The California Division of Labor Standards Enforcement and the Office of the Labor Commissioner have introduced and passed a new law named the Healthy Workplaces/Healthy Families Act of 2014 (AB 1522). Specific for payroll purposes, they have enacted a portion of the act that requires employers in the state to provide Paid Sick Leave to Employees who meet the criteria.
We have compiled a list of the rules surrounding the new law, as well as instructions on how to properly set up the policy for tracking in OnPay.
While our information is accurate to the extent of our knowledge, please use the following websites to learn the laws for yourself:
- FAQ About California's New Paid Sick Leave Law (AB 1522)
- Healthy Workplace Healthy Family Act of 2014
- Although the new law took effect January 1, 2015, employees do not have the right to accrue and take sick leave under the law until July 1, 2015.
- Employees begin accruing sick leave on their first day of employment but are not eligible to take the sick leave unless they have worked in the state of California for at least 30 days as well as working for the employer for more than 90 days.
- The first 90 days of employment is considered a probationary period in which the employee cannot use their accrued sick leave.
- Employers are not required to allow their employees to start accruing sick leave until July 1, 2015, or their hire date, whichever is later.
- Once the probationary period ends, the employee is entitled to use (take) their time as long as they have accrued enough time and are using it for one of the stated purposes of the law.
- Reasons an employee can take sick days (hours):
- You can take paid leave for you or a family member for preventive care or care for an existing health condition or for specified purposes if you are a victim of domestic violence, sexual assault or stalking. Family members include the employee’s parent, child, spouse, registered domestic partner, grandparent, grandchild, and sibling. Preventive care would include annual physicals or flu shots. For partial days, your employer can require you to take at least two hours of leave, but otherwise, the determination of how much time is needed is left to the employee.
- All employees who work at least 30 days within a year in California, including part-time, per diem, and temporary employees are covered by the law. Here are a few exceptions:
- Employees covered by collective bargaining agreements with specified provisions are exempt, as are individuals employed by an air carrier as a flight deck or cabin crew member if they receive compensated time off at least equivalent to the requirements of the new law.
- Employees earn at least one hour of paid leave for every 30 hours worked.
- Employers can limit the amount of sick leave an employee takes to 24 hours per year.
- For purposes of the law, a year is from the first day they begin to accrue to the anniversary date of the policy.
- Employees may accrue more time than they can use in a year, and the employer must allow the employees to carry over at least 48 hours from year to year if they have accrued that much, but the employer is only required to let each employee use 24 hours each year.
- Employees have the right to decide how much sick leave they need to take at one time, up to the maximum the employer is required to provide of 24 hours. The employer can set a minimum of 2-hour requirement for each sick leave occurrence.
- Employees receive sick pay at their normal hourly rate. If the employee is commissioned, they receive sick pay based on a rate found by dividing the previous 90 days worth of pay by the number of hours they worked during those 90 days.
- Employers must post notices about sick leave laws in a conspicuous space at the workplace. Normally where all other labor law posters can be found.
- Employers must notify new hires of the sick leave law individually.
- Employers who have an existing sick, vacation, or PTO policy that meets or exceeds the requirements of the law do not have to change their policies. They simply must make it known to all of their employees that they have a plan in place that meets or exceeds the required criteria.
Easier to Understand...
Now that we have gone through the main rules of the new law, let's look at how they affect you and your employees. Basically, you are now required to provide everyone that works for you for more than 90 days, a paid sick leave policy. The policy, as defined by the state, says employees must accrue one hour for every 30 hours worked. You are only required to allow employees to use 24 hours of sick leave each year. You are also required to allow the employees to carry over unused hours to the next year, up to 48 hours. Even with this carryover rule, and the fact that they can accrue much more than they can use in a year, you still only must allow them to use 24 hours per year.
This can cause some confusion on the part of you and your employees. They see that they accrue more and more each pay period, but they could have already used the 24 hours you were required to give them that year.
It is also important to remember that you have the option to allow employees to use more than 24 hours per year. That is totally up to you to decide how many hours you will actually allow your employees to use above the mandated 24 hours. You as an employer can provide a more generous policy than the law states.
If you already provide a policy that provides the same amount of hours and accessibility as required by law, then you do not have to change or alter your policy to meet the new law. You simply must educate your employees about the law, and post the notice in a conspicuous place.
You as the employer can choose to allow the employees to accrue all 24 hours at once. That means that each year on their anniversary date, they receive 24 hours of sick time to use at their discretion throughout the year. This can save a lot of confusion as the most they could ever have at one time is the 24 hours, and they do not ever worry about carrying the hours over to the next year. You must do at least 24 hours in this scenario, and the employee gets to use the hours when they see fit even if they do not end up working enough hours to accrue that much time.
Here are the two options for setting up policies in OnPay:
The first option is for the hourly accrual. Again, you will basically set it up to accrue 0.0334 hours per hour worked, and you will have to keep up with how much sick they have used if you want to limit them to the 24 hours per year minimum.
To add a new policy: Choose the Company Settings Icon on the left-hand navigation menu > choose Payroll Accrual Policies from the sub-menu > then click the +Add to start a new policy. You will then set it up exactly like below:
Here is what the policy looks like once it is added to OnPay:
As you can see from the second image, you can choose the pay types that accumulate hours for the calculation. If you pay someone more than 40 hours in a pay period then it is going to accumulate on the number of hours that you pay them. It is important to remember that your employees pay stub will be rather confusing as it will appear that they have way more hours available to them than they can use. But, because of carryover and accrual rules, you cannot limit the number of hours they can accrue to 24 unless you offer an annual policy. They just have to be able to understand how many hours they have used, and how many they have left by subtracting what they have used from the 24 they have available each year.
The second option is an annual accrual. This is the easiest to set up, maintain, and explain to your employees. They will always get their 24 hours per year (or more if you decide to provide more), and each year they will get them again on their anniversary date.
To add a new policy: Choose the Company Settings Icon on the left had nave menu > choose Payroll Accrual Policies from the sub-menu > then click the +Add to start a new policy. You will then set it up exactly like below:
In this example, any unused hours expire on the anniversary date each year, and a fresh 24 hours are accrued. They then continue to accrue 24 hours per year. With an annual policy, you must put the anniversary 3 months in the future of the employee's hire date so that the system will give them 24 hours upon 3 months passing.
Here you can see that it is easy to understand how much an employee is going to receive, and the only thing the system has to keep up with is how much they have, and how much they use.
Once you have chosen an option and set up the policy, you should assign that policy to each employee with an anniversary. You will go to each employee profile and make your way to the other section. You then choose the Sick tab, choose the policy you created, and assign the anniversary date. If you have selected an hourly plan you will want to use the employee's hire date for the anniversary date. If you have selected an annualized policy you will want to set the employee's anniversary 3 months in the future to allow for a 90 day wait period.
Here is how to set up each employee:
Once you have set up your policy and assigned it to employees. You should follow the rest of the law and display the law poster for the employees to see. You can find the poster you should display here:
Also, do not forget to inform each new employee of the changes and their rights surrounding the new law. To make this easier for you, California has provided a form to have your new employees fill out. You can find it here:
If you have any questions about how to set up the sick policy in OnPay please contact us.