CALIFORNIA S NEW PAID SICK LEAVE LAW- OPTIONS, RISKS AND COSTS. Presented by Matthew Bartosiak Sr. Consultant Employers Group

Transcription

1 CALIFORNIA S NEW PAID SICK LEAVE LAW- UNDERSTANDING YOUR OPTIONS, RISKS AND COSTS Presented by Matthew Bartosiak Sr. Consultant Employers Group

2 REAL-WORLD CHALLENGES Insights from EG members (Survey) Method -Accrue, front-load or keep current policy? Is a PTO policy sufficient? Calculating rate of pay Calculating fiscal impact Revising policies Preventing misuse What else should we be thinking about? 2

3 BIGGEST CHALLENGE EG SURVEY 36% - Nothing in particular 17% - Record-keeping (tracking hours worked) 13% - Fiscal impact to company 12% - Avoiding misuse 12% - Documenting on paystub 12% - Deciding between accrual and frontloading methods 3

4 NEWLY ENTITLED EEs EG SURVEY 42% -Have employees not previously entitled to paid sick leave that will now be entitled 58% -Do not have employees newly entitled to paid sick leave 4

5 APPROACHES EG SURVEY 53% -Existing sick leave or PTO should provide sufficient allotment and accrual 18% -Undecided 15% - Existing plan is insufficient and will raise allotment and/or accrual 13% - Will use the frontloading method 1% -Currently offer only vacation and will provide sick leave through accrual or transition to a PTO 5

6 FISCAL IMPACT EG SURVEY 43% - Minimal fiscal impact 26% -No fiscal impact 17% - Significant fiscal impact 17% -Not sure 6

7 WAGE STATEMENT EG SURVEY 73% -Will notify employees of paid sick leave balance on pay stub 25% -Have not yet decided how to notify employees of paid sick leave balance 3% -Will notify employees through a written statement each pay period 7

8 POTENTIAL MISUSE EG SURVEY 55% -No concern at all 36% -Possible, will look into policies to address 9% -Definite concern about misuse 8

9 PAID SICK LEAVE LAW THE 101 AB 1522 The Healthy Workplaces, Healthy Families Act of 2014 Effective Date: 1/1/ Posting and notices Effective Date: 7/1/ Accruals start Covered Employers All employers, regardless of size just a very few exemptions A year as discussed under this Law refers to any 12-month period -anniversary, calendar, etc. AB304 Possible clarifications coming 9

10 EXEMPTIONS Collective Bargaining Agreements Must have sick leave or PTO and meet certain other conditions Construction Industry -Regular hourly rate not less than 30% above CA min. wage, premium wage rates for all o.t. hours worked, and CBA either (a) entered into before 1/1/15 or (b) expressly waives requirements of the law. CBA must provide for wages, hours of work, and working conditions. In-Home Health Care Workers Publicly funded. Flight Deck and Cabin Crew Members---covered under the Railway Act andreceiving time off equivalent to AB

11 WHO IS COVERED? Workers who, after July 1, 2015, work 30 or more days within a year Oakland employees who work two or more hours in a week Covers all workers exempt, non-exempt, full-time, part-time Per diem employees Seasonal and temp. employees 11

12 TEMP EMPLOYEES Temporary Employees From Agencies: Client company must honor law if there is jointemployment (client gives on-going daily supervision) Follow the policy of the temp agency Trust, but verify! 12

13 QUESTION TEMP-TO-HIRE If a temp worked more than 90 days and is converted to regular employee,do they immediately get to use sick leave? 13

14 ACCRUAL One hour for every 30 hours worked, including overtime hours---no fractions used Exempt Employees -assume 40 hours worked each week unless normal workweek is less than 40 hours A 40-hour workweek accrues 1.33 hours per week Ifhours worked are tracked, then count all worked hours 14

15 CAPS ON ACCRUAL Accrued time must carry over yearly to a cap of 48 hours or six days. Cap is six days or 48 hrs, but employers may limit use to three days/24 hrs a year (remaining time can be used the first of the next year). SF and Oakland Cap must be at least 72 hours for employers with 10+ ees, 40 for small employers. SF and Oakland Employee may use all sick leave up to cap at any time. San Diego Cap is 40 hours, carry over allowed 15

16 ACCRUAL AND CAP -THREE OPTIONS 1. Follow Rules of AB1522 One hour for every 30 hours worked, three days or 24 hours (used yearly,) carry over to cap of six days or 48 hours---must track hours worked 2. Front Loading -Provide three days or 24 hours beginning of every year-immediately available, no accrual, no yearly carry over, no cap if six days or 48 hours no tracking of hours required 3. Employer Policy Use existing sick leave policy with either: (a) honoring AB 1522 rules on accrual, carry over, accrual and other requirements; or, (b) Provide at least three days or 24 hours per year. Some legal experts argue that this option allows an employer to use its own accrual method. Must still track 16

17 FOCUS ON FRONTLOADING When is a new hire eligible to use frontloaded paid sick leave? 90 days from first day of work. Frontloading in 2015 What to do with paid sick leave already used? Three days/24 hours you are OK. Frontloading in 2015 How much to provide for 7/1 12/31? One hour for 30 hours worked or three days/24 hours. Advantages, disadvantages, risks 17

18 QUESTIONS MULTIPLE METHODS Can we use different methods for different groups of employees? For example, one method for exempt, one for non-exempt? Can we offer different amounts of paid sick leave to different groups of employees as long as it meets the states minimum requirements? 18

19 QUESTIONS PT ACCRUALS How do I grant sick leave to a part time employee that works an irregular schedule or works occasionally a few days per month? If a full-time employee works 34 hours/wk and a part-time employee works 22.5, how much sick time should each get? 19

20 PTO PLANS PTO plans are OK, as long as: The PTO plan satisfies the accrual, carryover and other requirements of AB 1522, Or The PTO plan puts the full amount of leave into (an employee s) leave bank at the beginning of each year. State s FAQ s on Paid Sick Leave. Note----Although the FAQ answer states full amount, the law requires only 3 days or 24 hours to be front loaded. See previous slide. 20

21 QUESTION: PTO If we currently offer a PTO plan that accrues at three days per 12-month period and carries over up to six days is it sufficient? 21

22 QUESTION: FRONTLOADING If an existing plan gives full-time employees 32 hours of sick time, frontloaded on their date of hire and subsequently on January 1 st of each year is it already in compliance or will it need to be switched to anniversary date? 22

23 PAYOUT AND FORFEITURE Sick leave may not be forfeited by active employees. Law does not address situations when an employer pays out unused sick leave. Pay Out at Termination Not required,but if employee re-hired within one year, then all accrued time is immediately available. No 90- day waiting period. This may especially affect seasonal employees who come back. 23

24 ACCRUAL CALCULATION Counting Hours vs. Days: Use hours versus days whichever yields more sick time. Alternative Workweek Schedules Example: employee works four days, 10 hours Total cap equals 60 hours (cap of six days x 10 hours). Work day is less than eight hours? Use 24 hours and cap of 48 hours it yields more time for employee than using days. 24

25 PURPOSES FOR USE May be taken for the employeeor a family member for preventive care or care of an existing health condition, or for specified purposes. Qualifying family members for whom sick leave can be taken include: Employee Parents--step-parents included also in loco parentis Child---step child included also in loco parentis Spouse Registered domestic partner Oakland if no spouse or domestic partner, employee may name someone for whom to take sick days Grandparent, grandchild Sibling step-sibling not addressed Also for reasons related to domestic abuse, sexual assault, or stalking--labor Code Sections 230 (c). and 2301(a) 25

26 WHEN ELIGIBLE TO USE Employee may use accrued time on the 90 th day of employment. Can use immediately if frontloaded Oakland s Sick leave law-90 day rule only applies to employees hired after March2,

27 NOTIFICATION FROMEMPLOYEE Employee Notice: Reasonable advance notice required for foreseeable leave; otherwise, as soon as practicable. Employer may not require as a condition of using leave that the employee search for or find a replacement worker. San Diego if leave is foreseeable-7 days notice. If not foreseeable as soon as practical. 27

28 NOTIFICATION FROMEE (cont) Documentation : The law does not address whether an employer may require medical documentation as a condition to using paid sick leave. 28

29 USAGE Employer may set a reasonable minimum usage increment of no less than two hours. Partial days are OK for exempt employees San Francisco Ordinance: One hour minimum increment allowed (larger minimum increment requirements may be permitted based upon circumstances. Oakland Municipal Code: Does not directly address the issue but may be interpreted to permit minimum usage increments of not more than one hour. 29

30 CALCULATING RATE OF PAY Pay no later than the payday for the next regular payroll period after the sick leave is taken. Paid sick days must be paid at the same wage as the employee normally earns during regular work hours The rate of pay must be the employee s hourly wage San Francisco the allowance to pay a sick hour at the equivalent of 2 x the S. F. minimum wage will have to acquiesce to the state requirement to pay at the employee s hourly rate Include bonuses or gratuities? Not addressed 30

31 CALCULATING RATE OF PAY (cont) If an employee is paid commission or piece rate, then divide total compensation for previous 90 calendar days by number of hours worked and pay this rate. Employee was paid a piece rate of $0.36 per sq ft for 16,500 sq ft during 400 hours of work in a 90-day period. He earned $5,940. His hourly rate for paid sick leave is $5, hours = $14.85 per hour. Employee is paid on commissions only. In a 90 day period, she worked 480 hours and earned $9,000. Her hourly rate for paid sick leave is $ hours = $18.75 per hour. 31

32 ITEMIZED WAGE STATEMENT Show available paid sick leave or PTO Alternatively, may give separate document showing available paid sick leave provide every payday along with paycheck 32

33 REVISED WAGE DISCLOSURE NOTICE Revised wage notice has information about paid sick leave Labor Commissioner has provided revised template of wage disclosure notice: Required as of 1/1/2015 for all non-exempt employees 33

34 REQUIRED POSTER Must post by January 1, 2015 Available at: 34

35 PENALTIES Employee can file claim with labor Commissioner for not providing paid sick days, or for retaliation Liability for not providing dollar value of sick days x 3, or $250 (whichever is greater) up to $4,000 Liability for other harm: Civil penalty up to $50/day up to $4,000 Labor Commissioner can recover costs of investigation - $50 per employee/per day 35

36 COMPLIANCE TIPS Determine which employer option the company will use regarding accruals and caps. Remember the three options. Review and, as necessary, revise existing paid sick leave or PTO policies and procedures to ensure compliance with the new Act Develop paid sick time policy that complies with the Act for any employees not covered under existing paid sick leave or PTO policies---pt employees, temp employees, seasonal employees Review any applicable CA municipal ordinances and make sure that company sick pay or PTO policy integrates with the new ACT. Where difference occur honor the rules that most benefits the employee 36

37 COMPLIANCE TIPS (cont) Review company s policies concerning anti-retaliation, attendance, conduct, and discipline policies to prevent retaliation against employees for using sick leaves protected under the Act. Make sure the company complies with the Act s notice, posting, and recordkeeping requirements and monitor the Division of Labor Standards Enforcement (DLSE) website ( for template notices and posters Determine how the company will meet posting requirements for remote workers. Review the Wage Theft Prevention Act Notice and update the Notice to reflect the Act s requirements, or use the template provided by the Labor Commissioner 37

38 COMPLIANCE TIPS (cont) Ensure that benefits, timekeeping, and payroll systems are ready to properly calculate, track, report accrued and unused paid sick leave. Be prepared for the record keeping requirements Ensure that itemized wage statements, or some other written notice, will be provided showing available sick hours. Train HR as well as supervisory, managerial, and payroll employees on AB 1522 s requirements. Monitor the DLSE website ( for regulations, FAQs) and other guidance information. 38

39 CALCULATING FISCAL IMPACT Bottom Line: No accurate method Example Manufacturing employee in CA = $427 per year (21 cents per hour) Existing data not based on same allotment as new law Factoring amount taken vs provided Cost of replacing the employee and lost productivity Administrative cost of tracking 39

40 CALCULATING FISCAL IMPACT Remember: There is a positive impact: Faster recovery from illness Improved morale Potential decrease in turnover Less spreading of communicative diseases Decrease in employer liability (wrongful terms) Decrease in presenteeism (workers showing up sick unable to perform at standard) 40

41 POTENTIAL MISUSE EXAMPLES Increase in use of paid sick time during holiday seasons Student workers or employees still in school taking paid sick time during finals Fridays and Mondays Intermittent Leave* 41

42 QUESTION -POTENTIAL MISUSE Can we require a doctor s note if an employee wants to use two or more consecutive days of paid sick leaveor wants to use a paid sick day before or after a paid holiday? 42

43 PAYROLL COMPLIANCE Do not expect that your payroll company (whoever it may be) is prepared for this If you choose to state the balance on the payroll, notify your payroll company in advance exactly what you will need. Electronic paychecks and EE-access attendance programs 43

44 QUESTIONS OTHER CONCERNS Should taking a day of paid sick leave disqualify an employee from receiving a perfect attendance bonus? Where can we get a sample policy? 44

45 Prognosis: BREAKING NEWS: AB304 Introduced 2/12/2015 Good chance that AB304 will pass and be signed into law as early as September Provisions would probably go into effect as of 1/1/2016 Stay tuned! 45

46 BREAKING NEWS: AB304 The Details Require ee to work for same employer for 30 or more days within previous 12 mos to qualify Allow accrual on a basis other than 1:30 if accrual is on regular basis and ee will have 24 hours of accrued sick leave available by 120 th calendar day of employment If unlimited sick leave is provided, can indicate unlimited on itemized wage statement 46

47 AB304 (continued) More Details If ee receives different hourly rate when accrued sick leave is taken, rate of pay would be calculated in same manner as regular pay for purposes of overtime Employer would not be required to reinstate accrued PTO to ee rehired within one year that was paid out at time of separation No additional paid sick required if amount of leave made available meets requirements Etc 47

48 THANK YOU! Thank you for participating in our webinar today. For questions or additional information on California s New Paid Sick Leave Law, please reach out to: Employers Group Helpline: Or directly to: Matt Bartosiak: mbartosiak@employersgroup.com 48