BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 304 Hearing Date: July 8,
2015
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|Author: |Gonzalez |
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|Version: |June 22, 2015 |
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|Urgency: |Yes |Fiscal: |Yes |
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|Consultant:|Alma Perez-Schwab |
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Subject: Sick leave: accrual and limitations.
KEY ISSUE
Should the Legislature amend the paid sick leave law enacted
last year, which requires employers to provide specified
employees with up to three days per year of leave, in order to
address some stakeholder concerns and ensure proper
implementation?
ANALYSIS
Under the existing Healthy Workplaces, Healthy Families Act of
2014 , starting on July 1, 2015, an employee who works in
California for 30 or more days within a year from the
commencement of employment is entitled to paid sick days at the
rate of not less than one hour per every 30 hours worked.
Among other things, the Act (Labor Code §245-249):
1. Authorizes the use of accrued paid sick days beginning
on the 90th day of employment.
2. Allows employers to limit the use of paid sick days to
24 hours or three days per year.
3. Upon the oral or written request of an employee,
requires an employer to provide paid sick days for:
a. Diagnosis, care, or treatment of an existing
health condition of, or preventive care for, the
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employee or the employee's family member (defined as a
child, parent, spouse, registered domestic partner,
grandparent, grandchild and sibling).
b. For specified purposes, as defined, for an
employee who is a victim of domestic violence, sexual
assault, or stalking.
4. Prohibits an employer from denying an employee the right
to use accrued sick days, discharge, threaten to discharge,
demote, suspend, or in any manner discriminate against an
employee for using accrued sick days, attempting to
exercise the right to use accrued sick days, filing a
complaint with the department or alleging a violation of
this article, cooperating in an investigation or
prosecution of an alleged violation of this article, or
opposing any policy or practice or act that is prohibited
by this article.
This Bill would make a number of changes to the Healthy
Workplaces, Healthy Families Act enacted last year.
Specifically, this bill:
1) Provides that the definition of "employee" does not
include specified retired annuitants.
2) Specifies that an "employee in the construction
industry" means an employee performing work - deleting the
reference to "onsite work" in the current provisions of the
law.
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) Provides that an employer may use a different accrual
method, other than providing one hour per every 30 hours
worked, provided that the accrual is on a regular basis so
that an employee has no less than 24 hours of accrued sick
leave or paid time off by the 120th calendar day of
employment or each calendar year, or in each 12-month
period.
5) Provides that an employer may satisfy the accrual
requirements of this section by providing not less than 24
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hours or three days of paid sick leave that is available to
the employee to use by the completion of his or her 120th
calendar day of employment.
6) Amends the law to specify 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 (beginning July 1, 2015) an
amount of leave that may be used for the same purposes and
under the same conditions, and the policy satisfies one of
the following options:
a) Satisfies the accrual, carry over, and use
requirements of the law.
b) Provided paid sick leave or paid time off to a class
of employees before January 1, 2015, pursuant to a sick
leave policy that used an accrual method different than
providing one hour per every 30 hours worked, provided
that the accrual is on a regular basis so that an
employee, including an employee hired into that class
after January 1, 2015, has no less than one day or eight
hours of accrued leave within three months, and the
employee was eligible to earn at least three days or 24
hours within nine months. If an employer modifies the
accrual method used in the policy it had in place prior
to January 1, 2015, the employer shall comply with any
accrual method set forth in existing law or provide the
full amount of leave at the beginning of the year. This
bill shall not prohibit the employer from increasing the
accrual amount or rate.
c) Provides that specified sick leave or annual leave
benefits provided to specified state employees or
officers by statute or the provisions of a memorandum of
understanding meet the requirements of the paid sick
day's law.
7) 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.
8) Provides that if an employer provides unlimited paid
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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."
9) 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.
10) Provides that an employer shall calculate paid sick
leave using any of the following calculations:
a) Paid sick time for nonexempt employees shall be
calculated in the same manner as the regular rate of pay
for the workweek in which the employee uses paid sick
time, whether or not the employee actually works overtime
in that workweek.
b) Paid sick time for nonexempt employees shall be
calculated by dividing the employee's total wages, not
including overtime premium pay, by the employee's total
hours worked in the full pay periods of the prior 90 days
of employment.
c) Paid sick time for exempt employees shall be
calculated in the same manner as the employer calculates
wages for other forms of paid leave time.
11) Provides that an employer is not obligated to inquire
into or record the purpose for which an employee uses paid
leave or paid time off.
12) Provides that the provisions of this bill are severable,
as specified.
13) Contains an urgency clause.
COMMENTS
1. Need for this bill?
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AB 1522 (Gonzalez), Chapter 317, Statutes 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. 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 in order
to ease implementation of California's new paid sick leave
law.
This bill would amend the Act in order to provide
clarification regarding which workers are covered, how the
paid time off is accrued, and protections for employers that
already provide paid sick leave. Previous versions of the bill
were opposed by various employer organizations, however, the
author and stakeholders were able to reach agreement on the
language before us which has addressed most of the employer
concerns. In a letter dated June 19, 2015, the California
Chamber of Commerce and a coalition of employer organizations
removed their opposition to the bill.
2. Summary of changes to the Healthy Workplaces, Healthy Families
Act of 2014:
Below is a summary of the changes to the paid sick law that
are proposed with this bill:
Conforms to State Law Governing CalPERS Retired Annuitants:
Under the Government Code, CalPERS retired annuitants are not
allowed to receive any form of compensation in addition to
their pay as it could affect their status under CalPERS. By
exempting retired annuitants from the provisions of AB 1522,
retired persons will be able to return to work while still
receiving their pension annuity.
Flexibility for Existing Paid Sick Leave Plans: Prior to the
signing of AB 1522, some employers were already engaged in the
practice of providing paid leave or paid time off. This bill
will clarify that employers are not required to provide
additional paid sick days if the employer had a policy prior
to January 1, 2015 that meets certain conditions, as
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specified.
Alternative Accrual for Non-Hourly Payroll: The payroll
systems for many employers do not track their employees on an
hourly basis. This bill will allow employers to comply with
state law if they accrue or front-load their sick leave
policies so employees receive three paid sick days by the
120th day of the year.
Labor-Management Consensus in Specific Industries: The motion
picture and broadcasting industry commonly uses different
third party payroll companies on each production. This bill
will extend the start date for written notice requirements to
January 21, 2016 as agreed to by both employer and labor
representatives in the industry.
Flexibility for Calculating Sick Pay: Nonexempt employees
often perform work at varying rates of pay, which can make it
difficult to calculate the rates at which sick leave is paid
to employees. This bill will allow employers to choose between
the methodology required under AB 1522 as well as the "regular
rate of pay" that is more familiar to many employers.
3. Remaining Concerns:
Committee staff has received information regarding some
unresolved concerns with the provisions of the paid sick days
law and its implementation. Specifically, stakeholders are
seeking clarification in the following areas:
Calculating Paid Sick Leave for Employees Working on
Commission: Concerns have been raised regarding the
calculation of wages to be paid for an employee working on
commission that takes their accrued paid sick days.
The bill provides that an employer shall calculate paid sick
leave using any of the following:
a) For nonexempt employees:
i) In the same manner as the regular rate of pay
for the workweek in which the employee uses paid sick
time, whether or not he/she works overtime in that
week.
ii) By dividing the employee's total wages, not
including overtime premium pay, by the employee's
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total hours worked in the full pay periods of the
prior 90 days.
b) Paid sick time for exempt employees (exempt as an
administrative, executive, or professional employee under
a wage order of the Industrial Welfare Commission) shall
be calculated in the same manner as the employer
calculates wages for other forms of paid leave time.
The concern is that an outside sales person that essentially
sets their own hours and is highly compensated could 'game'
the system by planning when to request the paid sick days in
order to get a higher rate by timing the receipt of their
income. Staff was given the example of property and casualty
insurance agents and brokers who are paid on commission and
have both renewal income as well as income based on new sales
closed during the year. As an example, they offer the
following scenario: an employee that earns $300,000 annually
but takes a smaller monthly draw, say $8,000 per month, but
toward the end of the year draws down the remainder of the
income owed would be able to game the system because the
balloon payments toward the end of the year will allow that
person (for the next 90 days) to request sick pay at a much
higher rate than if the sick pay was determined based on the
income paid over the entire 12 months.
This is a similar concern for employees who earn bonuses.
Stakeholders would like the provisions to align to last year's
regular rate of pay concept which stated, "If the employee in
the 90 days of employment before taking accrued sick leave had
different hourly pay rates, was paid by commission or piece
rate, or was a nonexempt salaried employee, then the rate of
pay shall be calculated by dividing the employee's total
wages, not including overtime premium pay, by the employee's
total hours worked in the full pay periods of the prior 90
days of employment."
Continuous 90-day employment: Concerns have been raised by the
City and County of San Francisco regarding an individual that
works for an employer for part of the year, leaves that job
and later in the year returns to work for the same employer.
The concern lies in the ability of that employee to regain
access to any balance paid sick days if they had such access
at the time of separation. Specifically, the concern is that
an employee might work for 30 days, then return 8 months later
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and the employer would have to stitch together the previous
employment with the new employment to figure out when 90 days
of employment is cumulatively met. They propose the following
clarification: "246. (f)(2) If an employee separates from an
employer 90 or more days after he or she was hired and is
rehired by the employer within one year from the date of
separation, previously accrued and unused paid sick days shall
be reinstated?" They believe that this revision would allow
the employee access to the balance but if the employee did not
have access when he/she left, the clock would restart if
rehired like any other new hire.
4. Proponent Arguments :
According to the author, in order to help employers meet
requirements, clarify provisions and ensure the smooth
implementation of the Healthy Workplaces, Healthy Families Act
of 2014, this bill aims to conform state law governing CalPERS
retired annuitants, provide flexibility for existing paid sick
leave plans, allow for alternative accrual for non-hourly
payroll, provide for labor-management consensus in specific
industries, allow for flexibility in calculating sick pay for
nonexempt employees and make a number of minor changes that
are clarifying and technical in nature. Proponents state that
this bill makes important changes to the sick leave law so
that its provisions work better for employers and workers and
facilitate an orderly implementation.
5. Opponent Arguments :
None received.
6. Prior Legislation :
AB 11 (Gonzalez) of 2015: Held in Assembly Appropriations
Committee
AB 11, effective July 1, 2016, would extend the provisions of
paid sick days legislation enacted last year to include
providers of in-home supportive services, as described.
AB 1522 (Gonzalez) of 2014: Chaptered
AB 1522 enacted the Healthy Workplaces, Healthy Families Act
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of 2014 (discussed above) which requires employers to provide
paid sick days to employees who work 30 or more days within a
year from commencement of employment.
SUPPORT
Air Conditioning Sheet Metal Association
Air-Conditioning & Refrigeration Contractors Association
Brocade Communications Systems, Inc.
California Chapters of the National Electrical Contractors
Association
California Employment Law Council
California Legislative Conference of the Plumbing, Heating and
Piping Industry
California State Association of Counties
Finishing Contractors Association of Southern California
League of California Cities
Motion Picture Association of America
State Building and Construction Trades Council
United Contractors
Wall and Ceiling Alliance
Wine Institute
OPPOSITION
None received
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