California’s Paid Sick Leave Law, AB 304, or the Healthy Workplaces, Healthy Families Act of 2014 as it is officially known, is a hot topic that we have blogged about a number of times. Eligible employees began accruing paid sick time under the new law on July 1st. However, proposed amendments to the Paid Sick Leave Law were still meandering through the Legislature until finally passed by the Senate on July 13th and signed into law by Governor Brown today.
Assembly Bill 304 was first introduced in February 2015, and underwent seven dizzying amendments. In our last blog, we discussed the June 2, 2015 version, which included for the first time an urgency clause. The urgency clause makes the amendments effective today, the day that Governor Brown signed the bill. To see the full text of the newly passed amendments, click here.
So what do the latest amendments do? The key changes relate to how employers are to calculate the payment of sick time accrued under the new law.
When the law was originally passed, the rate of pay was to be calculated based upon an employee’s hourly rate. For employees who earn different hourly rates of pay, are paid by commission or piece rate, or are nonexempt salaried employees, the rate of pay was calculated based upon the wages paid, not including overtime premium pay, and the hours worked in the full pay periods that the employee worked during the prior 90-days.
A different method of calculation was proposed in the original text of AB 304. However, to keep things interesting, subsequent amendments proposed different methods of calculation, including the final June 22nd amendment. While this left many employers scratching their heads over how to update their policies (“Should we incorporate the original method of calculation for now?” “Should we incorporate this version or wait and see if it’s going to be amended again?” “What? Another amendment? It’s been only 3-days since the last one! I give up!”) the good news is that the amended version signed by the Governor today contains a greatly simplified method of calculation.
a) For nonexempt employees, employers may choose one of two options: (1) calculate paid sick leave in the same manner as the regular rate of pay for the workweek in which the employee uses the paid sick time; or, (2) calculate paid sick leave by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked during the full pay periods that the employee worked during the prior 90 days.
b) For exempt employees, paid sick leave is calculated in the same manner as the employer calculates wages for other forms of paid leave time.
If you have any questions about the newly adopted amendments, you can always reach out to our California Counseling and Workplace Solutions team.