In a case of statutory interpretation, the California Court of Appeal recently ruled that litigation to enforce the state’s paid sick leave law (PSL) may be prosecuted under the state’s Private Attorney General Act (PAGA).i
The Healthy Workplaces, Healthy Families Act of 2014 (HWHFA)ii generally requires employers to provide eligible employees with at least three paid sick days per year. The Labor Commissioner and the Attorney General are charged with enforcing this law.iii
Finding that enforcement statutes under the HWHFA do not preclude an “aggrieved”iv employee from bringing a PAGA action for violations of the Act, the Court’s ruling opens the door to additional employer related PAGA risks. A few key points on complying with HWHFA are outlined below.
The HWHFA provides three separate methods for providing paid sick leave benefits: 1) Accrual; 2) Lump sums via front-loading; and 3) Pre-existing sick policy that meets HWHFA requirements.
Accrual Method:
Accrual rates are a minimum rate of one hour for each 30 hours worked starting on the first day of employment, or that provides at least 24 hours by the 120th day of each year of employment, calendar year, or other 12-month period. Employers may also provide new hires at least 24 hours or 3 days of sick time available for use after 120 days of employment. Nonexempt employee overtime hours are counted toward accrual rates.
Unused accrued hours must be allowed to carry over from year to year. Total accrual hours may be capped. In the absence of express guidance from California’s Department of Labor Standards Enforcement, a conservative approach to capping accrued hours would be to cap total accrual rates at 48 hours or six days; whichever provides the greater benefit to the employee. Employers should again be aware that local paid sick leave provision may require greater total accrual caps.
Front-Loading Method:
Front-loading allows an employer to provide a lump sum amount of paid sick leave time at the start of each year of employment, calendar year or any 12-month period. Minimum sums are based on the following:
- 24 hours for part-time employees (less than 8 hours per day).
- 24 hours or three days for employees who regularly work an eight-hour day.
Three times the regular number of daily work hours (or three days) for employees who regularly work more than an eight-hour day (for example, employees working ten-hour shifts must receive a lump sum of at least 30 hours).
Employers should be aware that local laws allowing front-loading may require greater amounts of leave time. No carryover is required when employers opt to front-load paid sick leave benefits. However, employers should check applicable local leave laws to determine if carryover provisions apply to front-loading.
Both methods have positive and negative aspects, but overall, a front-loading method—with no carryover or accrual calculations—is far easier from an administrative perspective.
NOTE: Modifying pre-existing Paid Time Off (“PTO”) policies will cause employers to lose their existing PTO policy “grandfathered” status and will require them to comply with all statutory requirements.
Paid sick time may be used for bereavement, illness, injury or preventive care for themselves, a designated person, or a family member as outlined in the statute. Sick time can also be used for certain purposes by an employee who is a victim of crime or abuse. The employee must provide reasonable advance notice if the need to use paid sick leave is foreseeable. If not foreseeable, the employee must provide notice as soon as practicable.
Although employers are not required to pay accrued PSL to an employee at the time of termination, those that choose to combine sick leave and vacation into a PTO plan will be required to pay out the accrued time.
[i] Wood v. Kaiser Foundation Hospitals (Feb. 2023) No. D079528.
[ii] Labor Code § 245 et seq.
[iii] Labor Code § 248.5
[iv] PAGA defines an “aggrieved employee” as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (Lab. Code, §2699, subd. (c).)