California Employers: PAID SICK LEAVE LAWS CHANGE ON JANUARY 1, 2024

Compliance with local and state Paid Sick Leave ordinances is just one of the many pitfalls a California small business can face when employing people.

Current State Law on Paid Sick Leave

On January 1, 2015, California instituted its existing paid sick leave law, the Healthy Workplaces, Healthy Families Act of 2014. The law requires employers, regardless of size, to provide their employees with 1 hour of paid sick leave for every 30 hours worked to any employee who worked for the employer for 30 or more days. The law allowed employers to cap the accrual of paid sick leave at 48 hours and cap the use of paid sick leave at 3 days or 24 hours, whichever is greater, within a 12-month period.

However the law is again changing, and many employers will be caught completely unaware of the paid sick leave laws effective on January 1, 2024. On October 4, 2023, Governor Newsome approved SB 616 which increases the amount of paid sick leave that almost every employer must offer to their employees.

Highlights of New Law – Effective January 1, 2024

Here are the highlights:

1. SB 616 will require employers to provide paid sick leave of 5 days or 40 hours.
2. Employers can still offer an accrual rate of one hour of paid sick leave for every 30 hours. Employers using a different accrual method have to offer accrual of no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period, and no less than 40 hours of accrued sick leave or paid time off by the 200th calendar day of employment or each calendar year, or in each 12-month period.
3. Employers may satisfy the accrual requirements by providing not less than 24 hours or 3 days of PSL by the employee’s 120th calendar day of employment, and no less than 40 hours or 5 days of paid sick leave by the employee’s 200th calendar day of employment.
4. Employers may limit the use of paid sick leave to 40 hours or five days in each year of employment, calendar year, or 12-month period.
5. Employers may cap the accrual of paid sick leave to 10 days or 80 hours. A total of 10 days or 80 hours is also the cap that employers can place on the amount of paid sick leave an employee can carryover from year to year.
6. Employers can simplify this process by providing an upfront grant of 5 days or 40 hours at the beginning of each year. This would allow an employer to not provide any accrual or allow any carryover.

What SB 616 means for an employer’s existing documentation:

1. New hire packets need to be revised to include an updated Labor Code § 2810.5 Notice to Employee – Please note that the DIR website has not yet updated the Notice to Employee form to reflect the changes to paid sick time leave law.
2. Update employee handbooks and workplace posters.
3. Update pay stub information. Look at your employee’s most recent paystub and review them prior to 1/1/2024.

Many businesses rely on their payroll companies to implement these changes and assume that the payroll companies will take care of this for them. Don’t take that risk. Consult with an attorney to discuss whether it’s best for your business to provide upfront grants of paid sick leave, or to update the accrual rates.

And finally, remember that paid sick leave and paid time off are different things. Many employers mistakenly conflate the two, paying out sick leave when an employee is terminated, for example, or not recognizing that paid time off is owed at the time of termination.

Some employers choose to combine both paid sick leave and paid time off into a single bucket because they believe it is simpler and easier to manage. In another article, we’ll explain what the pros and cons of such a policy can be.

Paid Time Off vs. Paid Sick Leave

In the state of California, employers must provide paid sick leave to all employees, regardless of how many employees they have. On top of the state laws, many local governments (including San Diego) have enacted even more stringent requirements on employers in regard to paid sick leave.

However, while employers in California must provide paid sick leave to their employees, there is no legal requirement that employers also provide paid time off.

Differences between Paid Time Off vs. Paid Sick Leave

• *Yes, if there is a written policy that employer can elect to pay out all unused vacation time at the end of a calendar year, without requiring employee consent.
• **Yes, if employer provides an up-front grant of 5 sick days.