California Employers: Increased Paid Sick Leave Effective January 1, 2024

Governor Gavin Newsom recently signed into law SB 616, which increases the amount of paid sick leave that employers must provide under the Healthy Workplaces, Healthy Families Act of 2014 (the “Act”).

Effective January 1, 2024, employers[1] must provide eligible employees with up to five days or 40 hours of paid sick leave per year. Previously, the annual obligation was three days or 24 hours. In-home supportive services and waiver personal care services employees will be entitled to paid sick leave benefits under SB 616.

Overall, the structure of the Act remains the same. For example, employers will still have the option to frontload benefits at the beginning of each year or adopt an accrual system, and to establish certain caps on the amount of leave that employees may use each year or have accrued at any one time. Therefore, as explained below, in most cases, employers that are compliant with current law will need to incorporate only a few updates into their policies. Additionally, employers with unionized workforces should be aware that SB 616 adds several new conditions that a collective bargaining agreement providing paid sick days must satisfy in order for the unionized employees to remain excluded from the Act’s requirements.

I.  Required Update to Frontloading Policies

Employers that frontload paid sick leave benefits (i.e., provide employees with the full amount of their sick leave at the beginning of the year) need only increase the amount of leave to no less than the greater of five days or 40 hours.

II.  Required Updates to Accrual-Based Policies

Employers with accrual-based systems must make three updates to their policies. First, the employer’s policy must allow employees to accrue paid sick leave at a rate of either (a) no less than one hour for every 30 hours worked or (b) an alternative rate under which employees accrue (and are allowed to use) no less than three days or 24 hours of paid sick leave by the employee’s 120th calendar day of employment and no less than the greater of five days or 40 hours of paid sick leave by the employee’s 200th calendar day of employment. Second, if an employer caps the amount of paid leave that its employees may use per year, the employer will need to ensure that the cap is no lower than the greater of five days or 40 hours per year. Third, employers that cap the total amount of paid leave an employee may accrue at any one time will need to revise their policy to increase the cap to the greater of 10 days or 80 hours.

III.  Paid Time Off (PTO) Policies

As before, employers will not be required to offer employees additional paid sick leave if their PTO policies provide employees with at least the same rights as required by the Act, including, but not limited to, the same hours for usage and for the same purposes.

IV.  Additional Local Law Considerations

The paid sick leave landscape is especially cumbersome in California because, in addition to the Act, employers must also comply with local paid sick leave laws. To reduce some of this complexity, SB 616 preempts local laws that conflict with certain of the Act’s provisions. Specifically, local laws will be preempted to the extent they:

• require employers to pay accrued, unused sick leave benefits at termination;
• require employers to advance, or prohibit employers from advancing, sick leave benefits to employees;
• require employers to provide employees with notice of their sick leave benefit balances on paystubs or accompanying documents that differ from the Act’s requirements;
• require employers to calculate the rate at which sick leave benefits must be paid differently than what is set forth in the Act;
• contain different notice requirements that employees must provide for sick leave use; and
• contain different deadlines for sick leave benefit payment.

How SB 616’s preemption provisions will interact with local law is likely to be nuanced. Therefore, employers doing business in municipalities with local sick leave laws should consult with counsel to ensure that their revised policies comply with both state and local law requirements.

What California Employers Should Do Now

• Review and, if necessary, revise paid sick leave or other PTO policies to align with SB 616.
• Update HRIS systems for tracking employees’ accrual and use of paid sick leave benefits to align with revised policies, if needed.
• Train human resources professionals on calculating and administering benefits under revised policies.
• Monitor the California Labor Commissioner’s Office for a new paid sick leave poster to display, which we anticipate will be issued in 2024.

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ENDNOTE

[1] SB 616 excludes railroad carrier employers from the Act.