Changes to Paid Sick Leave Obligations Are Coming: Be Sure to Have the Right Policies in Place Before the Year Ends.

On October 4, 2023, Governor Newsom signed Senate Bill (“SB”) 616 into law.

SB 616 amends the Healthy Workplaces, Healthy Families Act of 2014 (Labor Code sections 245-249) to increase the minimum number of paid sick days to which employees, including public employees, are entitled as well as the minimum number of days employees may carry over from one year of employment to the next. While these substantive changes do not apply to employees who are covered by certain Memorandums of Understanding (“MOUs”) or Collective Bargaining Agreements (“CBAs”), employees covered by such contractual agreements nevertheless will receive certain procedural protections against discrimination and retaliation related to the use of paid sick leave that they did not previously possess.

Before SB 616 takes effect January 1, 2024, here is what your agency needs to know about the law, so that your agency can revise your personnel policies as necessary to comply with the new legal obligations.

The Current Law

The Healthy Workplaces, Healthy Families Act of 2014 (Labor Code sections 245-249) establishes paid sick leave entitlements for most employees in California.

Currently, the substantive benefits and procedural protections under the law do not extend to employees who are covered by an MOU or a CBA that provides the following: (1) paid sick days, leave or time off; (2) final and binding arbitration; and (3) a regular hourly rate of pay not less than thirty percent (30%) more than the state minimum wage (i.e., $20.80 per hour on January 1, 2024 when the minimum wage increases to $16.00 per hour).

Under the current law, employers must allow covered employees to accrue paid sick leave at a rate not less than one (1) hour of leave accrued for every 30 hours of work (known as the 1:30 accrual rate). Employers may use a different accrual method, so long as employees receive a minimum of three (3) days (or 24 hours) of paid sick leave by the employees’ 120^th calendar day of employment. Alternatively, current law allows employers to front-load the “full amount of leave” (i.e., providing three (3) days (or 24 hours) of paid sick leave) at the beginning of each year of employment, calendar year, or 12-month period).

While current law entitles covered employees to accrue and carry over from one year of employment to the next a certain amount of paid sick leave, the law does not require employers to allow employees to accrue more than six (6) days (or 48 hours) of paid sick leave nor does the law require employers to allow employees to carry over more than three (3) days (or 24 hours) of such leave. If an employer elects to front-load sick leave, the employer is not obligated to allow employees to carry over any sick leave that they may have remaining at the end of the year because there is the understanding that employees will receive their full allocation of sick leave at the beginning of the next year of employment, calendar year, or 12-month period.

The current law also only provides procedural protections to covered employees (i.e., those not subject to MOUs or CBAs like those defined above). Such employees receive statutory protection related to their use or attempted use of paid sick leave, including the right to use accrued sick leave and the right to be free from discrimination related to the use or attempted use of such leave and to be free from retaliation if they file a complaint with the Labor Commissioner regarding paid sick leave violations. Employees who are not covered by the Healthy Workplaces, Healthy Families Act are not entitled to these procedural protections currently.

The New Paid Sick Leave Landscape

The enactment of SB 616 will make a number of significant changes to paid sick leave entitlements for and procedural protections available to employees under the Healthy Workplaces, Healthy Families Act.

The new law does not change 1:30 accrual rate set forth under the existing law. However, for employers that use a different accrual method, the law now requires that they provide employees a minimum of five (5) days (or 40 hours) of paid sick leave by the employees’ 200th calendar day of employment. This new statutory requirement supplements the existing requirement that such employers provide employees three (3) days (or 24 hours) of paid sick leave by the employees’ 120th calendar day of employment.

If an employer uses the 1:30 method or a different accrual method, the employer must allow the employee to carry over any accrued sick leave from year to year. Using one of these accrual methods, the employer must now allow an employee to accrue up to 10 days or 80 hours of paid sick leave.

Under the new law, the alternative front-loading approach remains available to employers, so long as the employer front-loads the “full amount of leave”, which is five (5) days or 40 hours of paid sick leave. Employers that elect to front-load five (5) days or 40 hours of paid sick leave are not required to allow employees to carryover leave from one year to the next.

Finally, the new law extends the procedural protections that were previously only available to employees who were not covered by an MOU or CBA to those that are covered by such a contractual agreement.

Steps to Making Sure Your Organization Is Ready

Given these significant changes to paid sick leave law, it is important that employers act promptly in order to ensure compliance with the new legal obligations when they take effect January 1, 2024.

1. 1. Review the Agency’s Paid Sick Leave Policies: Review the agency’s existing paid sick leave policy to ensure that the policy satisfies the new substantive requirements regarding accrual and carry-over of paid sick leave under the Healthy Workplaces, Healthy Families Act for employees who are covered by the law and entitled to those substantive benefits.
   2. Review the Agency MOUs or CBAs: Review and analyze the agency’s MOUs and CBAs to determine whether the agreements provide for (1) paid sick days, leave or time off; (2) final and binding arbitration; and (3) sufficient compensation to employees. If the MOUs or CBAs do not satisfy the requirements for exemption from the substantive requirements under Labor Code section 245, understand that the employees covered by such MOUs or CBAs will be entitled to those substantive benefits.
   3. Consider the Status of an Employee: For employers with part-time employees, consider the front-loading approach, which will likely reduce the administrative burden associated with the monitoring hours worked by employees who may work irregular hours.
   4. Provide Procedural Protections for All Employees: Extend the procedural protections set forth under Labor Code section 246.5 to all employees, including those that are covered by an MOU or CBA that satisfies the requirements for exemption from the substantive requirements of the Healthy Workplaces, Healthy Families Act.
   5. Communicate: Communicate to affected employee organizations any changes to policy or practice that the agency must make in order to comply with the changes to the law. An agency does not need to negotiate a change that is necessary in order to comply with the law, but it should communicate that it is changing its policy or practice and provide the employee organizations an opportunity to identify any negotiable effects or impacts of the decision and request to bargain those effects or impacts.
   6. Document, Document, Document: Maintain thorough records that the agency reviewed and, if necessary, revised its policies or practices to comply with the law.
   7. Consult Trusted Legal Advisors: If you are uncertain about how the changes in the law may affect your agency or if you need guidance in updating your policies, consider consulting with your trusted legal advisors.

By following these steps, your agency can ensure that it is fully prepared for the changes that will take effect January 1, 2024.