On September 10, 2014, Governor Jerry Brown signed Assembly Bill 1522, enacting the Healthy Workplaces, Healthy Families Act of 2014 (“Act”). The Act becomes effective July 1, 2015. Generally, it provides that an employee who works in California for 30 or more days in a year is entitled to an accrual of paid sick leave. Under the Act, the employee may begin using the paid leave after 90 days of employment, but any accrued leave need not be paid at termination or other separation of employment.
According to the Act, the paid sick leave benefit must accrue at a rate of at least one hour of sick leave for every 30 hours of work. For full-time employment, this would equate to 66.66 hours (8.33 days) of accrued sick leave annually. However, the Act puzzlingly allows employers to limit employee use of paid sick leave to 24 hours (3 days) each year. Still later, the Act creates another glaring ambiguity by allowing employers to cap accrued sick leave at 48 hours (6 days). At this point, it is unclear how these conflicting provisions will be interpreted and implemented moving forward.
The Act offers an exception for paid-time off (PTO) policies. Under California law PTO policies are treated essentially the same as vacation policies and any accrued and unused PTO amount must be paid at the end of the employment relationship. The Act’s PTO exception requires that PTO be available for the same purposes and under the same conditions as the Act’s paid sick leave benefit and must either: “satisfies the accrual, carry over, and use requirements of this section” or “provide no less than 24 hours or three days of paid sick leave, or equivalent paid leave or paid time off, for employee use for each year of employment or calendar year or 12-month basis.”
Although the language seems unnecessarily confusing, it appears that a PTO policy that: (i) allows use for any purpose; (ii) accrues at a rate of at least 24 hours (3 days) per year; (iii) has a cap of at least 48 hours (6 days) per year; and (iv) allows accrued amounts to carry over from year to year would meet the Act’s exception. Unfortunately, some of the accrual mechanics authorized by the Act seem inconsistent with certain accrual standards established by California case law, including Suastez v. Plastic Dress-up Co. and its progeny. Whether a statutory exception to the California case law was intended will undoubtedly be determined in the future.
Regardless, this Act and its implementation provide prudent employers an opportunity to review their paid leave policies including, any vacation, sick leave, PTO, holiday, sabbaticals, and other related benefit offerings. We strongly encourage California employers to carefully review their policies for full compliance with these new standards, which standards we anticipate will contribute to the already abundant employment litigation found in our state.