BILL ANALYSIS Ó
AB 304
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, 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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