Assembly Bill 304 was enacted on an emergency basis shortly after California’s paid sick leave law, known as the Healthy Workplaces, Healthy Families Act of 2014, became effective on July 1, 2015. There were good reasons for the amendment: the paid sick leave law was confusing and difficult to implement. Effective immediately, AB 304 seeks to clarify some aspects of the sick leave law and provides employers with greater options regarding implementation. Specifically, AB 304 permits employers to use a sick leave accrual rate other than the 1 hour for every 30 hours worked rate provided in the law as originally enacted, as long as sick leave accrues regularly and the employee will accrue 24 hours by the 120th calendar day of employment. If the paid leave is not accrued at the beginning of each 12 month period, the carry over requirements apply, so that up to 6 days or 48 hours must carry over to the next year.
AB 304 also permits employers to continue using policies that existed prior to January 1, 2015 if at least one day or 8 hours of sick leave or paid time off is earned within 3 months of employment, and employees are eligible to earn at least 3 days or 24 hours within 9 months of employment. However, any modification to the accrual rate that existed prior to January 1, 2015 must meet the statutory requirements of one hour of paid leave for every 30 hours worked or the employer must provide the full amount of leave at the beginning of each year of employment, calendar year or 12 month period. In addition, if a class of employee is not covered by the existing policy, a new policy must be adopted for the class that meets the statutory rules for new policies.
AB 304 simplifies sick leave calculations, especially for employees with fluctuating pay rates or commissions, by providing that for all non-exempt employees sick leave can be calculated in one of 2 ways: either in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek or; by dividing the employee’s total wages, not including overtime pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment. AB 304 also simplifies sick pay calculation for exempt employees as well, by providing that employers may use the same rate used for other forms of paid leave.
To further assist employers, the California Department of Labor Standards Enforcement (DLSE) recently issued an opinion letter interpreting the paid sick leave law requirement that no carry-over of accrued but unused time to the next year is required if the employee is provided a minimum of 3 days or 24 hours at the beginning of the employment year, calendar year or 12 month period. Specifically, the DLSE determined that the employer must provide the greater of 24 hours or 3 days. This means that an employee regularly working 6 hour days would be entitled to 4 days of 6 hours each, although this is more than 3 days of leave, while an employee regularly working 10 hour days is entitled to 3 days of 10 hours each, or 30 hours of sick leave, although this is more than 24 hours of leave. Similarly, if an employer places a cap on accrual of 6 days or 48 hours, the likely interpretation would be that the cap for a 10 hour shift employee would be 60 hours, and the cap for a 6 hour shift employee would be 48 hours. Employers should note, however, that while DLSE opinion letters are persuasive, they are not binding on courts of law.
