California Expands Paid Sick Leave Requirements Effective January 1, 2024

On October 4, 2023, California Governor Gavin Newsom signed Senate Bill (SB) 616, which amends California’s Healthy Workplaces, Healthy Families Act (HWHFA) and expands paid sick leave requirements for employers in California. The new amendment, which takes effect on January 1, 2024, increases the minimum number of paid sick leave days employers must provide to employees, allows employees to use an increased number of paid sick leave days per year, extends certain protections of the law to employees covered by collective bargaining agreements, and provides for the partial preemption of local ordinances as to certain aspects of HWHFA.

1) Increased Paid Sick Leave Entitlement

Under the HWHFA, there are several alternative ways in which employers can provide employees with paid sick leave. SB 616 increases the amount of paid sick time employees can receive and use each year, from three days or 24 hours to five days or 40 hours.

The Accrual Methods

• Modified Accrual Requirements: Under existing law and SB 616, employers that opt for an “accrual” paid sick leave policy may choose to either: (A) provide employees with one hour of paid sick leave for every 30 hours worked, or (B) adopt an “alternative accrual” method that meets certain minimum standards. For the “alternate accrual” method, current law mandates that employees accrue at least 24 hours or three days of paid sick leave or paid time off by the 120th calendar day of employment, each calendar year, or in each 12-month period. SB 116 modifies the minimum accrual for the “alternate accrual” method, by requiring employees to accrue at least 24 hours or three days of paid sick leave or paid time off by the 120th calendar day of employment, each calendar year or in each 12-month period, and at least 40 hours or five days of paid sick leave or paid time off by the 200th calendar day of employment, each calendar year, or in each 12-month period.
• Increased Cap on Accrual: Under existing law, employers may cap an employee’s total sick leave accrual at 48 hours or six days at any one time. SB 616 increases the accrual cap to the greater of 80 hours or ten days at any one time.
• Increased Annual Usage Cap: Current law permits an employer to limit an employee’s use of paid sick leave to 24 hours or three days per year. SB 616 mandates that employees be permitted to use at least 40 hours or five days of paid sick time per year. 

The “Up Front” Method

The second option for providing paid sick leave is the “front loading” method, in which the employer provides employees with a minimum number of paid sick leave or paid time off hours at the beginning of each year of employment, calendar year, or 12-month period. SB 616 increases the front-loading requirement from at least three days or 24 hours of paid sick leave or paid time off to at least five days or 40 hours of paid sick leave or paid time off per year. Under the “up front” method, no accrual or carry over of the sick leave is required because the full amount of leave is received at the beginning of each year. For initial hires, the employer is still permitted to require the employee to wait until the 90th day of employment to begin being entitled to use the sick leave or time off.

Employees Covered by Collected Bargaining Agreements

Under existing law, California’s paid sick leave requirements do not apply to employees who are covered by a valid collective bargaining agreement (CBA), if the CBA meets certain conditions. In particular, the CBA must (a) expressly provide for the employees’ wages, hours of work and working conditions; (b) expressly provide for paid sick days, paid leave or paid time off; (c) require final and binding arbitration of disputes concerning paid leave; (d) provide premium wage rates for all overtime hours worked; and (e) establish a regular hourly rate of pay of at least 30 percent more than the state minimum wage. SB 616 limits the CBA exclusion in order to extend certain of the HWHFA’s provisions to employees covered by CBAs:

• To be subject to the exclusion, the CBA must permit employees to use paid leave for the purposes of (i) diagnosis, care or treatment of an existing health condition of, or preventative care for, an employee; (ii) diagnosis, care or treatment of an existing health condition of, or preventative care for, an employee’s family member; and (iii) to obtain treatment related to the employee being a victim of domestic violence, sexual assault, or stalking.
• Employers cannot condition the use of paid sick leave on the employee searching for or finding a replacement worker to cover their absence.
• Employers cannot deny employees the right to use accrued sick days or retaliate against employees for using accrued sick days, exercising or attempting to exercise their rights under HWHFA, or complaining about violations of the statute.
• There is a rebuttable presumption of unlawful retaliation if an employer denies an employee the right to use accrued sick days, or otherwise takes adverse action against them, within 30 days of: (a) the employee filing a complaint with the Labor Commissioner alleging violations of HWHFA (b) cooperating with an investigation or prosecution of an alleged violation; or (c) opposing a policy, practice or act that is prohibited by the article.

Partial Preemption of Local Ordinances

SB 616 provides that certain provisions of HWHFA will preempt any local ordinance to the contrary:

• Labor Code section 246(g): Employers are not required to compensate employees for accrued, unused paid sick days upon separation from employment.
• Labor Code section 246(h): Employers may advance paid sick days to an employee at the employer’s discretion and with proper documentation.
• Labor Code section 246(i): Employees must provide employees with written notice setting forth the amount of paid sick leave or paid time off available for use on either the employee’s wage statement or in a separate writing provided on the designated pay date with the employee’s payment of wages. If an employer provides unlimited paid sick leave or unlimited paid time off, the employer may satisfy this requirement by stating “unlimited” on the wage statement or notice.
• Labor Code section 246(l): The rate of pay used to pay employees for paid sick leave must be calculated using the methods set forth in subsection (l).
• Labor Code section 246(m): If the need for paid sick leave is foreseeable, the employee must provide reasonable advance notification. If the need for paid sick leave is unforeseeable, the employee must provide notice of the need for the leave as soon as practicable.
• Labor Code section 246(n): Employers must pay for sick leave by no later than the payday for the next regular payroll period after the sick leave was taken.

Employers should review and revise their current paid sick leave or paid time off policies to comply with the amendment’s requirements. In doing so, employers should update employee handbooks and posters to reflect any modifications and ensure that employees are notified in writing of any changes. Employers should also provide new employees with a Labor Code section 2810.5 “Notice to Employee” that reflects any updated sick leave entitlements. In addition, employers should notify their payroll provider of any changes in their sick leave policies sufficiently in advance of January 1, 2024, so that appropriate modifications can be made to ensure that employee wage statements accurately reflect any updated employee entitlements.