legislation; or
- The employer may use any alternative method of accrual, as long as sick leave time is accumulated “on a regular basis” and as long as the employee will have accrued at least 24 hours of accrued sick leave by the 120th day and 40 hours by the 200th day, measured from (a) the beginning of the calendar year, (b) the beginning of the employee’s employment, or (c) any other 12-month period the employer selects and applies; or
- If the employer elects to have the 12-month period begin on the employee’s first day of employment, the employer may elect for the employees to accrue “days” as an alternative to accruing “hours.” If a day-accrual approach is used, then the employee must have accumulated at least three days by the completion of the 120th day of employment and five days by the 200th day of employment.4
When might it be advantageous for an employer to use the “day” accrual method (see (3) above) as opposed to the “hours” accrual method? If the employee works less than an 8-hour day, then the day accrual method would appear to make more sense. Otherwise, the part-time employee will reap a windfall from the wording of the legislation.
- Example: Assume the employee is part-time, working 6-hour days. The employer’s policy permits all employees, part-time and full-time, to accumulate one hour of leave for every 30 hours worked. At that rate, in every five days of employment (or in one week’s time), the 6-hour employee will have accumulated one hour of sick leave. By the 40th week, the employee will have accrued 40 hours of leave (The maximum required by law if the hours’ method is used.). Since the employee only works 6 hours a day, 40 hours of sick leave will provide that employee with the equivalent of 6.6 days off each year. Instead, if the employer used the day accrual method, the employee’s sick days can be capped at 5 workdays (or 30 hours of paid sick leave each year).
As pointed out above, the law requires that the employer permit the employee 40 hours or five days of paid sick leave in a 12-month period; however, if the employer does not wish for the employee to be entitled to more sick days than the minimum mandated by the legislation, it is important that the employer’s policy impose a cap that is consistent with this legislation.
- Example: Assume the accrual rate is one hour per 30 hours worked (see (1) above), and the employee works 8-hour days. In that case, the employee will likely accrue more than 40 hours by year’s end.
- Example: Beginning on January 1, 2024, the employee works 8 hours per day, five days per week, throughout the year and takes three weeks’ vacation, leaving 49 weeks in which the employee works. Without a cap, the employee will accrue about 65 hours of sick time by the end of the year.
Further, if an employer uses the accrual approach, then employees are entitled to carry over unused, accrued sick leave from year to year. We will refer to those carried over sick days as being applied to a “subsequent year.” The employer may impose up to two additional caps: one cap on the number of paid sick days in any single subsequent year and a second cap on the total number of accrued sick days for all subsequent years. For those sick days the employee may take in any single subsequent year, the employer may, if it chooses, impose a cap of 40 hours or 5 days, and this cap may (but is not required to) limit both to the carried over days and the currently accruing days in the subsequent year to 40 hours or 5 days. Finally, the employer may impose a cap on the total number of days that are accruable for all subsequent years to 80 hours or ten days.5
Frontload Approach
Under the frontload approach, employers again have the choice of “hours” or “days.” Employers using this approach provide employees with either the full 40 hours or full five days of paid sick leave upfront at the beginning of a 12-month period. If an employer establishes a frontload policy, employees are not entitled to carry over unused sick leave from one year to the next. Employers are free to use either the employee’s first day of employment, the calendar year, or any other 12-month period as the time frame for compliance.6
Under either an accrual policy or a frontload policy, the employer may limit a new employee’s use of paid sick leave until the employee’s 90th day of employment. Employers may also set a minimum of two-hour increments for each time paid sick leave is used, but they cannot require their employees to take an entire day of paid sick leave off at a time.
Frequently Asked Questions
Can employees borrow unaccrued time for paid sick leave?
Yes, employers have the discretion to lend paid sick leave before it is accrued. They may also allow new employee to use paid sick leave before meeting the 90-day employment requirement.
Do California’s paid sick leave laws apply to exempt and nonexempt employees?
Yes, this legislation applies both to exempt and nonexempt employees. The main difference between exempt and nonexempt employees is that the California Department of Industrial Relations’ wage and overtime laws apply to nonexempt employees, but they do not apply to exempt employees.
Can employers request medical certification when an employee uses paid sick leave?
We do not recommend requesting certification when an employee uses paid sick leave. Employees are entitled to take paid sick leave immediately upon oral or written request, assuming they confirm that it is for their or a “family member’s” care, and employers may not deny paid sick leave solely based on a lack of certification. The law does permit, in theory, employers to reasonably request certification before payment for sick leave if they have information indicating that the employee is not requesting leave for a valid purpose. However, facts falling into this exception would be unusual. In effect, this law provides employees with up to five paid workdays off per year with little or no medical confirmation.
Are employers required to notify employees of their right to paid sick leave?
Yes, employers must display a poster notifying employees of their paid sick leave rights in a format that can be easily read at a location that is frequented by employees during the day.
The posting at the workplace should state the following:
- An employee is entitled to accrue, request, and use paid sick days.
- The amount of paid sick days provided for under Article 1.5 of the California Labor Code.
- The terms of use of paid sick days.
- That retaliation or discrimination against an employee who requests or uses paid sick days is prohibited and that an employee has the right to file a complaint with the Labor Commissioner against an employer who retaliates or discriminates against the employee.7
How does this legislation apply to employers with a PTO policy?
Under a PTO policy, employers do not distinguish between time off for reasons related to illness or injury and time off for other personal reasons, including vacations. Employers who have PTO policies are required to assure that the terms and conditions of this Act, in all respects, apply to employees who wish to take a PTO day off. In other words, the employer’s PTO policy must, at a minimum, satisfy all of the conditions and terms placed upon the sick leave requirements under this Act.
