BILL ANALYSIS                                                                                                                                                                                                    ”



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          Date of Hearing:  April 22, 2015


                     ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT


                               Roger HernŠndez, Chair


          AB 304  
          Gonzalez - As Amended April 14, 2015


          SUBJECT:  Sick leave:  accrual and limitations


          SUMMARY:  Makes a number of changes to legislation enacted last  
          year related to paid sick days.  Specifically, this bill:  


          1)Provides that the definition of "employee" does not include  
            specified retired annuitants.


          2)Provides that the definition of "employee" does not include  
            employees covered under the federal Railroad Unemployment  
            Insurance Act.


          3)Specifies that the law applies to an employee who works in  
            California "for the same employer" for 30 or more days within  
            a year.


          4)Amends the law to provide that an employer is not required to  
            provide additional paid sick days if the employer has a paid  
            leave policy or paid time off policy, the employer makes  
            available an amount of leave that may be used for the same  
            purposes and under the same conditions of the existing paid  








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            sick days law, and the policy does either of the following:


             a)   Satisfies the accrual, carry over, and use requirements  
               of the law.


             b)   Provides no less than 24 hours or three days of paid  
               sick leave, or equivalent paid leave or paid time off, for  
               employee use at the beginning of each year of employment,  
               calendar year, or 12-month period.


          5)Provides that an employer is not required to reinstate accrued  
            paid time off to a rehired employee that was paid out at the  
            time of termination, resignation, or separation of employment.


          6)Provides that if an employer provides unlimited paid sick  
            leave or unlimited paid time off, the employer may satisfy a  
            specified written notice requirement of existing law by  
            indicating on the notice or the employee's itemized wage  
            statement that such leave is "unlimited."


          7)Delays application of provisions related to the inclusion of  
            the amount of paid sick leave available on itemized wage  
            statements or separate writings until January 21, 2016 for  
            employers in the broadcasting and motion picture industries.


          8)Specifies that if an employee receives different hourly rates  
            in the pay period when the accrued paid sick leave is taken,  
            then the rate of pay shall be calculated in the same manner as  
            the regular rate of pay for purposes of overtime.


          9)Makes other related changes.









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          EXISTING LAW provides that an employee who, on or after July 1,  
          2015, works in California for 30 or more days is entitled to  
          paid sick days for specified purposes, to be accrued at a rate  
          of not less than one hour for every 30 hours worked.


          FISCAL EFFECT:  Unknown


          COMMENTS:  AB 1522 (Gonzalez) of 2014 enacted the Health  
          Workplaces, Healthy Families Act of 2014 to provide paid sick  
          days to specified California employees effective July 1, 2015.   
          AB 1522 was landmark legislation that extended the right to paid  
          sick days to an estimated 6.5 million California workers.


          This bill makes a number of changes to the legislation passed  
          last year, most of which can be characterized as clarifying or  
          clean-up in nature, and several of which have been negotiated  
          with representatives of employers or various industries.  


          Key Provision of Existing Law at Issue in This Bill


          One proposed change contained in this bill has generated  
          significant controversy.


          As passed last year, the law enacted Labor Code Section 246 (d)  
          which reads as follows:


            (d) Accrued paid sick days shall carry over to the following  
            year of employment. However, an employer may limit an  
            employee's use of paid sick days to 24 hours or three days in  
            each year of employment. This section shall be satisfied and  
            no accrual or carry over is required if the full amount of  








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            leave is received at the beginning of each year, in accordance  
            with subdivision (e).


          In addition, Labor Code Section 246 (e) reads as follows:



            (e) An employer is not required to provide additional paid  
            sick days pursuant to this section if the employer has a paid  
            leave policy or paid time off policy, the employer makes  
            available an amount of leave that may be used for the same  
            purposes and under the same conditions as specified in this  
            section, and the policy does either of the following:


            (1) Satisfies the accrual, carry over, and use requirements of  
          this section.


            (2) Provides no less than 24 hours or three days of paid sick  
            leave, or equivalent paid leave or paid time off, for employee  
            use for each year of employment or calendar year or 12-month  
            basis.

          Differences of Interpretation and the Change Proposed in This  
          Bill


          The language cited above appears to have become the subject of  
          much debate among the stakeholders involved in the original  
          discussions around AB 1522.


          On the one hand, the author and supporters of AB 1522 contend  
          that the language in Section 246(e)(2) above requires the leave  
          to be provided at the beginning of the year, and allege that  
          this is how the language has been interpreted by the Labor  
          Commissioner.  Any other interpretation, they contend, would  








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          allow an employer to wait to provide the leave until the last  
          three days of the year, which was clearly not the intention of  
          AB 1522.  Moreover, they point to the language in Section 246(e)  
          that states such leave must be provided "under the same  
          conditions" to prohibit employers from ignoring the other  
          conditions outlined in the bill (including the accrual rate).





          The California Chamber of Commerce, on the other hand, argues  
          that the aforementioned language in Section 246(e)(2) was a  
          specifically-negotiated compromise to allow for employers who  
          otherwise provide for paid sick leave, but do so under a  
          different accrual method (such as by pay period) that therefore  
          would not satisfy the accrual requirements of AB 1522.  They  
          deny that this language was intended to require such leave to be  
          provided "up-front" at the beginning of the year, and deny that  
          the Labor Commissioner has interpreted the requirement in this  
          manner.


          This bill proposes to amend Section 246(e) to read as follows:



            (e) An employer is not required to provide additional paid  
            sick days pursuant to this section if the employer has a paid  
            leave policy or paid time off policy, the employer makes  
            available an amount of leave that may be used for the same  
            purposes and under the same conditions as specified in this  
            section, and the policy does either of the following:


            (1) Satisfies the accrual, carry over, and use requirements of  
          this section.










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            (2) Provides no less than 24 hours or three days of paid sick  
            leave, or equivalent paid leave or paid time off, for employee  
            use at the beginning of each year of employment, calendar  
            year, or 12-month period.


          


          ARGUMENTS IN SUPPORT


          According to the author, this bill aims to improve and ease  
          implementation of California's new paid sick leave law.  Last  
          year, AB 1522 was signed into law by Governor Jerry Brown -  
          giving more than 6.5 million workers the right to accrue no less  
          than three paid sick days a year.  However, the passage of such  
          a sweeping workplace benefit has spurred a robust public  
          discussion regarding the implementation of the law.  As such,  
          the author wishes to clarify a handful of the law's requirements  
          before the law goes into effect on July 1, 2015. 

          ARGUMENTS IN OPPOSITION


          A coalition of employers, including the California Chamber of  
          Commerce, state that while this bill purports to be a "clean-up"  
          bill, it in fact substantively amends the law to eliminate the  
          opportunity for an employer to provide a more beneficial,  
          accrual based paid sick leave or paid time off policy to their  
          employees.

          Specifically, they state the following:


            "Section (2) of 246(e) currently allows an employer to have a  
            written paid sick leave or paid time off policy wherein the  
            employee accrues no fewer than three days or 24 hours in a  
            year, by a method other than hours worked.  Interpreting this  








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            section otherwise would essentially render Section (1) of  
            246(e) meaningless.  Section 246 would not provide two options  
            for an employer policy if the intent and requirement were that  
            any employer policy had to match the specific accrual method  
            set forth in AB 1522 of one hour for every 30 hours worked.  


            Moreover, Section 246(e)(2) is not currently limited to "front  
            loading" policies, as such policies are separately recognized  
            in the bill under Section 246(d).  As set forth in Section  
            246(d), an employer does not have to accrue or carry over sick  
            leave if the employer provides three days or 24 hours of paid  
            sick leave at the beginning of each year in accordance with an  
            employer policy.  Section 246(d) references subdivision (e) to  
            acknowledge that an employer must have a policy for front  
            loading, not to limit Section 246(e)(2) to only a front  
            loading policy.  Nothing in Section 246(e)(2) requires that an  
            employer provide the three days or 24 hours at the beginning  
            of the year - it just requires that an employer provides an  
            employee with three days or 24 hours of paid time off or paid  
            leave within each year.  If the Legislature intended Section  
            246(e)(2) to only apply to front loading policies, it would  
            have explicitly stated so as it did in Section 246(d).


            [This bill] amends Section 246(e)(2) to completely eliminate  
            an employer's ability to have a paid time off or paid leave  
            policy that accrues paid sick leave in a different manner than  
            hours worked.  The amendments limit an employer's policy to  
            only a front loading policy, as referenced in section (d), or  
            a policy that accrues based upon hours worked.


            As recognized by the current language if Section 246(e)(2) in  
            AB 1522, many employers in California already offer more  
            generous paid time off or paid sick leave to their employees.   
            However, most employers allow employees to accrue this time  
            off according to pay period rather than hours worked as it is  
            easier to track and administer.  For example, an employer who  








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            provides 5 days of paid time off a year would simply break  
            down 40 hours over each biweekly pay period for accrual  
            purposes, which would be equivalent to 1.54 hours of accrued  
            time off each per pay period.  This type of policy, which is  
            more beneficial to an employee, would be deemed non-compliant  
            by [this bill].  


            Finally, there is no basis that the Labor Commissioner has  
            mandated such an interpretation of Section 246(e)(2).  As just  
            recently provided in the Labor Commissioner's webinar and  
            power point presentation regarding AB 1522, a paid time off  
            policy that provides no fewer than three days or 24 hours of  
            usage for the same purposes as outlined in AB 1522 will be  
            compliant. The Labor Commissioner does not specify that leave  
            must be provided at the beginning of the year in order to be  
            compliant, as [this bill] requires." 


          REGISTERED SUPPORT / OPPOSITION:




          Support


          California Railroad Industry




          Opposition


          African-American Farmers of California


          Agricultural Council of California








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          Air Conditioning Trade Association


          California Association for Health Services at Home


          California Association of Bed & Breakfast Inns


          California Bankers Association


          California Business Properties Association


          California Chamber of Commerce


          California Citrus Mutual 


          California Farm Bureau Federation


          California Fresh Fruit Association


          California Hotel and Lodging Association


          California League of Food Processors


          California Manufacturers and Technology Association


          California Restaurant Association








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          California Retailers Association


          California Travel Association


          Family Business Association


          Far West Equipment Dealers Association


          National Federation of Independent Business


          National Hmong American Farmers


          Nisei Farmers League


          Plumbing-Heating-Cooling Contractors Association of California


          Western Electrical Contractors Association 


          Western Growers Association


          Western Plant Health Association




          Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091









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