BILL ANALYSIS                                                                                                                                                                                                    Ó






           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                        AB 304|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  AB 304
          Author:   Gonzalez (D)
          Amended:  6/22/15 in Assembly
          Vote:     27  - Urgency

           SENATE LABOR & IND. REL. COMMITTEE:  5-0, 7/8/15
           AYES:  Mendoza, Stone, Jackson, Leno, Mitchell

           SENATE APPROPRIATIONS COMMITTEE:  Senate Rule 28.8

           ASSEMBLY FLOOR:  69-0, 6/22/15 - See last page for vote

           SUBJECT:   Sick leave: accrual and limitations


          SOURCE:    Author

          DIGEST:  This bill amends the Health Workplaces, Healthy  
          Families Act of 2014 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. 

          ANALYSIS: 
          
          Existing law: 

          1)Establishes the Healthy Workplaces, Healthy Families Act of  
            2014 to provide employees who works in California for 30 or  
            more days within a year from the commencement of employment  
            with paid sick days at the rate of not less than one hour per  
            every 30 hours worked.  

          2)Authorizes the use of accrued paid sick days beginning on the  








                                                                     AB 304  
                                                                    Page  2


            90th day of employment and allows employers to limit the use  
            of paid sick days to 24 hours or three days per year. 

          3)Requires an employer to provide paid sick days for the  
            diagnosis, care, or treatment of an existing health condition  
            of, or preventive care for, the employee or the employee's  
            family member (defined as a child, parent, spouse, registered  
            domestic partner, grandparent, grandchild and sibling). 

          4)Requires an employer to provide paid sick days for specified  
            purposes, as defined, for an employee who is a victim of  
            domestic violence, sexual assault, or stalking. 

          5)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:  

            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.








                                                                     AB 304  
                                                                    Page  3


            5)  Provides that an employer may satisfy the accrual  
              requirements of this section by providing not less than 24  
              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.







                                                                     AB 304  
                                                                    Page  4



            8)  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."

            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.

          Background
          
          AB 1522 (Gonzalez, Chapter 317, Statutes of 2014), enacted the  
          Health 







                                                                     AB 304  
                                                                    Page  5


          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 amends 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. 

          Summary of changes to the Healthy Workplaces, Healthy Families  
          Act of 2014:
          Below is a summary of the changes to the paid sick law proposed  
          with this bill:  

          1)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.

          2)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  
            specified.

          3)Alternative Accrual for Non-Hourly Payroll: The payroll  
            systems for many employers do not track their employees on an  







                                                                     AB 304  
                                                                    Page  6


            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.

          4)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. 

          5)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.

          Related Legislation
          
          AB 11 (Gonzalez, 2015):  Held in Assembly Appropriations  
          Committee.
          AB 11 extends the provisions of paid sick days legislation  
          enacted last year to include providers of in-home supportive  
          services, as specified. 

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          SUPPORT:   (Verified7/8/15)


          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 







                                                                     AB 304  
                                                                    Page  7


          League of California Cities
          Motion Picture Association of America
          State Building and Construction Trades Council
          United Contractors
          Wall and Ceiling Alliance
          Wine Institute 


          OPPOSITION:   (Verified7/8/15)


          None received


          ARGUMENTS IN SUPPORT:     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.  


           

          ASSEMBLY FLOOR:  69-0, 6/22/15
          AYES:  Achadjian, Alejo, Baker, Bigelow, Bloom, Bonilla, Bonta,  
            Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu,  
            Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier,  
            Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez,  
            Gonzalez, Gordon, Gray, Grove, Hadley, Roger Hernández,  
            Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine,  
            Linder, Lopez, Low, Maienschein, Mathis, McCarty, Medina,  
            Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Patterson,  
            Perea, Quirk, Rendon, Rodriguez, Salas, Santiago, Steinorth,  
            Mark Stone, Thurmond, Ting, Wagner, Weber, Wilk, Williams,  
            Atkins
          NO VOTE RECORDED:  Travis Allen, Brough, Dahle, Beth Gaines,  







                                                                     AB 304  
                                                                    Page  8


            Gallagher, Harper, Mayes, Olsen, Ridley-Thomas, Waldron, Wood

          Prepared by:Alma Perez / L. & I.R. / (916) 651-1556
          7/10/15 14:06:03


                                   ****  END  ****