Seyfarth Synopsis: On September 13, 2023, the California legislature passed S.B. 616, which is expected to significantly expand the State’s existing paid sick leave mandate by increasing the annual amount of paid sick leave from three days or 24 hours to five days or 40 hours for eligible employees, and raising the accrual cap from 48 hours to 80 hours. Unless Governor Newsom vetoes the bill (which is not expected), the amendment will take effect on January 1, 2024.

California was one of the first states nationally to implement a statewide paid sick leave mandate, back in 2014. Since then, the law has been amended a number of times – but what hasn’t changed (so far) is the number of hours employers were required to provide. That may all be changing soon!

Impending Changes to California’s Paid Sick Leave Law

S.B. 616 proposes several key changes to California’s existing paid sick leave law, including:

• Increased Annual Paid Sick Time. The bill increases the annual paid sick leave usage cap from 24 hours or three days per year to 40 hours or five days per year, regardless of whether an employer opts to accrue or frontload paid sick time. This increase would align California with a number of other state paid sick leave laws, including Arizona, Connecticut, Massachusetts, Michigan, New Jersey, and Oregon.
• Increased Rolling Accrual Cap: The bill also would increase the current California rolling accrual cap (also known as “point-in-time” accrual cap and maximum accrual cap) from 48-hours or six days to 80-hours or 10 days.
• Increased Alternative Accrual Rate. Under the current paid sick leave law, the accrual rate is one hour for every 30 hours worked, but employers may use a different accrual method as long as the employee receives no less than 24 hours of accrued paid sick leave by their 120th calendar day of employment and in each calendar year. S.B. 616 continues to allow an alternative to the 1 for 30 accrual method, but with an added wrinkle. Specifically, in addition to ensuring that employees accrue at least 24 hours of paid sick leave by their 120th calendar day of employment, employees must also now accrue at least 40 hours of paid sick leave by their 200th calendar day of employment. For each calendar year after the first year of employment, employees would need to accrue at least 40 hours of paid sick leave per year.
• Increased Frontloaded Grant to Avoid Accrual and Carryover.
  • New Hires. Under the current paid sick leave law, employers can avoid accrual tracking with a lump grant of at least 24 hours or three days of paid sick leave for new employees to use by their 120th calendar day of employment. S.B. 616 requires employers to provide new hires with no less than 40 hours or five days of paid sick leave that is available to use by their 200th calendar day of employment to avoid accrual of paid sick leave. It is not completely clear from the text of the bill whether the 24-hour allocation by day 120 and the 40-hour allocation by day 200 are inclusive or exclusive of each other.
  • Existing Employees. S.B. 616 does not change employees’ right to carry over accrued, unused paid sick leave at year-end. However, it increases the amount of the lump sum grant a California employer must make each year to avoid the accrual and year-end carryover requirements, from at least three days or 24 hours to at least five days or 40 hours of paid sick leave granted at the beginning of each benefit year.

Next Steps: Signature, Effective Date

As noted above, this law will go into effect unless Governor Newsom vetoes it, which is unlikely. Unless vetoed, the amendments will go into effect on January 1, 2024. Stay tuned for updates in the coming weeks as Governor Newsom has until October 14, 2023, to sign or veto bills that were passed by the state legislature.

Also, stay tuned for Seyfarth’s full legislative update coming soon!