BILL ANALYSIS Ó Senate Appropriations Committee Fiscal Summary Senator Kevin de León, Chair AB 1522 (Gonzalez) - Employment: Paid Sick Leave Amended: June 15, 2014 Policy Vote: L&IR 3-1 Judiciary 5-2 Urgency: No Mandate: No Hearing Date: August 14, 2014 Consultant: Robert Ingenito SUSPENSE FILE. AS AMENDED. Bill Summary: AB 1522 would require employers to provide at least three paid sick days to employees who work 30 or more days in a calendar year. Fiscal Impact (as approved on August 14, 2014): The Department of Industrial Relations (DIR) indicates that it would incur first-year costs of $1.2 million (special funds) associated with training, rulemaking, investigation and enforcement of complaints. Ongoing costs of would be $1.1 million, related to ongoing investigation and enforcement of wage and retaliation claims. The Department of Justice would incur costs of $536,000 in 2014-15 and about $900,000 annually ongoing (General Fund), for investigation and prosecution of statutory violations, to the extent the bill leads to increased civil action. Increased compensation costs related to the In-Home Supportive Services (IHSS) Program. Increased IHSS costs are estimated to be about $14 million annually (General Fund). Background: Current law provides employees the opportunity to take both paid and unpaid leave from work without fear of discharge or discrimination for a number of specified purposes, including personal and family sick leave. Current law does not, however, generally require employers to provide paid sick leave. At present, only one county (San Francisco) has passed an AB 1522 (Gonzales) Page 1 ordinance requiring employers to provide paid sick leave for all employees, including temporary and part-time employees, who work within the county. The ordinance became effective on February 5, 2007. Proposed Law: Specifically, this bill would, among other things, do the following: Provide that on or after July 1, 2015, an employee who works for 30 or more days in a calendar year is entitled to paid sick days. 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 may accrue and be carried over to the following year; however, employers may limit their use to 24 hours or 3 days in each calendar year. Provide that "employer" includes any person employing another and includes the state, political subdivisions of the state, and municipalities. Provides that an "employee" does not include one who is (1) covered by a valid collective bargaining agreement that expressly provides for paid sick days or similar policy, as specified, or (2) in the construction industry covered by a valid collective bargaining agreement that was entered into before January 1, 2015 or waives the requirements of this bill, as specified. Provides that a public authority must comply with these requirements for individuals who perform in-home supportive services, except that these requirements may be satisfied by entering into a collective bargaining agreement that provides an incremental hourly wage adjustment in an amount sufficient to satisfy the bill's requirements. Require an employer, upon oral or written request of an employee, to provide paid sick days for the following purposes: (1) diagnosis, care or treatment of an existing health condition of, or preventive care for, an employee or the employee's family member, or (2) for an employee who is AB 1522 (Gonzales) Page 2 a victim of domestic violence, sexual assault, or stalking 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 requiring employees to find a replacement worker as a condition of using his/her paid sick days. Prohibit an employer from denying an employee the right to use sick days, discharging, threatening to discharge, demoting, suspending or in any manner discriminating 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 takes other specified adverse action within 30 days of specified protected activities by the employee. Require employers to provide written notice in specified languages and comply with posting requirements, as specified, or be subject to a civil fine for not compliance. Require employers to retain employee records related to used and accrued paid sick days for at least five years. Require employer to include in employee wage statements any paid sick leave accrued and used pursuant to this Act. AB 1522 (Gonzales) Page 3 Direct the Labor Commissioner to (1) coordinate implementation and enforcement of these requirements and to promulgate guidelines and regulations, (2) investigate alleged violations and order appropriate relief, including reinstatement, back pay, the payment of sick days unlawfully withheld, and additional administrative penalties, as specified, and (3) in addition to the Attorney General, bring a civil action against an employer in a court of competent jurisdiction to recover relief, as specified, including back pay, penalties, liquidated damages and attorney's fees and costs. Related Legislation: AB 400 (Ma) in 2011 was substantially similar to this bill except that it limited the use of paid sick days to 40 hours per year or five days (for small businesses) and 72 hours per year or nine days for other businesses. The bill was held in the Assembly Appropriations Committee. Staff Comments: As noted by the Legislative Analyst, beginning in the late 1980s, California appellate courts issued a series of opinions addressing the definition of a state-reimbursable mandate. The courts found that a mandate is created when the state requires local governments to provide a new or upgraded program to the public, or imposes a unique requirement on local governments that does not apply generally to residents and entities of the State. In County of Los Angeles v State of California (1987) and City of Sacramento v State of California (1990), the California Supreme Court ruled that state laws that extended worker compensation and unemployment insurance protections to local employees did not constitute reimbursable mandates. Specifically, the court found that local government employer obligations were comparable to other employers, and were not attributable to providing a new program to the public. Together, these cases form the basis of what is commonly referred to as the "law of general applicability." That is, if a statute imposes similar obligations on the private and public sector, the public sector's costs to comply with the requirement do not constitute a state-reimbursable mandate. In IHSS, the recipient is technically the employer and a provider can work for more than one recipient. It is unclear if a provider would get seven days of sick leave per provider and AB 1522 (Gonzales) Page 4 who the provider would contact regarding sick leave and how the county is notified. How this information would be tracked, records on sick leave balances maintained and compensation adjusted is also unclear. This bill proposes to address this, in part, by allowing a public authority to enter into a collective bargaining agreement that provides an hourly wage adjustment in an amount sufficient to satisfy the accrual requirement (paid sick leave at the rate of no less than one hour for every 30 hours worked), essentially money instead of sick leave. Author's amendments: Strike requirements for including accrued and used sick leave credit on employee paystubs, and allow employers the option of either including available sick leave credit on a paystub, or on a separate document that accompanies the employee's regular wage statements. Cap various administrative penalties at $4,000. Provide that an employer whose sick leave or paid time off policy allows for at least three days annually, regardless of whether it is on an upfront or accrual basis, will comply. Allow an employer to limit total accrual of paid sick leave to six days as long as three days are available for employee use annually. Make technical and clarifying changes.