Changes in California’s Paid Sick Leave Law

During this past legislative session, California has passed Senate Bill No. 616 (SB 616), amending the 2014 Healthy Workplaces, Healthy Families Act to establish a uniform statewide standard for Paid Sick Leave. This legislative move aims to address the diverse patchwork of Paid Sick Leave regulations that various local communities across the state have implemented over recent years. Effective January 1, 2024, this new law will impact nearly all employers with employees in California, except for railroad carrier employers. This gives businesses only a few months to review and, if necessary, adjust their Sick Leave policies to ensure compliance.

Key Changes in the New California Paid Sick Leave Law

SB 616 introduces several notable changes to the existing statewide Sick Leave regulations, including:

1. Increase in the minimum Paid Sick Leave for full-time employees from 24 hours (3 days) to 40 hours (5 days).
2. Requirement for both full-time and part-time employees to accrue a minimum of 1 hour of Paid Sick Leave for every 30 hours worked.
3. Employees can start using their accrued sick leave 90 days after the commencement of employment.
4. Employers cannot limit employees from using less than 40 hours per year of the accrued Paid Sick Leave.
5. The cap on accrued Paid Sick Leave hours increases from 40 hours (5 days) to 80 hours (10 days). If employees reach the maximum accrual of 80 hours and use some of their leave, they will continue accruing until they reach the maximum again.
6. Employers must allow at least 40 hours of unused, accrued Paid Sick Leave to carry over to the following year.
7. Employees become eligible for paid sick days if they work in California for the same employer for 30 or more days within a year from the start of their employment.
8. Employers are required to provide written notice to employees about their available Paid Sick Leave, including current balances on pay stubs.
9. Any local city ordinances with lower Paid Sick Leave minimums will be superseded by the new state standard.

Employers have three options for providing Paid Sick Leave in their policies: state-guided accrual calculation of 1/30, a lump sum, or a custom accrual calculation. Employers choosing the custom accrual calculation must meet specific standards, including providing 24 hours (3 days) of Paid Sick Leave by the 120th day of employment and an additional 16 hours by the 200th calendar day (for a total of 40 hours). The use of Sick Time may be limited to 40 hours (5 days) per calendar year, year of employment, or 12-month period.

The law also addresses how these changes apply to employees under collective bargaining agreements, outlines protections against retaliation, and provides guidance for businesses with alternative accrual methods.

Five Steps for California Companies to Prepare for the Paid Sick Leave Expansion

Given the ever-changing landscape of California labor law, businesses in the state should take proactive steps to ensure compliance with the new Paid Sick Leave regulations:

1. Carefully review and update current Sick Leave policies to align with California’s new statewide requirements.
2. Update the employee handbook and communicate these changes to employees before January 1, 2024.
3. Provide training to HR staff and specialists to ensure they understand the new requirements and can administer them effectively.
4. Ensure that payroll and recordkeeping systems are capable of accurately tracking and documenting accrued Sick Leave, as well as maintaining records of balances and usage for each employee.
5. Review the new law with your company’s payroll processor and seek guidance from HR and labor law experts as needed to ensure full compliance with SB 616.