BILL ANALYSIS Senate Committee on Labor and Industrial Relations Carole Migden, Chair Date of Hearing: June 25, 2008 2007-2008 Regular Session Consultant: Alma Perez Fiscal:Yes Urgency: No Bill No: AB 2716 Author: Ma As Amended: June 19, 2008 SUBJECT Employment: paid sick days. KEY ISSUE Should the legislature require employers to provide paid sick days to their employees? PURPOSE To require that employers provide paid sick days to employees who work for seven or more days in a calendar year. ANALYSIS Existing law provides for various forms of unpaid and (in some circumstances) paid leave for employees. Existing law authorizes, but does not require, employers to provide their employees with paid sick leave. Any employer that chooses to provide sick leave must allow an employee to use accrued and available sick leave, in an amount not less than the sick leave that would be accrued during six months at the employee's then current rate of entitlement. Sick leave can be used by the employee for any of the following reasons: Being physically or mentally unable to work due to illness, injury, or a medical condition of the employee. Obtaining professional diagnosis of treatment for a medical condition of the employee. Other medical reasons of the employee, such as pregnancy or obtaining a physical examination. To attend to an illness of a child, parent, spouse, or domestic partner of the employee. Sick leave does not accrue, from one year to the next, nor does it vest. In addition, sick leave does not extend the maximum period of leave to which an employee is entitled under other leaves, such as the federal Family and Medical Leave Act, regardless of whether sick leave is received during that leave. Existing law prohibits employers from denying an employee the right to use sick leave or discharge, threaten to discharge, demote, suspend, or in any manner discriminate against an employee for using, or attempting to use, sick leave to attend to an illness of a child, parent, spouse, or domestic partner of the employee. Violation of this right entitles employees to reinstatement and actual damages or one day's pay, whichever is greater, and to appropriate equitable relief. The employee can either file a complaint with the Labor Commissioner, or bring a civil action for remedies. Currently , San Francisco County is the only county that has passed an ordinance requiring employers to provide paid sick leave for all employees, including temporary and part-time employees, who work within the county. The San Francisco Paid Sick Leave Ordinance became effective on February 5, 2007. This Bill would create the Healthy Families, Healthy Workplaces Act of 2008, which would require employers to provide paid sick days to employees who work seven or more days in a calendar year. Specifically, this bill would: Make several findings and declarations related to employees and the need for paid sick days. Provide that an employee who works in California for seven or more days in a calendar year is entitled to paid sick days, compensated at the same wage the employee normally earns during regular work hours. Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 2 Senate Committee on Labor and Industrial Relations Specify that paid sick days accrue at a rate of no less than one hour for every 30 hours worked, and may be used beginning on the 90th calendar day of employment. Provide that paid sick days shall be carried over to the following calendar year, but an employer can limit their use as follows: o A small business employer (defined as having ten or fewer employees) may limit an employee's use to 40 hours or five days in each calendar year. o All other employers may limit an employee's use to 72 hours or nine days in each calendar year. Require an employer, upon oral or written request of an employee, to provide paid sick days for the following purposes: o Diagnosis, care or treatment of an existing health condition of, or preventive care for, an employee or the employee's family member; or o For an employee who is a victim of domestic violence or sexual assault, as specified. Define "family member" to include a child (as specified), a parent (as specified), a spouse, a registered domestic partner, a grandparent, a grandchild, or a sibling. Not require an employer to provide compensation to an employee for accrued, unused paid sick days upon termination, resignation, retirement, or other separation from employment, except if an employee is rehired by the same employer within one year, any previously accrued, unused paid sick days shall be reinstated. Allow an employer to lend paid sick days to an employee in advance of accrual, at the employer's discretion and with proper documentation. Prohibit an employer from denying an employee the right to use sick days, discharging, threatening to discharge, demoting, suspending or in any manner discriminating Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 3 Senate Committee on Labor and Industrial Relations against an employee for using sick days, as specified. Establish a rebuttable presumption of unlawful retaliation if an employer denies an employee the right to use sick days or in any manner discriminates against an employee within 90 days of, among other things, the employee filing a complaint with the Labor Commissioner alleging violations of these provisions. Require employers to provide written notice and posting requirements, as specified, or be subject to a civil fine for not compliance. Require employers to keep certain records related to paid sick days for five years. Authorize the Labor Commissioner to: o Coordinate implementation and enforcement of these requirements and to promulgate guidelines and regulations; o Investigate alleged violations and order appropriate relief, including reinstatement, back pay, the payment of sick days unlawfully withheld, and additional administrative penalties, as specified. o In addition to the Attorney General, a person aggrieved, or an entity a member of which is aggrieved, to bring a civil action in a court of competent jurisdiction to recover relief, as specified, including back pay, penalties, liquidated damages and attorney's fees and costs. Specify that this bill establishes minimum requirements and does not preempt, limit, or otherwise affect the applicability of any other law or similar requirement that provides greater accrual or use of sick days, or that extends other protections to employees. Provide that these requirements do not apply to an employee covered by a valid collective bargaining agreement that, among other things, expressly provides for paid sick days or a paid leave or paid time off policy, and final and binding arbitration of disputes concerning the application Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 4 Senate Committee on Labor and Industrial Relations of these provisions. Provide that these requirements do not apply to employees in the construction industry covered by a valid collective bargaining agreement that meets certain conditions but does not necessarily provide for paid sick days. Make other conforming and related changes to existing law. COMMENTS 1. Need for this bill? According to data collected by the U.S. Bureau of Labor Statistics, more than 59 million workers throughout the country have no sick days leave, and even more - nearly 86 million - do not have paid sick leave just to care for sick children. A recent study by the Women's Policy Research Institute, Valuing Good Health in California: The Costs and Benefits of the Healthy Families, Healthy Workplaces Act of 2008 by Vicki Lovell, found that employees with paid sick days are less likely to leave their jobs. In addition, the study found that by allowing workers to receive paid sick days, the amount which employers could save annually could reach up to $1 billion. These costs savings are primarily attributed to the reduction of worker turnover. In California, San Francisco County is the only county that has passed an ordinance requiring employers to provide paid sick leave for all employees who work within the county. According to the San Francisco Office of Labor Standards Enforcement, passage of the law has resulted in a small amount of complaints from employees of employer non-compliance. In addition, to date, a state Senate district office in San Francisco has not received any complaints of employer non-compliance from constituents. This bill is similar to the San Francisco ordinance and would create the Healthy Families, Healthy Workplaces Act of 2008 to require all California employers to provide paid sick days to employees who work seven or more days in a calendar year, as specified. Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 5 Senate Committee on Labor and Industrial Relations 2. Background on San Francisco's Paid Sick Leave: In 2006, San Francisco 61 percent of voters approved Proposition F, the first law in the nation that required workers with the ability to earn and use paid sick days. The San Francisco Paid Sick Leave Ordinance (Chapter 12W) became effective on February 5, 2007. The measure was implemented and is enforced by the San Francisco Office of Labor Standards Enforcement (OLSE). Pursuant to this ordinance, all employers must provide paid sick leave to each employee (including temporary and part-time employees) who performs work in San Francisco. For every 30 hours worked, an employee shall accrue one hour of paid sick leave. An employee's accrued paid sick leave carries over from year to year, subject to the applicable cap, but does not get paid out at termination. Employees are entitled to paid sick leave for their own illness or to provide care for a sick child, parent, sibling, grandparent, grandchild, spouse, registered domestic partner or other designated person. Employers are required to post a notice published by OLSE advising employees of this benefit, as specified. Under the ordinance, employees who assert their rights to receive paid sick leave are protected from retaliation. The City can investigate possible violations, shall have access to employer records, and can enforce the paid sick leave requirements by ordering reinstatement of employees, payment of paid sick leave unlawfully withheld, and penalties. 3. Update on the implementation of the San Francisco's Paid Sick Leave Ordinance: OLSE has reported that there is no hard data as to the utilization of sick leave under the San Francisco law, or of its impact on employers or employees. However, in terms of enforcement, OLSE reports that it had approximately 35 formal complaints the first year of the law and sent an additional 35 cautionary letters to employers about whom anonymous workers had contacted the office. In addition, OLSE undertook a Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 6 Senate Committee on Labor and Industrial Relations three-month public rulemaking process in early 2007 to clarify outstanding issues regarding the law and has made over 20 public presentations to business and merchant associations. 4. Similar Efforts at the National, State and Federal Levels: Paid sick days legislation has been proposed at the federal, state and local levels. At least fourteen states have proposed legislation for paid sick days over the last two years. For several years, a federal Healthy Families Act has been proposed that would ensure that all employees working 30 hours or more per week have seven paid sick days a year. The Healthy Families Act, (S. 910, authored by Senator Edward Kennedy, and H.R. 1542, authored by Representative Rosa DeLauro) seeks to ensure that Americans can address their own health needs and the health needs of their families. S.910 (Kennedy) was last referred to the Senate Committees on Health, Education, Labor, and Pensions. H.R. 1542 (DeLauro), was last referred to the Subcommittees on Health, Employment, Labor and Pensions. In addition, on March 4, 2008, the Washington, D.C. Council passed the Accrued Sick and Safe Leave Act (ASSLA) mandating that employers offer paid sick leave to all employees in the District. Although the D.C. council has passed the ASSLA, the measure will not become law until 30 days after the Mayor signs the bill, unless Congress intervenes. 5. Proponent Arguments : According to the author, 6 million working Californians (40 percent of all workers in California) do not have any paid sick days through their employer. The author believes the lack of paid days is a public health concern that harms children and families. Proponents argue that many hardworking Californians are forced to choose between losing a day's wages, or their job, when they or their family members become sick, a decision that no worker should be forced to make. Proponents of the measure believe low-wage workers are most disproportionately affected by the lack of paid sick days. According to proponents, research by the Urban Institute Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 7 Senate Committee on Labor and Industrial Relations (Getting Time Off: Access to Leave Among Working Parents by Katherine Ross Phillips 2004) shows that nationally, among working parents with income below 200% of the federal poverty line, 41% have no paid leave of any kind (no paid sick leave, paid vacation, or personal days). Only 22% of food service and hotel workers have any paid sick leave, and workers in child care centers and nursing homes also disproportionately lack this benefit. Proponents argue that the majority of workers without access to paid sick days work most closely with the public, a fact that undoubtedly has an effect on public health. Proponents argue that there will be a tremendous public health savings if all workers are able to earn and use paid sick days. They also argue that workers will be able to take time off before an illness affects them or a family member too severely keeping them from being out of work longer. Proponents believe this bill is a good investment in the state's workforce. In addition, the author argues that this bill is modeled after a 2006 San Francisco ordinance that was passed overwhelmingly by voters. The San Francisco law has been in effect for over a year and, according to media reports, employers feel business has proceeded as usual and the law has not been overly burdensome. 6. Opponent Arguments : According to opponents, this bill would unreasonably expand employer costs and liability for new mandated paid sick leave benefits covering all employees. Opponents argue that many California employers provide paid sick leave and/or paid vacation time even though current law does not require it, however, unlike vacation days, sick leave does not accrue nor vest and any unused sick leave may be forfeited at the end of a designated period. This bill would change this process by requiring unused paid sick time to carry over from year to year. Opponents believe this would become a major paperwork burden for companies and could increase legal and financial liabilities. Opponents argue that in order to prevent workplace disruption and abuse the employees should be required to give reasonable Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 8 Senate Committee on Labor and Industrial Relations notice of absence and provide verification that the use of paid sick days is lawful. In addition, opponents argue that this bill contains broad mandates that apply regardless of the impact on the business or other employees who may be needed to take on additional job duties to cover for the absent employee. Opponents believe that employers should be allowed to cap both the use and accrual of paid sick days, as long as the accrual cap equals or exceeds five days for small business and nine days for larger businesses. In addition, opponents argue that the application of paid sick days to on-call relief workers is a major issue for nonprofit health and human services agencies, especially at 24/7 facilities with mandatory minimum staffing levels. In conclusion, opponents argue that the ever-increasing burden of costly mandates on employers can cumulatively result in lower wages, reducing available health insurance, limiting training programs and in the worst-case scenario- job loss or reduced work hours. Opponents believe that in an already troubled economy, California should be seeking ways to stimulate job growth and avoid forcing costly mandates on employers. SUPPORT 9 to 5 National Association of Working Women AFGE Local 2003 Amalgamated Transit Union American Civil Liberties Union of Northern California American Civil Liberties Union of Southern California American Federation of State, County and Municipal Employees, AFL-CIO Asia Law Alliance Asian Women's Shelter Association of Community Organizations for Reform Now California Alliance for Retired Americans California Applicants' Attorneys Association California Association of Nonprofits California Child Care Resource & Referral Network California Child Development CORPS California Coalition Against Sexual Assault California Coalition for Civil Rights Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 9 Senate Committee on Labor and Industrial Relations California Commission on the Status of Women California Conference of Machinists California Federation of Teachers California Labor Federation, AFL-CIO California NOW California Nurses Association/National Nurses Organizing Committee California Pan-Ethnic Health Network California Partnership California Partnership to End Domestic Violence California Rural Legal Assistance Foundation California School Employees Association, AFL-CIO California Teamsters Public Affairs Council California Women Lawyers California Women's Law Center Center for WorkLife Law Communications Workers of America Disability Rights Legal Center Engineers & Scientists of California, Local 20 Equal Right Advocates Family Caregiver Alliance Family Violence Prevention Fund Filipinos for Affirmative Action Health Officers Association of California IFPTE Local 21 Int'l Brotherhood of Electrical Workers Local No. 595 International Longshore and Warehouse Union JERICHO Labor Project for Working Families Lambda Letters Project Legal Aid Society Los Angeles County Democratic Party Northern California District Council of the International Longshore and Warehouse Union Parent Voices Professional Firefighters Association Sacramento Central Labor Council, AFL-CIO San Francisco Labor Council San Mateo County Central Labor Council Service Employees International Union Southern California HIV Advocacy Coalition State Building and Construction Trades Council, AFL-CIO Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 10 Senate Committee on Labor and Industrial Relations Survivors in Action UNITE HERE! United Auto Workers Local 2865 United Domestic Workers of America United Food and Commercial Workers Union, Western States Council United Transportation Union Women's Foundation of California OPPOSITION 2 G Roses LLC A to Z Wholesale Floral Supply, Santa Ana, Calif. AG-Seeds Unlimited Alpha Poultry and Livestock Equipment, Inc. Altman Specialty Plants, Inc. Arlington Transload Services LLC Associated General Contractors of California Association of California Healthcare Districts Association of California Water Agencies B & H Flowers, Inc. B.A.P. Nursery, Inc. Baglietto Seeds Best Agri-Marketing, Inc. Biotech Associates Ltd. Blooms & Bears Florist, Irvine, Calif. Bornt & Sons, Inc. Butte County Rice Growers Association Cal/West Seeds California Advocates, Inc. California Apartment Association California Association for Health Services at Home California Association of Collectors California Association of Joint Powers Authorities California Association of Public Authorities for In-Home Supportive Services (CAPA) California Association of Sheet Metal and Air Conditioning Contractors' National Association California Attractions and Parks Association California Automotive Business Coalition California Bankers Association California Beer and Beverage Distributors Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 11 Senate Committee on Labor and Industrial Relations California Chamber of Commerce California Cleaners Association California Construction & Industrial Materials Association California Employment Law Council California Family Foods California Farm Bureau Federation California Fence Contractors' Association California Framing contractors Association California Grocers Association California Hispanic Chambers of Commerce California Hospital Association California Hotel & Lodging Association California Independent Grocers Association California League of Food Processors California Lodging Industry Association California Manufacturers and Technology Association California New Car Dealers Association California Newspaper Publishers Association California Restaurant Association California Retailers Association California Small Business Association California Special Districts Association California State Association of Counties California State Department of Finance California Trucking Association Canall Farms, Maxwell, Calif. City of Costa Mesa Colusa Rice Concrete Contractors Association, Inc. DeBruyn International, Inc. DePue Warehouse Company Distributors Processing, Inc. Porterville Economy Lumber Company, Campbell, Calif. Engineering Contractors' Association Ever-Bloom, Inc., Carpinteria Fairfax Lumber & Hardware Far West Equipment Dealers Association Flasher/Barricade Association Foster Lumber Yards, Inc. Vallejo Francis Biddle International, Inc. Fresno County Farm Bureau Glenn Growers, Princeton Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 12 Senate Committee on Labor and Industrial Relations Gringo Ventures LLC (dba Dos Gringos), Vista H & H Engineering Construction, Inc., Stockton, Calif. Harris Moran Seed Company Hart Floral, Modesto, Calif. IGM Integrated Grain & Milling Independent Maintenance Contractors Association Independent Waste Oil Collectors and Transporters Integrated Coating and Seed Technology, INCOTEC, Salinas Interwest Commodities LLC Irrigation Solutions, Inc. Irvine Chamber of Commerce J.S. West & Company, Modesto, Calif. Jasmine Creek Florist Keithly-Williams Seeds, Inc., Holtville Keller Lumber Sales, Inc., Redding, Calif. Kohara Nursery, Inc. L.C. Dennis Company, Inc., Maxwell, Calif. League of California Cities Long Beach Area Chamber of Commerce Los Angeles Area Chamber of Commerce Manhattan Beach Chamber of Commerce's Legislative Advocacy Council Marin Builders' Association Mary Wadsworth, Corcoran Moark, LLC, Norco National Federation of Independent Business Nutri-Systems NuWest NuWest Milling, Hughson, Calif. Ocean Breeze International Pacific Association of Building Service Contractors Penny-Newman Grain Company Peter M. Fukumae, CPA R.A. Davis Commodities, LLC Red Top Rice Growers Reel Lumber, Anaheim Regional Council of Rural Counties Relles Florist River Garden Faros Co., Knights Landing Robert Mann Packaging, Inc. Gilroy Rote Greenhouses, Inc. Rudvalis Orchids Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 13 Senate Committee on Labor and Industrial Relations S&W Seed Company Screw Conveyor Pacific Corporation Seed Dynamics, Inc. Salinas Sequoia Orchids LLD Skyline Flowers Growers Small Business California Smith-Kandal Insurance and Real Estate Agency South Bay Association of Chambers of Commerce Southwest California Legislative Council Strain Orchards, LP Strain Ranches, Inc. Thomas Products LLC Thompson Rose, Co. San Marcos, Calif. Truckee-Tahoe Lumber Company Unity Forest Products USAA Voortman's Egg Ranch Western Electrical Contractors Association Western Growers Western Milling Yuba City Florist, Inc. Zacky Farms, LLC * * * Hearing Date: June 25, 2008 AB 2716 Consultant: Alma Perez Page 14 Senate Committee on Labor and Industrial Relations