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Berkeley Minimum Wage Increase

Berkeley Minimum Wage Increase

Minimum wage increases are all the rage. Berkeley, CA is no exception.  Effective October 1, 2017, Berkeley minimum wage increases to $13.75 per hour (from $12.53). It will increase again on October 1, 2018 to $15.00 per hour, and continue to increase each year. Because Berkeley has a higher minimum wage rate than the one set by California or the Federal government, the higher local minimum wage rate takes precedence and must be paid to all employees covered by the local minimum wage regulation. Berkeley’s minimum wage ordinance applies to any employee who “In a calendar week performs at least two (2) hours of work for an Employer within the geographic boundaries of the City.”

Employers must post the Berkeley Minimum Wage Poster, which you can download here. The same poster talks about Berkeley’s new Paid Sick Leave Ordinance and Berkeley’s Family Friendly and Environment Friendly Workplace Ordinance.

Berkeley Paid Sick Leave

In addition to the Berkeley minimum wage increase, Berkeley also has its own Paid Sick Leave Ordinance the becomes effective October 1st. The Paid Sick Leave Ordinance (PSL) requires all employees earn 1 hour of paid sick leave for every 30 hours worked. “Small Business” employers with fewer than 25 employees may cap an employee’s accrued paid sick leave at 48 hours and may cap the use of paid sick leave to 48 hours per year. Employers with 25 or more employees may cap an employee’s accrual of paid sick leave at 72 hours, but may not cap how much paid sick leave an employee uses in a calendar year. All Employers, regardless of where they are located, must provide paid sick leave to their Employees who perform at least 2 hours of work per week within the geographic limits of the City of Berkeley.

Berkeley Family Friendly and Environment Friendly Workplace Ordinance

The Family Friendly ordinance provides each employee the right to ask for a flexible or predictable work schedule. Employers must respond in writing within 21 days to any written request. The ordinance applies to employers who regularly employs 10 or more employees working in the City. Covered employers include the City but not any other federal, state, or local government entities. It applies to employees who regularly work at least 8 hours per week in Berkeley, and have worked for the same employer for at least three months. Eligible employees can request a flexible or predictable working arrangement.

A “Predictable Working Arrangement” means “a change in an Employee’s terms and conditions of employment that provides a consistent or reliable pattern of work assignment, including but not limited to days scheduled to work, start time and end time and work site location with at least seven (7) calendar days’ notice prior to the start of the scheduled shift.”

A “flexible working arrangement” means a change in an employee’s terms and conditions of employment that provides flexibility. Employees may request changes such as:

  • Modified work schedules.
  • Changes in start/end times for work.
  • Part-time employment.
  • Job-sharing arrangements.
  • Working from home.
  • Telecommuting.
  • Reduction or change in work duties.
  • Part-year employment.

Employees must request the changes in writing. Employers must respond to the request within 21 days.

As is common for local ordinances, employers cannot retaliate against employees under any of the new ordinances. If you work in Berkeley, or have employees working at least 2 hours per week in Berkeley, become familiar with these new laws.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Minimum Wage and Paid Sick Leave Increases

As you get ready to celebrate the 4th of July, don’t forget that a number of local minimum wage increases across California will take effect July 1, 2017. Eligibility rules may vary among the locations listed below. Employers should review the individual city ordinances and follow posting requirements. Employee handbooks and policies, as well as new posters, may need updating.

The following cities and counties will increase their minimum wage July 1:

  • Emeryville: $15.20 an hour for businesses with 56 or more employees; $14 an hour for businesses with 55 or fewer employees.
  • City of Los Angeles: $12 an hour for employers with 26 or more employees; $10.50 an hour for employers with 25 or fewer employees.
  • Los Angeles County (unincorporated areas only): $12 an hour for employers with 26 or more employees; $10.50 an hour for employers with 25 or fewer employees.
  • Malibu: $12 an hour for employers with 26 or more employees; $10.50 an hour for employers with 25 or fewer employees.
  • Milpitas: $11 an hour
  • Pasadena: $12 an hour for employers with 26 or more employees; $10.50 an hour for employers with 25 or fewer employees.
  • San Francisco: $14 an hour.
  • San Jose: $12 an hour.
  • San Leandro: $12 an hour
  • Santa Monica: $12 an hour for employers with 26 or more employees; $10.50 an hour for employers with 25 or fewer employees.

The Economic Policy Institute has a very good, up to date, interactive website regarding minimum wage laws in California and around the United States.

Local leave law updates

Over the last several years, California and several cities and counties have implemented mandator paid sick leave laws. The City of Los Angeles’ Paid Sick Leave Ordinance now applies to all employers. Employers with 25 or fewer employees must provide increased accrual benefits (48 hours annually for use/72 hours for total accrual cap) for sick leave benefits July 1, 2017.

San Francisco’s Paid Parental Leave Ordinance was passed with a phased-in implementation. Employers with 35 or more employees must begin complying as of July 1, 2017.

Fox Rothschild has a very good table summary of the various paid sick leave laws in California. It was last updated in September 2016, so there may be additional changes.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Using this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. Using the Internet or this blog to communicate with the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Cal Chamber Updates Employee Handbook Creator

California Chamber of Commerce Employee Handbook Creator

Employers looking to create an inexpensive employee handbook oftentimes use the California Chamber of Commerce’s Employee Handbook Creator. It is a good resource for obtaining up-to-date, compliant policies. Although not customized solely for your company, it contains the policies you need. It also tells you why the policies are in place.  The Employee Handbook Creator asks a series of questions, and includes policies appropriate for the number of employees.  It also identifies required policies versus recommended policies. The software now asks questions about where your employees work, so you can comply with local ordinances. For around $250, it’s an affordable and reasonable solution for smaller employers.

The Chamber recently updated its standard policies to include city- and county-specific policies regarding paid sick leave and minimum wage laws. With the ever-growing number of local ordinances imposing new obligations on employers, the policies are very helpful.

The Chamber also has a chart of local minimum wage laws and paid sick leave ordinances. The chart identifies whether there are specific posting requirements, which employers must comply with the local laws, and links to the ordinances and FAQs. This is a very helpful resource, and I’ve just bookmarked it.

In conjunction with Fox Rothschild, LLP, the Chamber also published a comparison of California State and local paid sick leave laws. You guessed it, I’ve bookmarked this one as well.

The California Chamber of Commerce has not paid me to provide this information. After creating, reviewing and revising scores of handbooks over the years, I’m just a fan of low-cost ways to help employers comply with the law.

Have Your Employee Handbook Reviewed by an Expert

Using the Chamber’s Employee Handbook Creator is not an excuse to avoid having an knowledgable professional review the handbook. The Chamber uses some language in its policies that I like to change, and the resulting handbook won’t necessarily express the culture of your business. Additionally, as good as it is, I’m always reluctant to rely entirely on a computer-generated document. I like to read and edit the employee handbook to make sure it actually fits the employment. The Chamber handbook is a lot better than copying the handbook from your competitor or your last employer, but I still recommend having it reviewed by counsel or knowledgeable HR professional before implementation.

Most employers should update their handbook every one to two years. Sometimes changes in the will require more frequent updates. For example, in the middle of last year the Fair Employment and Housing Commission implemented updated regulations requiring all employers to have a written sexual harassment prevention policy in place and distributed to all employees. I wrote about some of the new requirements here.

If you have a question about your employee handbook, contact the Nuddleman Law Firm, P.C.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Properly Paying Caregivers: SNT Symposium

Properly Paying Caregivers for Special Needs Trust Beneficiaries

I am excited to present Properly Paying Caregivers for SNT Beneficiaries at this year’s Special Needs Planning SymposiumSharon Novak of TEAM Risk Management Strategies, LLC and I will cover:

  • Employees versus Independent Contractors
  • Personal Attendants versus Companions
  • Who is an Employer when Hiring Caregivers
  • Minimum Wage and Overtime Obligations
  • Paid Sick Leave Requirements
  • Payroll Taxes, Unemployment Insurance and Workers’ Compensation
  • Conducting Background Checks
  • Common Myths and Misconceptions when Hiring Caregivers

The presentation will be part of a 2-day symposium, with 14 sessions, 10+ speakers and 2 workshops. Set in beautiful Sonoma, California, you can view the full schedule here.

Properly Paying Caregivers Presentation  Set for Saturday, February 18th, at 2:30 p.m.

Kevin Urbatsch did a wonderful job gathering wonderful speakers, including professional fiduciaries, trusts and estates attorneys and other professionals experienced in handling special needs trusts. I look forward to seeing you all there.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law. We cannot answer questions about specific situations or provide legal advice over the Internet. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Do not post confidential or time-sensitive information in this blog. The Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

More Local Paid Sick Leave Ordinances

 

Over the last few years, several cities and counties in California have passed ordinances requiring paid time off or paid sick leave for employees.  California employers are still trying to figure out how to comply with California’s paid sick leave law (aka: Healthy Workplace Healthy Family Act).  Santa Monica, Los Angeles, San Diego, and Long Beach have added their own sick leave ordinances, and San Francisco has amended its sick leave ordinance, making it that much more difficult for employers to comply with the sometimes contradicting requirements.  Below are brief highlights the new/amended local ordinances.

Amended San Francisco Paid Sick Leave

Effective January 1, 2017, San Francisco’s paid sick leave law is amended in an attempt to better align its provisions with California’s paid sick leave law. The amendments provide that San Francisco’s sick leave begins to accrue upon the commencement of employment, but employers may limit usage until after 90 days of employment.  The amendments allow employers to “advance” the sick leave at the beginning of the year instead of permitting employees to accrue the time. This is treated as an advance, temporarily halting accrual until after working the number of hours necessary to have accrued the advanced amount, at which point accrual resumes.  However, unlike the grant method under California’s paid sick leave law, employers  still have to allow employees to carry over unused sick time to the following year.  I suspect this will continue to cause problems for San Francisco employers, and doesn’t really address the accrual versus one-time grant problem.

The amendments also change to the definition of “family members” for whom time may be used, expands the permitted uses to include preventative care and time for purposes related to domestic violence, sexual assault, and stalking suffered by the employee, clarifies how and when sick leave must be paid, requires written notice to employees regarding available balances of paid sick leave, and, like California’s law, requires reinstatement of unused sick leave if an employee is rehired within one year of separation.

San Francisco is usually pretty good about providing FAQ’s about their ordinances, so I suspect the city will publish material to help guide employers in the near future.

Los Angeles Paid Sick Leave

Covered employees: Employees who work two or more hours in a particular week in the City of Los Angeles

Effective date: Businesses must comply with the sick leave requirements starting July 1, 2016

Accrual rate: The ordinance provides that paid sick leave begins to accrue at the commencement of employment, and the employee shall accrue one hour of paid sick leave for every 30 hours worked

Accrual cap: Employers may implement an accrual cap of 72 hours of accrued paid sick leave.  Accrued time must be carried over from year to year

Usage cap: Employees must be permitted to use up to 48 hours of accrued sick leave each year

One-Time Grant: Instead of permitting employees to accrue paid sick leave, employers may grant the full amount of leave at the beginning of each year, and if they do so, the time need not carry over from year to year

Usage: Employers may prohibit employees from using any accrued paid sick leave until after the first 90 days of employment

Leave to care for others: In addition to the persons identified in the California sick leave law for whose care employees can use sick leave, the ordinance permits employees to use sick leave to care “for any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship”

Santa Monica Paid Sick Leave

Covered employees: Employees who work two or more hours in a particular week in Santa Monica

Effective date: Businesses must comply with the sick leave requirements starting January 1, 2017

Accrual rate: The ordinance provides that paid sick leave begins to accrue at the commencement of employment, and the employee shall accrue one hour of paid sick leave for every 30 hours worked

Accrual cap: Employers with 26 or more employees shall provide at least 40 hours of paid sick leave as of January 1, 2017 (note, however, that the California law requires employees be permitted to accrue up to 48 hours) and at least 72 hours of paid sick leave as of January 1, 2018

Employers with 25 or fewer employees shall provide at least 32 hours of accrued paid sick leave as of January 1, 2017 and at least 40 hours of accrued paid sick leave as of January 1, 2018 (remember: California law requires employees be permitted to accrue up to 48 hours)

Accrued time must be carried over from year to year

Usage cap: Unlike the California sick leave law, the ordinance does not permit a usage cap

One-Time Grant: Instead of permitting employees to accrue paid sick leave, employers may grant the full amount of leave at the beginning of each year, and if they do so, the time need not carry over from year to year

Usage: Employers may prohibit employees from using any accrued paid sick leave until after the first 90 days of employment

San Diego Paid Sick Leave

Covered employees: Employees who, in one or more calendar weeks of the year, performs at least two hours of work in the City of San Diego

Effective date: The voters of San Diego approved the paid sick leave ordinance on June 7, 2016.  Under San Diego election laws, the law will take effect on the date the City Council adopts a resolution declaring the result of the election.  It is assumed this will occur sometime in July

Accrual rate: The ordinance provides that earned sick leave begins to accrue at the commencement of employment, and the employee shall accrue one hour of earned sick leave for every 30 hours worked within the geographic boundaries of the City of San Diego

Accrual cap: Employers may not implement an accrual cap; employees must be permitted to continue to accrue earned sick leave.  Accrued time must be carried over from year to year

Usage cap: Employers may limit usage of earned sick leave to 40 hours per year

One-Time Grant: The law does not expressly provide for a grant of earned sick leave

Usage: Employers may prohibit employees from using any accrued earned sick leave until after the first 90 days of employment

So far, Oakland and Emeryville have not changed their paid sick leave ordinances. None of the local ordinances require employers to pay out unused paid sick leave upon termination. However, if an employer allows employees to use paid sick leave for purposes other than sick leave, the employer could turn the paid sick leave into a paid time off policy which would have to be paid out at the end of the employment.

California employers with employees working in any of the cities above should review their paid sick leave f policies to evaluate whether they comply with both the state and municipal sick leave ordinances.  Businesses with employees in multiple cities should either adopt a different policy for employees in certain cities or create a single policy complies with whichever municipality is the strictest.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

Wage Deductions for Exempt Employee Absences

Wage deductions for exempt employee absences

Most exempt employees must receive a guaranteed salary. The employee is paid for the work performed, not the hours worked.  This means an exempt employee gets paid the same amount regardless of whether s/he works 8 hours a day, or 1 hour a day.  Employers that fail to pay the exempt employee’s salary risk losing the exempt status, and possibly subjecting the employer to significant overtime liabilities.

So, when can you an employer make wage deductions for exempt employee absences?  There is a useful DLSE Opinion Letter on the topic, but weeding through the 13-page opinion letter and the letter that prompted the opinion is not easy.  Hopefully the following provides some clarification for employers and employees regarding when an employer can make wage deductions for exempt employee absences.

Full Week Deductions are OK

If an exempt employee performs no work in a workweek for “personal reasons” and does not have vacation or PTO to cover the time off, the employer does not have to pay the employee’s salary for that week.  If the employee has available accrued PTO or vacation pay, the employer can require the employee to use the available PTO/vacation.  If the employee does not have sufficient PTO/vacation to cover the full week, the employer can just pay the available PTO/vacation and does not have to pay wages for the rest of the week (because the employee has performed no work).

There are a few exceptions: If an employee misses work for a protected reason, such as jury duty, attendance as a witness, or temporary military leave, the absence is not “personal” time off and therefore the employer is obligated to pay the exempt employee for the full workweek

Deductions from Vacation/Paid Time Off/Paid Sick Leave Balances

Employers can require employees to use available vacation, paid time off or paid sick leave balances before taking unpaid time off or to cover partial day, full day or full week absences.  Employers should not, however, require an employee to use Paid Sick Leave under the Health Workplaces Healthy Families Act unless the absence is for one of the reasons specified in the Act.

Full Day Deductions — Personal Reasons

If an exempt employee performs no work in a workday for personal and has no accrued vacation or PTO, then the employer can deduct the equivalent of one day’s pay from the exempt employee’s salary.  Caution: The employee must perform no work—this means no emailing, no phone calls.  If the employee performs any work, the employer must pay the employee’s full salary.

See the exception above about absences that are not for “personal reasons.”

Partial Day Deductions — Personal Reasons

If an exempt employee works any portion of a work day, the employer must pay the employee’s full salary for that day. However, an employer can require the employee to use available vacation or PTO to cover the hours not worked. (Conley v. Pacific Gas & Electric Co., 131 Cal.App.4th 260 (2005) and Rhea v. General Atomics, 227 Cal.App.4th 1560 (2014)).  The employer is not reducing the employee’s salary—it is just requiring the employee to use available PTO/vacation.

For example, if an employee works two-hours, then leaves for the day, the employer can require the employee to use 6 hours of vacation/PTO to cover the absence.  The employee receives his/her full salary and therefore the employer is not making a wage deduction for exempt employee absences.

If the employee does not have available vacation or PTO, the employer cannot make a wage deduction for a partial day absence.

Full Day Deductions – Paid Sick Leave

Every California employer must provide mandatory paid sick leave (PSL) benefits as of July 1, 2015. The PSL law specifies the different reasons for taking PSL, and if an exempt employee takes a full or partial day absence under the mandatory PSL law, the employer can charge the absence against the exempt employee’s accrued mandatory paid sick time.

But what if the exempt employee does not have any more PSL?  Employers can make wage deductions for exempt employee absences of one full day or more caused by sickness, an accident or a disability if the employer has a “bona fide plan, policy or practice of providing compensation salary loss due to sickness, accidents or a disability.” Since every employer is required to provide PSL, presumably every employer has a qualifying plan, policy or practice.  Of course, this assumes the employer actually adopts and complies with the Healthy Workplaces Healthy Families Act.

Partial Day Deductions – Paid Sick Leave

If the exempt employee is only absent part of the day due to sickness or illness, and the employee has exhausted his/her available PSL, the employer may not deduct the remaining time from the employee’s salary.  For example, if the employee works two hours, and then goes home sick, but does not have sufficient available PSL to cover the absence, the employer is still required to pay the employee for the full day.

Other times when an employer can make wage deductions for exempt employee absences

There are a few other odds and ends when an employer can make wage deductions for exempt employee absences without violating the “salary” rules:

  • Employers do not have to pay the full week’s salary for the first and last weeks worked if the employee only works a partial day.
  • Absences under the FMLA are specifically unpaid absences, and therefore an employer can deduct for partial-week, and possibly partial-day absences, covered under FMLA.
  • If an employee is sent home for a safety-infraction, the employer may not be required to pay the full day’s or full week’s salary.

Recap

Any time you deduct money from an employee’s wages, you run the risk of violating the law.  Employees who do not receive the wages they are expecting are more likely to seek outside assistance.

  • Employers do not have to pay the week’s salary if no work is performed during the workweek.
  • Employers may deduct for full day absences caused by “personal reasons” or if the employee takes time off for an illness and the employee has exhausted his/her available PSL.
  • Employers should not dock an exempt employee’s salary for a partial day absence. If the employee does not have sufficient vacation/PTO or PSL to cover the missed partial day, the employer should pay full day’s salary.
  • The employer can require an employee to use available vacation/PTO or PSL for partial day absences (the PSL minimum increment is two hours).
  • Do not deduct from the employee’s PSL balance unless it is for one of the reasons specified in the Health Workplaces Healthy Families Act.

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

Feel free to suggest topics for the blog. We are happy to consider topics pertaining to general points of Labor and Employment Law, but we cannot answer questions about specific situations or provide legal advice. If you desire legal advice, you should contact an attorney.

Your use of this blog does not create an attorney-client relationship between you and Nuddleman Law Firm, P.C. The use of the Internet or this blog for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be posted in this blog and Nuddleman Law Firm, P.C. cannot guarantee the confidentiality of anything posted to this blog.

The Nuddleman Law Firm, P.C. represents employees and businesses throughout Silicon Valley and the greater San Francisco Bay Area including Pleasanton, Oakland, San Ramon, Hayward, Palo Alto, Menlo Park, Mountain View, Los Altos, San Jose, the South Bay Area, Campbell, Los Gatos, Cupertino, Morgan Hill, Gilroy, Sunnyvale, Santa Cruz, Saratoga, and Alameda, San Mateo, Santa Clara, San Benito, Mendocino, and Calaveras counties.

New Paid Sick Leave Law Causes Anxiety for Employers

California workers are often faced with a difficult decision: I don’t feel well and I don’t want to go to work where I will get other people sick, but I can’t afford to miss any work. In order to remedy this malady, the California legislature passed AB 1522 creating the Healthy Workplaces, Healthy Families Act of 2014, which requires all employers to provide at least 24 hours of annual paid sick leave to all employees. Unfortunately, the new law was poorly drafted, causing confusion. The Labor Commissioner set up a FAQ page that helped a little, but still didn’t answer important questions.

Just about every employer client I have called me in the weeks leading up July 1st with questions about what they needed to do to comply with the law, and the answers were not always simple. Then, 13 days after employers were required to begin providing paid sick leave, governor Brown signed AB 304 modifying the statute. Although I suspect the purpose of the amendment was to clarify the law, California’s Healthy Workplaces, Healthy Families Act of 2014 leaves the most ardent HR professionals lightheaded.

HEADACHES

For employers that did not previously offer any type of paid time off, the new law seems fairly simple: Employers must provide at least 24 hours of paid sick leave every year. Simple, right? But what about employees working in San Francisco, Oakland, Emeryville, San Diego or any other city that has passed its own local ordinances requiring a hiring amount of paid sick leave?

If a company has employees working in different cities, even if the employees perform as little as two hours per week in one of the cities that has passed its own paid sick leave ordinance, the employer has to either adopt the highest city requirement and apply that across the board, or have different policies for different employees depending on how much time they spend in each different city. Now an employer has different accrual rates and leave caps for different employees. No chance an employer will make a mistake, right?

HOURLY EMPLOYEES

At what rate must employer’s pay out the paid sick leave? For hourly employees, you would assume the hourly rate is the employee’s regular rate of pay. In fact, the original statute defined “Paid sick days” as “time that is compensated at the same wage as the employee normally earns during regular work hours.” Section 246(k) also says, “[t]he rate of pay shall be the employee’s hourly wage.” Simple, right? It was until the legislature amended subsection k.

Now, the employer has three different methods to choose from:

(k) For the purposes of this section, an employer shall calculate paid sick leave using any of the following calculations:
(1) 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.
(2) 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.
(3) 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.

You’ll notice that there are two different calculations an employer can choose from for nonexempt employees:

  1. the employee’s regular rate of pay; OR
  2. divide the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the previous 90 days.

What does that second option mean? It’s a bit confusing, so let’s use an example. Alice’s regular rate of pay is $12.00 per hour, and she typically works 50 hours per week—40 regular hours and 50 overtime hours. Her regular weekly paycheck is $660.00 [($12 x 40) + ($18 x 10) = $660].

Under the amended statute, the employer is only supposed to include “full pay periods of the prior 90 days of employment.” Let’s assume Alice is paid every week. That would mean that, at most, there are 12 full pay periods in the 90 days prior to the intended sick leave. So, Alice earned $7,920 in those 12 full pay periods ($660 x 12 = $7,920).

The statute then directs us to divide the employee’s total wages “not including overtime premium pay” by the total hours worked. Alice worked 600 hours in the 12 pay periods (50 per week x 12 weeks = 600). When you divide her total wages not including overtime ($5,760) by her total hours worked (600) her paid sick leave rate would be $9.60—$2.40 less than her regular hourly rate. So, if an employee regularly works overtime, the employer can actually pay less than the employee’s regular hourly rate if the employer chooses to use the (k)(2) method of calculating the paid sick leave rate of pay. Maybe the lower rate under (k)(2) rewards employers that are willing to “do the math,” but I don’t see many employers using this alternative calculation.

I’d give an example of what happens when you pay different rates for shift differentials, but it looks like my calculator has a headache.

COMMISSIONS, SALARIES AND PIECE RATES

But what about employees paid commissions, salaries or on a piece rate basis? Well, for salaried employees, the regular rate of pay is presumably the weekly salary divided by 40, as dictated by Labor Code section 515(d)(2). Employees receiving commissions or paid on a piece rate basis are more complicated. Get out your calculators.

There are typically two types of commissioned employees: inside sales and outside sales. While outside salespeople are exempt from overtime laws, inside sales people are only exempt if they are covered by either wage order 4 or wage order 7, more than 50% of their wages are paid in the form of commissions, AND the employee earns at least 1.5 times the current minimum wage. Although the Paid Sick Leave law has rules for employees exempt from overtime under the administrative, professional and executive exemption, it does not have rules for other exempt employees (some inside sales, outside sales, sheepherders, irrigators, etc.).

The Labor Commissioner says “If an employee is paid commission or piece rate, then divide total compensation for previous 90 calendar days by number of hours worked and pay this rate.” But, do you use the compensation earned or the compensation paid? Commissions are oftentimes earned before they are paid. Hopefully the employer’s commission agreements clearly identify when the commission is earned versus when it is paid, but neither the Labor Commissioner nor the statute answer this question.

For piece rate employees it is a little bit easier, divide the total amount earned in the previous 90 days by the total hours worked. If the employer is reporting the pieces and hours worked on the pay stubs as required by Labor Code section 226, then this shouldn’t be a problem. On the bright side, employers that were not previously tracking hours worked for their piece rate workers have a good excuse to change their policies so they can properly track paid sick leave.

WHAT IS A YEAR?

There are still other decisions that have to be made. What constitutes a year? The law became effective January 1st, but employers were not required to provide the paid sick leave until July 1st. Should the employer use a calendar year? A year based on the employee’s start date? A year beginning when the paid sick leave requirement became effective? Choosing the right “year” alters how the employer tracks accrued paid sick leave.

CAN I USE MY EXISTING PTO POLICY?

Will your existing PTO policy satisfy the requirements? In most cases, no, because most employees typically do not begin accruing paid sick leave on their first day of employment. Although employers can prohibit an employee from using the paid sick leave during the first 90 days of employment, the employee begins accruing the paid sick leave from day 1. Keep in mind, if an employer modifies its PTO policy to allow the employee to begin accruing PTO from day 1, and that employee stops working in the first 90 days, the employer has to pay out the unused PTO. If the employer decides to keep Paid Sick Leave separate from other paid leave, the employer would not have to pay out the Paid Sick Leave upon termination.

In order for a PTO policy to satisfy the Paid Sick Leave requirements, the PTO has to have the same 30:1 accrual rate required by the Health Workplaces, Healthy Families Act. Although an employer can cap the Paid Sick Leave at 48 hours, the 30:1 accrual rate would actually give the employee about 66 hours of Paid Sick Leave in a year (assuming the employee works 40 hours a day, 50 weeks per year). If you have a PTO policy that allows an employee to accrue 48 hours of PTO per year, the accrual rate is actually lower than the 30:1 Paid Sick Leave requirements.

The July 13th amendment provided a small safe harbor. If an employer had a pre-existing PTO policy that allowed the employee to accrue at least 8 hours of PTO within the first 3 months of employment and at least 24 hours of PTO within the first 9 months of employment, the employer can use the existing PTO policy to satisfy the Paid Sick Leave requirements. However, if the employer ever alters the accrual method used in that policy, then the employer has to default to the 30:1 accrual rate. This applies even if the employer provides a more generous PTO accrual rate than it previously provided.

Rob’s prediction? Litigation.

Although I don’t know that the value of a paid sick leave violation claim would justify a single-plaintiff lawsuit, you can bet there are class action attorneys waiting file suit when an employer makes a mistake. Keep in mind that the Health Workplaces, Healthy Families Act of 2014 is part of the Labor Code. That means an employee can sue under the Labor Code Private Attorney General Act (PAGA) and bypass the class action requirements. Even though the individual employee’s recovery may be minimal, even small errors can create significant liability given that the penalties will accrue every pay period for all employees.

BROAD RETALIATION PROVISION

I also predict we will see litigation regarding employers who ask employees for proof that the leave was for a qualifying reason. The Act has a very broad anti-retaliation provision:
An employer shall not deny 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

There is a rebuttable presumption of retaliation for a variety of actions, including “if an employer denies an employee the right to use accrued sick days, discharges, threatens to discharge, demotes, suspends, or in any manner discriminates against an employee within 30 days of … (c) [o]pposition by the employee to a policy, practice, or act that is prohibited by this article.”

The Labor Commissioner has told employers that it is illegal to “deny sick leave due to a failure to provide details” regarding the need for the paid sick leave. The Act is silent as to whether an employer can require an employee to provide a doctor’s note for the absence, but the Labor Commissioner seems to be taking the position that if an employer asks an employee for the details of the leave (e.g., “Why do you need to take paid sick leave?”), and the employee refuses to provide the details, the employer must still pay the employee to take the time off work.

To be safe, employers should only ask for doctors’ notes once an employee has used the full 24 hours of paid sick leave.

Employment attorneys helping companies comply with the law have been inundated with phone calls and emails from clients that want to comply with the law. California’s new paid sick leave requirements confuse even the most seasoned HR professionals. I am glad the legislature took a stance on this important issue. Sick workers should not be forced to choose between paying rent or showing up to work where they can get other people sick. The idea behind the statute is good and honorable. Unfortunately, as is often the case, the legislature’s method is blemished.

Having thought this all through, I’m starting to feel a bit queasy myself. I think I need to take a sick day.

 

Original article by Robert E. Nuddleman of Nuddleman Law Firm, P.C.

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