Seyfarth Synopsis: Employers are usually mindful of the many laws governing employee medical leaves and how they interact. But what about accommodation for non-medically necessary leaves? This post discusses the basics of employee leaves for elective medical procedures.

California employers who administer employee leave laws navigate a complicated labyrinth. Employers must consider interactions among federal laws (ADA, FMLA, Title VII), state and local laws (CFRA, FEHA, PFL), and even their own internal employer policies. It gets even more complicated when employees would like to take medical leave for procedures that aren’t medically necessary, but rather are elective. So what is an employer to do when an employee says they want to take two weeks off for that nose job or tummy tuck?

“Tell Me What You Don’t Like About” California Laws—The Basics

The FMLA and the CFRA both entitle qualifying employees to up to 12 weeks of unpaid leave per 12-month period for an employee’s own “serious health condition” that prevents them from performing their essential job functions. A serious health condition is defined broadly as an illness or injury that involves inpatient care, a period of incapacity of more than three consecutive calendar days that also involves treatment by a health care provider, or a chronic condition requiring treatment. It follows then, that elective procedures in and of themselves do not qualify as a serious health condition that would require protected medical leave, absent some complication (discussed below).

Employers should also note that elective procedures aren’t just limited to lifts and augmentations. Elective procedures fall within a broad range that includes such varied items as treatment for acne and orthodontics.

Whatever the reason for medical leave may be, an employer may require medical certification of the employee’s serious health condition. If there is reason to doubt the validity of the certification, the employer can usually go so far as to get a second opinion. If an employee refuses or fails to provide the certification, the leave request could be delayed or even denied.

Importantly, under federal law, the medical provider can be asked to state the diagnosis or medical facts supporting the need for the leave; however, California law is different. Here, whether the leave is requested under CFRA or the FEHA, the employer is limited to obtaining a certification from a qualified provider that the leave is needed as an accommodation for a medical condition or disability, and the expected duration of the leave. This begs the question of how the employer is to know that the leave is for an elective procedure.  Since the employer cannot ask, the information is usually shared voluntarily by the employee or his/her medical provider.

You’ve Got A New Wrinkle?—Leave Complications

While the laws are clear that purely elective procedures aren’t covered by FMLA/CFRA statutory leave, there is a complication: where a serious health condition arises out of an elective procedure. That is to say, an elective procedure can result in inpatient care in a hospital, where complications develop. In this situation, provided that the employer receives proper notice, employees may qualify for statutory protected leave.

Another wrinkle that employers should know is that restorative dental or plastic surgeries after an injury or removal of cancerous growths are considered serious health conditions for which protected leave is required, provided the presence of the other conditions constituting a serious health condition.

“Appearance Is Everything”—Post-Op Disability Leave Checklist

Frequently, employers face situations where an employee cannot return to work after a 12 week FMLA/CFRA medical leave is up. What’s next?

This situation can trigger an interactive process under the ADA/FEHA, in which the employer and employee must work together to see what reasonable accommodations, if any, can enable the employee to perform the essential job functions. Strong interactive process procedures, including ongoing communication with the affected employee (where possible), are staunch tools in an employer’s possible defense to some ensuing discrimination claim.

One possible reasonable accommodation may be a further leave of absence. But both the FEHA and the ADA allow an employer to avoid providing further leave of absence if it would be not be reasonable to do so. California courts have concluded that employers need not provide an indefinite leave of absence as a reasonable accommodation. Each case must be addressed on a case-by-case basis, and there is no one-size-fits-all solution when it comes to reasonable accommodations.  Moreover, a reasonable accommodation need not be provided if it would create an “undue hardship” for the employer.

Workplace Solution: Leave laws are complicated, as each leave law has its own intricacies, compounded when one considers the law’s interactions with other law. So whether you’re looking to makeover your current leave policies or augment your knowledge base, you can always contact your Seyfarth attorney to address any areas that need touching up.

Seyfarth Synopsis: The Office of the California Labor Commissioner (aka the DLSE) recently issued an opinion letter explaining how employers should calculate sick pay for commissioned employees. Somewhat surprisingly, the letter counsels that the rate of sick time pay for these employees must be calculated using one of the schemes applicable to non-exempt employees—even if the commissioned employees qualify as exempt outside salespersons or as “commissioned employees.” 

On October 11, 2016, the DLSE issued an opinion letter regarding California’s Healthy Workplace Healthy Families Act of 2014.  As is usual with opinion letters, the DLSE was responding to a request for guidance from a cautious employer seeking to cure uncertainty about how to interpret a statute.  Opinion letters are binding only on the particular employer who asked the question, but the rest of the California employment world generally pays attention; the letters the DLSE choses to publish provide general insight into the DLSE’s approach.

The employer here wanted to know the correct way to calculate the rate of pay for sick leave taken by commissioned employees.  The  statute provides three alternative methods:

(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. Labor Code section 246(K)(1)-(3).

Based on this plain language, it would seem reasonable for California employers to use the scheme of section 246(k)(3), as commissioned employees are often exempt from overtime under applicable standards. But the DLSE has a different view. The opinion letter explains that the term “exempt,” as used in in this section, refers only to those employees who satisfy both the salary and duties tests of the professional, executive, or administrative exemptions.  By this reading, the term “exempt” does not include those employees who are exempt from overtime under the outside sales exemption or commissioned employee exemption.

To qualify as an outside salesperson, an employee must “customarily and regularly work more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.”  “Commissioned employees”  are persons working in the “Retail Industry” who earn more than one-half their compensation from commissions and whose  total compensation exceeds 1.5 times the minimum wage for each hour worked during the pay periodFor these employees, the DLSE says, employers should calculate sick time using one of the two sections applicable to nonexempt employees, even if they are actually exempt.

Workplace solution:  While the guidance may seem counter to the statutory language, the good news is that we now have some guidance.  To act consistently with the DLSE’s latest opinion, California employers should look to Labor Code sections 246(k)(1) or (2)—which articulate the two methods used to calculate sick pay for non-exempt employees—when determining how to appropriately calculate sick time for employees who receive commissions, even if they qualify as exempt from overtime as either an outside salesperson or a “commissioned employee.”

Seyfarth Synopsis: Many employers have “no fault” attendance policies in place to manage employee absenteeism.  Are these policies putting California employers on shaky ground? Read on….

“No fault” attendance policies are one popular method among employers to, with consistency, counsel, discipline and, in some instances, terminate employees who rack up excessive absences.  Under these policies, the reason for the employee’s absence is usually irrelevant–there’s “no fault” for the absence.  These policies typically involve assigning employees a certain number of days that they can miss or be late, known as “occurrences” or “occasions,” without facing discipline.  But when the number of absent days or instances of tardiness reaches a set level, the employee is often put on a disciplinary track, which can begin with a write-up or counseling, and end in termination.

While  in theory “no fault” policies are relatively easy to implement and administer, in practice they can land employers on shaky ground.  Employers well-versed in federal law are likely aware that best practices advise that they not count certain legally-protected absences covered by the Americans with Disabilities Act and/or the Family and Medical Leave Act in their “no fault” attendance policy calculations.  Riding the aftershocks of shifts in federal law, California’s Healthy Workplace Healthy Family Act complicates things even more, as we have blogged before.

Finding Cracks in “No Fault” Attendance.  AB 1522, California’s Healthy Workplace Healthy Family Act, set forth new laws on the accrual and usage of paid sick leave, which we have reviewed in more detail here.  It is important to keep in mind that the new law broadens the scope of reasons for using sick leave.  And while the basis for leave may not bear on an employee’s attendance under a “no fault” policy, to the extent an employee’s leave is covered by AB 1522, its provision regarding retaliatory conduct by employers for absences covered by the act, and penalties for doing so, may matter.  AB 1522 advises against employers denying an employee the right to use paid sick leave, discharging or threatening to discharge an employee who uses paid sick leave, or demoting, suspending or discriminating against an employee.  Damages for AB 1522 violations may range from mandatory reinstatement to hefty civil and/or administrative penalties.

Here is where things get shaky.  The no-retaliation restriction of AB 1522 makes it challenging to impose “no fault” attendance policies or evaluate performance based on leave an employee takes under the new law.  Setting aside instances of fraud or failure to report absences, employer-imposed discipline for taking leave under the new law can cause a 9.0 on the Richter scale.  But fear not–“no fault” policies need not be levelled entirely.

What about Perfect Attendance Rewards?  On the flip side of “no fault” attendance policies, many employers reward employees with perfect attendance with cash bonuses, gift cards, or extra planned time off.  While such rewards reinforce and incentivize good employee behavior, including punctuality and reliability, the threat of violating the ADA, FMLA and/or AB 1522 still looms.  For example, FMLA regulations indicate that employers may not count FMLA as a “negative factor in employment actions, such as hiring, promotions or disciplinary actions”.  See, 29 C.F.R. § 825.220(c).  Considering AB 1522 contains similar language regarding retaliation (see supra) for covered leave, employers who make exceptions to their policies may want to include AB 1522 absences as one in many perfect attendance reward considerations.

Reducing Hazards with a “Two-Bucket” Approach.  If employers do not distinguish between AB 1522 leave and policy-based leave, they run the risk of facing penalties for discipline (or rewards) based on employee attendance where that employee may have used paid-time-off.  To continue applying their “no fault” attendance policies, employers can adopt a “two-bucket” approach to tracking the accrual and use of sick leave and vacation that would allow them to separately monitor each employee’s accrual and usage of AB 1522-mandated leave versus non-protected time off.  Employers could thereby isolate leave for which discipline can be issued and subject it to their attendance and/or performance standards.  Employers must also be aware that given California’s multitude of protected reasons for taking time off, even with the “two-bucket” system, some vacation time may still be protected time.

Alternatives to the “Two-Bucket” Approach–is there a way to retrofit existing policies?  A little flexibility in “no fault” attendance policies can go a long way. Employers may choose to carve out leave protected under federal, state, and local laws from their tally of employee absences.  One way to incorporate such flexibility is to expressly state in the attendance policy that the employer will excuse absences protected by federal, state, and local laws, and will consider them on an individual basis.

Another method of avoiding aftershocks would be to change attendance policy numbers to account for leave for legally authorized purposes.  In other words, employers may limit penalties to employees whose absences go above and beyond the amount time that is, or may be, authorized under AB 1522 (or other federal, state and local laws).  Ultimately, the goal is to ensure that employers do not penalize or discriminate against employees taking lawful leave.

A few tips on preparedness and prevention:

As you can gather from the information above, this area of employment law is complex, technical and, like the ground in California, ever-shifting.  No employer should rely solely on dated or generalized information in forming, revising, or implementing “no fault” attendance policies.  It is best to proceed with caution, and the assistance of expert employment counsel.  That being said, here are some key takeaways:

  • Communicate attendance policies clearly to all employees. Include the policies in handbooks and on posters in common areas.
  • Avoid taking adverse employment actions against an employee who requests or takes legally-authorized leave.
  • For actions against employees pursuant to a “no fault” attendance policy, or reward based on perfect attendance, document business reasons for the action on file.
  • Keep an eye on employment laws, and review and revise your attendance policies to comply with the law regularly–there’s no telling when a new shift will change the landscape again.

We will continue to monitor and report any activity on this front, but feel free to reach out to your favorite Seyfarth attorney if you have questions.

Edited by Chelsea Mesa.

Seyfarth Synopsis: We’ve regularly reported on California’s peculiar paid sick leave laws. Not counting industry-specific paid sick laws (e.g., the Long Beach and Los Angeles ordinances regulating hotel employers), there are now six California city ordinances mandating paid sick leave.[1] This week’s focus is on changes to the San Diego law, effective September 2, 2016.

The San Diego ordinance, originally proposed in 2014, had been put on hold pending a voter referendum. Voters passed the referendum on June 16, 2016. As passed, the referendum lacked key details. Conspicuously absent were permissible caps on annual accrual and carryover. As passed, the referendum did not allow employers to “front load” sick leave once per year (in an “annual grant”). The California Healthy Workplaces, Healthy Families Act of 2014 made annual front-loading a popular option. The referendum also failed to state an effective date.

By action of the S.D. City Council, the effective date became July 11, 2016. On that same day, the City Council passed the first reading of a 21-page Implementing Ordinance available here making amendments and clarifications. The Implementing Ordinance did not go into effect immediately, but faced the normal implementation process: a second reading, mayoral signature, and a 30-day waiting period before taking effect. The Implementing Ordinance was signed by the mayor on August 3, 2016, and will become effective on September 2, 2016.

The Good News. Effective Friday, September 2, 2016, San Diego will:

  • Allow employers to cap an employee’s total accrual of sick leave at 80 hours (80 hours is the maximum carryover);
  • Allow employers to front-load no fewer than 40 hours of sick leave at the beginning of each “benefit year” (a regular and consecutive twelve-month period, determined by the employer);
  • Clarify the enforcement process, including a civil penalty cap for employers with no previous violations. The Office of the City Treasurer has been designated as the enforcing agency.

The Implementing Ordinance language seemingly still provides for carryover of earned sick leave for up to 80 hours. The Implementing Ordinance provides: “Employers may limit an Employee’s use of Earned Sick Leave to 40 Hours in a Benefit Year, but unused, accrued Earned Sick Leave must be carried over to the following Benefit Year.” An FAQ available here states that carryover is not required if the employer uses an annual grant (frontloading). The FAQ states:

Can an employer “front load” 40 hours of sick leave rather than award it through the accrual method?

The ordinance provides only for the accrual of paid sick time at the rate of one hour of sick time for every 30 hours worked. The ordinance does not provide for any other method of awarding earned sick leave; however, the Implementing Ordinance, once effective on September 2, 2106, will allow employers to front load no less than 40 hours of sick leave to an employee at the beginning of each benefit year. Front loading at least 40 hours of leave each benefit year will excuse an employer from the accrual and carryover provisions of the Ordinance.

Under this FAQ interpretation, life would be easier for San Diego employers who administer sick leave via annual grants. Carryover will not need to be tracked and annual grants can be uniform.

The Bad News. Ambiguity remains in the San Diego Ordinance, including on the issue of how employers comply in the gap period between the effective date of July 11, 2016 and the effective date of the Implementing Ordinance (September 2, 2016). Also, there are open issues on the rate of pay. On the one hand, it seems that San Diego intended to swing closer to the California paid sick law. On the other hand, San Diego appears to be at odds with the state law on the rate of sick leave pay. Per the Implementing Ordinance, non-exempt employees are paid “at the same regular rate of pay for the work week in which the Employee uses Earned Sick Leave.” Does “regular rate of pay” mean the “regular rate of pay” for the purposes of the overtime laws (a legally complex calculation that includes certain types of bonuses, different rates of pay, commissions, etc.), as required by California law? Per the FAQ, it appears San Diego’s intent is to require pay at the hourly rate in effect at the time the sick pay is used, not the more complex “regular rate of pay” used for overtime. The FAQ says: “Employees accrue leave by the hour, not by a specific wage rate. When used, these hours must be paid at the hourly rate the employee earns at the time the employee uses the earned sick leave.” Unfortunately for employers subject to The California Healthy Workplaces, Healthy Families Act of 2014, San Diego is at odds with how the Division of Labor Standards Enforcement has interpreted the California paid sick leave law for non-exempts. DLSE’s FAQ, available here, says the employer may either:

Calculate your regular, non-overtime rate of pay for the workweek in which you used paid sick leave, whether or not you actually worked overtime in that workweek (in general terms, this is usually done by dividing your total non-overtime compensation by the total non-overtime hours worked), or

Divide your total compensation for the previous 90 days (excluding overtime premium pay) by the total number of non-overtime hours worked in the full pay periods of the prior 90 days of employment

Even on sick leave pay for exempt employees, there is a San Diego peculiarity, although it is probably not consequential for most employers. For exempt employees, the San Diego Implementing Ordinance says to pay sick time at the “same rate and in the same manner as the Employer compensates working time.” The DLSE, in contrast, says to pay California sick leave at the rate paid for time off: “For exempt employees, paid sick leave is calculated in the same manner the employer calculates wages for other forms of paid leave time (for example, vacation pay, paid-time off.)” The DLSE’s FAQ is available here. This picayune peculiarity could, in some cases, make a difference in exempt pay.

Our practical suggestion: pay San Diego sick leave at whichever rate is more generous. For non-exempts, the state calculation will be more generous in most cases. For exempts, base salary will work in most, but not all, cases.

[1] Here are the six:

  • San Francisco (Proposition F, passed in November 2006)
  • Oakland, summary here
  • Emeryville, with paid sick time to care for guide dogs, signal dogs and service dogs, summarized here
  • Los Angeles, summary here
  • San Diego, summary here
  • Santa Monica (coming in 2017), summary here

Edited by Colleen Regan and David Kadue.

Seyfarth Synopsis: In leaves of absence, as in employment law generally, California can be peculiar. We examine at a few examples, including particular city ordinances in Emeryville and San Francisco, and other statewide oddities such as voting, organ/tissue donation, and reckless student leave.

In the weird, wonderful, and often complex world of California leave laws, there are many familiar species. However, alongside the more commonplace military, disability, and medical leaves, California and its municipalities also recognize a wide array of strange, surprising, and uncommon leave categories:

  • “The Secret Life of Pets,” in Emeryville: Fortunately for employers (although perhaps unfortunately, for those of us who are dog and cat lovers), California has not exactly mandated “paw-ternity” leave just yet… But, we’re clawing our way closer! In June 2015, the city of Emeryville passed a paid sick leave ordinance allowing employees to use paid sick leave to care for a designated individual, if the employee has no spouse or registered domestic partner. Even Fido can be covered since the ordinance allows employees to use paid sick leave to provide care for a guide dog, signal dog, or service dog.
  • “Homeward Bound,” in San Francisco: San Francisco recently passed paid parental leave for most employees. And, San Francisco also has a different ordinance granting expansive paid sick leave, which allows workers to take time off to care for both family members and a “designated person” when they need medical care or attention. The designated person can be anyone the employee chooses, as long as their name is on file with the employer before the employee uses the leave. San Francisco’s paid sick leave ordinance covers almost any type of employee, including undocumented workers and household employees, such as caregivers, cooks, and house cleaners.
  • The “Shaggy” Troublemaker Student: Does your employee have a kid who has been sent to the principal’s office one too many times? According to California Labor Code § 230.7 and California Education Code § 48900.1, that employee is entitled to protected unpaid time off work if their child faces suspension from school. This applies to all employers regardless of the number of employees, as long as the employee provides reasonable notice to the employer.
  • Voting—“An American Tail”: Does your employee need to leave early to partake in the democratic process? California Election Code §14000 provides that an employee without sufficient time outside of his or her normal working hours to vote may take up to two hours off work to vote without loss of pay. The time off should be during the beginning or end of a regular working shift, and the employee is required to provide notice to their employer at least two working days in advance to arrange for voting time.
  • All Donators “Go to Heaven”: If your employee decides to help save a life and donate an organ or bone marrow, the employee is likely to need time off of work. In 2011, as the winner of a state senator’s “There Ought to Be a Law” contest, a new law was passed requiring employers to provide employees the opportunity to take leave to donate their own human tissue. Thus, California Labor Code § 1510 requires private employers with more than 15 employees to provide paid leaves of absence for organ and bone marrow donation.

These are just a few of the unusual protected leaves you may be faced with as an employer in California. And these bizarre rules are a good reminder that when dealing with employees and leaves in California, it may be best to tread cautiously. If reading this post sparked any questions, musings, or ponderings in your mind about California leave laws, your friendly neighborhood Seyfarth attorneys are available to advise on potential workplace solutions.

Seyfarth Synopsis: After hitting some major roadblocks, the San Diego Earned Sick Leave and Minimum Wage Ordinance has now been enacted. The Ordinance is to take effect this summer, most likely by the end of July. The Ordinance adds another perplexing piece to California’s paid sick leave patchwork.

After taking a nearly two-year hiatus, the San Diego Earned Sick Leave and Minimum Wage Ordinance was finally enacted on June 7, 2016, by San Diego voters. The Ordinance, originally approved by the San Diego City Council on August 18, 2014, hit a major snag when opponents sought a referendum. The City Council responded by suspending the Ordinance pending voter approval. The voters have now spoken.

San Diego joins six other California municipalities—San Francisco,[1] Oakland, Emeryville, Los Angeles,[2] Santa Monica,[3] and Long Beach[4]—that now supplement California sick pay law with additional paid sick leave entitlements. Because the statewide paid sick leave law does not supersede local ordinances, employers must comply with both the state and local laws, whichever most favors employees.

While the Ordinance’s effective date is currently unclear, signs point to a July 2016 effective date. We, of course, will keep you posted on any developments. In the meantime, employers should take steps now to ensure their policies and practices comply with the impending law.

Below is a detailed summary of the Ordinance and the key obligations it imposes on employers. Most notably, the Ordinance does not set a cap on either the amount of earned sick leave that employees can accrue in a year or the amount of unused earned sick leave that employees can carry over from year to year. The Ordinance also increases the minimum wage that San Diego employers must pay. The minimum wage will increase to $10.50 once the Ordinance goes into effect and will increase to $11.50 per hour on January 1, 2017. Starting January 1, 2019, the minimum wage will increase to an amount correlating with the cost of living.

Which Employers Are Covered by the Ordinance?

The Ordinance will cover all employers with at least one eligible employee working in San Diego, and defines “employers” as any person (including any association, organization, partnership, business trust, limited liability company, or corporation) who exercises control over the wages, hours, or working conditions of any employee, who engages an employee, or who permits an employee to work. Employers do not include persons who receive in-home supportive services care, under state law.

The Ordinance notes that covered employers need not provide additional earned sick leave where they provide their employees with an amount of paid leave under either a paid time off or other paid leave policy that meets or exceeds the Ordinance’s minimum standards and requirements, including the protected conditions and reasons for using sick leave.

Which Employees Are Covered by the Ordinance?

The Ordinance broadly defines a covered employee as one who performs at least two hours of work within the City of San Diego in one or more calendar weeks of the year and who qualifies as an individual entitled to minimum wage under California minimum wage law.

The following individuals are not subject to earned sick leave or the minimum wage increase:

  • Individuals authorized to obtain less than the minimum wage under a special license pursuant to California Labor Code sections 1191 or 1191.5.
  • Persons employed on a publicly subsidized summer or short term youth employment program.
  • Any student employee, camp counselor, or program counselor of an organized camp.
  • Independent contractors.

Earned Sick Leave Overview

How Much Sick Time Can Employees Accrue, Use, and Carry Over?

Employees accrue one hour of paid, earned sick leave for every 30 hours worked, at the same hourly rate or other measure of compensation that the employee earns. Accrual for employees exempt from California’s overtime laws is based on a 40-hour workweek, unless the employee’s regular workweek is less than 40 hours, in which case accrual is based on the regular work week. Employees will begin accruing earned sick leave on the later of the Ordinance’s effective date or the employee’s commencement of employment, and employees can begin using their accrued time 90 days thereafter.

Employers may limit use of sick leave to 40 hours in a 12-month period and can set a reasonable minimum increment for using sick leave, not to exceed two hours. Importantly, and as noted above, while the Ordinance sets an annual usage cap, accrual itself cannot be capped. In other words, employees must be allowed to accrue as much earned sick leave as possible based on their hours worked. Making matters worse for employers, unused leave, in whatever amount, must be carried over at year-end. In essence, employees can carry over an unlimited amount of accrued, unused sick leave, but may be limited to using 40 hours per calendar year. This accrual provision of the Ordinance is much more expansive than California’s statewide paid sick leave law, which provides that employers may cap the amount of accrued leave at 48 hours or six days, whichever is greater.

This distinction is problematic because it increases the risk of employee confusion. California law requires employers to provide employees with notice of their available number of sick leave hours either on the employees’ pay stubs, or in separate writings issued the same day as the employees’ paychecks. An employee who has, for example, 140 hours of accrued leave may not understand why only 40 hours of leave is available to use within a 12-month period.

The Ordinance’s unlimited accrual and carryover caps also make it risky for employers who seek to front-load earned sick leave in the form of an annual lump grant. Unlike the California statewide sick leave law, the Ordinance is silent on whether front-loading removes an employer’s accrual and year-end carryover obligations. As a result—and barring any future guidance from the City—this alternative sick leave delivery method may be unavailable to San Diego employers.

Under What Circumstances May Employees Use Sick Leave?

Qualified employees may use their earned sick leave for any of the following reasons:

  • If an employee is physically or mentally incapable of performing duties because of an illness, injury or medical condition, or is absent for the purpose of obtaining professional diagnosis or treatment of a medical condition or for other medical reasons, such as pregnancy or obtaining a physical examination.
  • If an employee is absent from work due to a family member’s[5] need to obtain treatment or professional diagnosis of a medical condition, or to provide care or assistance to a family member with an injury, illness or medical condition.
  • If, under certain circumstances, the employee or the employee’s family members are absent because of domestic violence, sexual assault or stalking.
  • If, by order of a public official because of a public health emergency, there is a closure of the employee’s place of business or the employee’s child’s school or child care provider.

What Notice Must Employees Provide When Using Sick Leave?

If the use of earned sick leave is foreseeable (e.g., scheduled doctor’s appointments), then an employer may require employees to provide up to seven days’ notice. But if use of sick leave is not foreseeable (e.g., a sudden illness), then an employer may require only as much notice as is practicable.

What Documents Can Employers Ask Employees to Provide When Using Sick Leave?

If employees are going to be absent for more than three consecutive work days then an employer may require employees to provide reasonable documentation that the employee used earned sick leave for a permitted purpose. Employers must accept doctor’s notes or other documentation signed by licensed health care providers indicating the need for the amount of leave taken. An employer however, may not require that the note specify the nature of the injury, illness or medical condition.

Is an Employer Required to Pay Unused Time upon Employment Separation?

No. Employers are not required to pay an employee for unused accrued sick leave upon termination. However,when an employee is rehired within six months of separation, the employer must reinstate the employee’s previously accrued, unused sick leave that was not paid upon separation, and the employee is entitled to use said leave.

Minimum Wage Increase Overview

What is the New Minimum Wage and When does it Go Into Effect?

Employees must be paid a minimum wage of $10.50 an hour upon the Ordinance’s effective date, which, again, we anticipate will occur in July 2016. Starting January 1, 2017, the minimum wage will increase to $11.50 an hour. Starting January 1, 2019, the minimum wage will increase by an amount corresponding to the prior year’s increase, if any, in the cost of living, as defined by the Consumer Price Index. If however, California or federal laws provide a higher minimum wage rate, then the minimum wage under this Ordinance will be increased to match the higher California or federal wage, effective on the same date that the increased California or federal wage takes effect.

Employer Obligations under the Ordinance

Employer Notice Requirements

Employers must post notices published by the City in a conspicuous place in the workplace informing employees of the current minimum wage, their right to the minimum wage, and their right to earned sick leave. The notice must also include information about the accrual and use of sick leave, the right to be free from retaliation, and the right to file a complaint with the designated enforcement office. The posted notice must be in English, Spanish and any other language spoken by at least five percent of employees at the employer’s job site.

In addition, at the time of hire or on the Ordinance’s effective date, employers are required to provide employees with written notice of the employer’s requirements under the Ordinance, and the employers name, address, and telephone number. Electronic notice is permitted.

Records Maintenance Requirement

Employers must create written or electronic records documenting employees’ wages earned, and accrual and use of sick leave, and retain these records for at least three years.

Prohibitions

Employers are prohibited from (1) requiring employees seeking to use their sick leave to search for or find a replacement worker, (2) disclosing the medical condition of the employee or his or her family member unless ordered to do so by the employee or authorized by federal or state law, and (3) retaliating against an employee who exercises his or her rights under the Ordinance.

Remedies/Penalties

An employer that violates any requirement of the Ordinance is subject to a civil penalty for each violation of up to, but not to exceed, $1,000 per violation. An employer failing to comply with the notice and posting requirements is subject to a civil penalty of $100 for each employee who was not given appropriate notice, up to a maximum of $2,000. Additionally, employees may file a complaint with the designated enforcement office or in court. Notably, filing a complaint with the enforcement office is not a prerequisite to filing a claim in court.

What Should Employers do Now?

With the Ordinance’s effective date looming, San Diego employers should take steps now, including the following, to achieve compliance:

  • Review existing sick leave policies and either implement new policies or revise existing policies so that they satisfy the Ordinance.
  • Post the required notices in all applicable languages.
  • Prepare notices in all applicable languages to provide to employees at the time of hire or once the Ordinance is implemented.
  • Review policies on attendance, anti-retaliation, conduct, and discipline.
  • Train supervisory and managerial employees, as well as HR, on the new requirements.
  • Ensure that payroll records adequately reflect accrual and use of earned sick leave and the increase in minimum wage.

[1] On June 7, 2016, San Francisco voters approved an amendment to the San Francisco Paid Sick Leave Ordinance.  The amended San Francisco law becomes effective on January 1, 2017.

[2] As discussed here and here, the Los Angeles City Council in April 2016 voted for 48 hours of paid sick leave for Los Angeles employees as an amendment to an LA City minimum wage ordinance. The LA ordinance is effective July 1, 2016.  Further, certain hotel employers must comply with additional compensated time off obligations set forth in the Los Angeles Citywide Hotel Worker Minimum Wage Ordinance.

[3] The Santa Monica paid sick leave law is effective January 1, 2017.

[4] Long Beach Resolution No. RES-12-0049 establishes paid sick leave and minimum wage requirements for certain hotel employers.

[5] Family members include an employee’s child, spouse, parent, grandparent, grandchild, sibling (including step-siblings), whether biological or not, or the child or parent of a spouse.

Seyfarth Synopsis: The Los Angeles City Council has voted and the Mayor has signed the ordinance.  As of July 1, 2016, many employees within the City of Los Angeles will be entitled to accrue 48 hours of paid sick leave per year. The ordinance has a number of unusual and specific provisions that employers need to be aware of, described in detail below.  Link to the Ordinance here.

Not content with California paid sick leave law (discussed here, here and here), several California municipalities have piled on. Their local ordinances require employers with employees working within their geographical boundaries to provide paid sick leave over and above what California law requires (California Labor Code Sections 245-249). The City of Angels is now poised to put a peculiar L.A. spin on paid sick time. The state paid sick leave law does not supersede local ordinances, and employers must comply with both the state and the local laws, whichever is more favorable to employees.

By a 13-1 vote on April 19, 2016, the Los Angeles City Council voted in favor of 48 hours of paid sick leave for Los Angeles employees as an amendment to a L.A. City minimum wage ordinance. That amount is double the annual amount of paid sick leave available under California’s state-wide sick pay law (24 hours/3 days). Following the initial vote, the City Council asked the City Attorney to draft the ordinance. Two versions of the ordinance were drafted and after confusing repeated voting on June 1, 2016, we are informed that one version has passed. The paid sick leave provisions are found in Article 7 of Chapter XVIII of the Los Angeles Municipal Code, Section 187.04 (A)-(I)). We are informed that one version has passed.

Coverage. Unlike state law, which contains exceptions for construction workers, certain home health workers, flight crews, and workers covered by union agreements (if certain conditions are met), the L.A. ordinance has no exceptions. The minimum wage provisions of the ordinance distinguish between larger employers (26 or more employees) and smaller employers (25 or fewer employees) for implementation timing—smaller employers have until July 1, 2017. It is uncertain from the text whether a similar grace period before implementation of paid sick leave for exists for smaller employers; at least one City Council member’s office confirmed the grace period for small employers applies to sick leave. Employees who work 30 days in Los Angeles within a year “from the commencement of employment” are covered (similar to the California state paid sick leave law).

  • Employee” is defined to include all individuals who perform two or more hours per week within the geographic boundaries of the City.
  • Employer” is defined as including “a corporate officer or executive, who directly or indirectly or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any Employee.” Thus, the ordinance appears to hold corporate officers and executives individually accountable.

Accrual and Use. Current employees must begin accruing or receive a grant of sick leave on July 1, 2016. Employees hired after July 1, 2016, will begin to accrue or will be granted paid sick leave on their date of hire. Employees may use paid sick leave beginning on the 90th day of employment or July 1, 2016, whichever is later. L.A. employees will be entitled to use up to 48 hours of sick leave in “each year of employment, calendar year or 12-month period.” Accrued unused paid sick leave shall carry over to the following year of employment, but may be capped at 72 hours. Employers may set a higher cap or no cap at all (having no cap is not recommended).

Employers have a choice of either (1) providing the entire 48 hours to an employee at the beginning of each year of employment, calendar year, or 12-month period (“lump grant”) or (2) having sick leave accrue at the rate of one hour of sick leave per every thirty 30 hours worked (“accrual”). While both the “lump grant” method and the same accrual rate are allowed by the state law (the state law has additional accrual options not allowed by the L.A. ordinance), state law provides that if an employer uses the “lump grant” design, then unused sick leave does not carry over and unused balance is simply replaced by the new lump grant. L.A. is different. Under the L.A. ordinance, up to 72 hours must carry over year to year. So, while an L.A. employee can use only 48 hours of sick pay in a year, the employee can carry over 72 hours of paid sick leave (or more, if the employer allows it).

L.A. employers need not pay out unused L.A. sick days upon termination. If an employee separates and is rehired within one year, then previously accrued and unused paid sick time must be reinstated. Unlike state law, the L.A. ordinance has no exception to reinstatement of sick time if paid sick leave was paid out on termination (as undifferentiated paid time off or “PTO” must be paid out).

Family Members and Equivalents. Sick leave under the L.A. ordinance can be used on the employee’s written or verbal request for all of the reasons stated in the California state paid sick leave law:

  • the employee’s own health care needs (including treatment of an existing health condition and preventative care) or
  • a covered family member’s health care needs (includes treatment and preventative care), or
  • to seek aid, treatment, or related assistance for domestic violence, sexual assault, or stalking.

The universe of family members is broader under the L.A. ordinance, however. Family includes not only children (biological, adopted, step, loco parentis), siblings, spouses, registered domestic partners, parents (including parents of the spouse or domestic partner), grandparents, or grandchildren, but also “any individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.” No clarification is provided about what it takes to be equivalent to family or how an employer can verify family equivalency.

Documentation.  The version of the L.A. ordinance which passed states, “An Employer may require an Employee to provide reasonable documentation of an absence from work for which paid sick leave is or will be used.” The other version omits any reference to the employers’ ability to obtain documentation (like the California state law).

Other L.A. Peculiarities. The L.A. ordinance has a number of specific additional provisions, such as:

  • It contains an urgency provision that would make the ordinance effective immediately; but provisions in the ordinance start accrual and use of sick leave no earlier than July 1, 2016.
  • It also contains a provision that if an employer “has a paid leave or paid time off policy or provides payment for compensated time off, that is equal to or no less than 48 hours, no additional time is required.”
  • It does not address advance notice for using sick time.
  • It has an anti-retaliation provision that appears to apply to employees who mistakenly but in good faith allege noncompliance and to create a rebuttable presumption of retaliation when adverse action is taken against an employee within 90 days of protected activity. A separate article provides for agency enforcement by fines and having to post “a notice of correction,” as well as traditional remedies in civil courts such as restitution, injunctions, reinstatement and back pay.
  • It designates an administrative agency, the Office of Wage Standards of the Bureau of Contract Administration, as bearing administrative/enforcement responsibilities and states that this agency “may promulgate guidelines and rules for the implementation” of the ordinance. Worthy of note: this agency may “allow an Employer’s established paid leave or paid time off policy or one which provides payment for compensated time off to remain in place and comply with this article even though it does not meet all the requirements in Section 187.04, if [the agency] determines that the Employer’s established policy is overall more generous.”

Most existing paid sick leave policies will need significant changes to make them compliant with this new L.A. ordinance. Possibly, more interpretive guidance and rules will be forthcoming from a designated administrative agency.

Questions?  Don’t hesitate to reach out to your Seyfarth attorneys if you need assistance bringing your company into compliance with this new ordinance.  July 1st is not far away!

Edited by Coby M. Turner.

Seyfarth Synopsis:  Santa Monica has amended its Minimum Wage Ordinance to postpone implementation of its paid sick leave entitlements, now starting January 1, 2017 instead of July 1, 2016, and create a two phase implementation process for both small and large employers.

Like many a trip to the beach, the journey of the paid sick leave portion of Santa Monica’s Minimum Wage Ordinance[1] has hit some last-minute snags. On Tuesday, April 26, the City Council accepted a package of amendment proposals. Within those proposals, instead of rushing to a July 1, 2016 implementation date of the previously adopted San Francisco-like 72-hour sick leave cap, the Council has decided that everyone should just chill out. The amended Ordinance will allow implementation to roll in like the tide, with the first wave of changes delayed to January 1, 2017, and a second wave coming in on January 1, 2018.

Under the first wave, small businesses (employers with 25 or fewer employees) must allow a rolling cap of 32 hours of paid sick time for employees, with larger businesses capped at 40 hours. The second wave will increase these caps to 40 hours for small businesses and 72 hours for larger businesses. Until January 1, 2017, Santa Monica employers can relax and continue to follow California law.

The accrual rate remains the same as required under California law (one hour for every 30 hours worked), but these accrual caps act as “point in time” caps, similar to the San Francisco ordinance. That is, Santa Monica employers would no longer be able to limit employee annual use to 24 hours after Jan 1, 2017. Instead, they will have to allow the use of whatever an employee has in his or her bank at any given time. The Ordinance also does not eliminate an employer’s obligations to follow the California statute where the California statute is more generous. So, at least until January 1, 2018 (when the accrual cap will increase to 72 hours for large employers), Santa Monica employers who provide sick time by the accrual method should still follow the 48-hour minimum accrual caps under state law. The updated proposal does imply that some kind of frontloading would be acceptable, but it’s not apparent yet how that would work. We hope that once the Ordinance itself is published, this issue will be made clear.

The Council has also reduced the period of time in which retaliation against an employee for exercising rights under the Ordinance will be presumed. The time, once 180 days, will now be 90 days (that that’s still three times longer than under the California law). So employers should be very cautious in taking actions against employees who take sick days, no matter how totally bodacious the surf report was for that day.

Please see here and here for more information.  We expect the amended Ordinance to be available at any moment.  In the meantime, please see your most tubular Seyfarth attorney for more information.

[1] The Ordinance is entitled “An Ordinance of the City Council of the City of Santa Monica Adding Chapter 4.62 to the Santa Monica Municipal Code Requiring a Minimum Wage for Employees, and Adding Chapter 4.63 to the Santa Monica Municipal Code Requiring a Living Wage to Hotel Workers.”

We’ve previously covered California’s sweeping Paid Sick Leave Law that took effect July 1, 2015 here and here. Now Santa Monica – not to be outdone by Bay Area sister municipalities in San Francisco, Oakland, and Emeryville – enacted its own paid sick leave ordinance (“Ordinance”) on January 26, 2016 – just two weeks after it was initially proposed.

The Santa Monica Ordinance, like its Northern California counterparts, mandates that most employers provide paid sick leave well in excess of California requirements, and allows covered employees of employers with 26 or more employees to accrue up to 72 hours of paid sick leave. Further, unlike California law, the Ordinance does not place an annual use limit on accrued sick leave.

Because the Ordinance is not preempted by California law, covered Santa Monica employers must comply with both the California Paid Sick Leave Law and the Ordinance. When the two conflict, the employer must follow the provision that is more generous to the employee.

Unless there is a referendum, the Ordinance will become law after 30 days, on February 25, 2016. The Ordinance provides that paid sick leave begins to accrue as of the “operative date” of the Ordinance. That term is not defined. According to the Santa Monica City Council’s office, the effective date of the Ordinance’s paid sick leave provisions is July 1, 2016.

And now, the key provisions of the Ordinance:

Who Is Covered?

The Ordinance generally covers any employee who works at least two hours a week in Santa Monica, subject to limited exceptions noted below. “Hotel workers” (excluding those employed in a managerial, supervisory, or confidential role) whose primary place of employment is at a Santa Monica hotel are covered by the paid sick leave provision of the Ordinance, regardless of how many hours they work in Santa Monica in a particular week.

Employees excluded from coverage are federal, state, county, and city government employees (including those employed by government agencies, school districts, and all other public entities). The Ordinance also does not cover employees who have waived their paid sick leave rights in a collective bargaining agreement (CBA) if the waiver is explicitly set forth in the agreement in clear and unambiguous terms.

How Much Sick Leave Must Be Provided? (Accrual, Accrual Caps, and Carry Over)

The Ordinance mandates paid sick leave in excess of the state requirement. Like the California Paid Sick Leave Law, the Ordinance provides that employees accrue one hour of paid sick leave for every 30 hours worked (including overtime hours). Significantly, however, the Ordinance’s accrual cap for employers with 26 or more employees far exceeds the state law’s 48-hour accrual cap. Specifically, employers with 26 or more employees must permit employees to accrue up to 72 hours of paid sick leave. Employers with 25 or fewer employees must allow employees to accrue up to 40 hours of paid sick leave.

These accrual caps are point-in-time caps – not annual accrual caps. Also, all accrued, unused paid sick leave (up to the maximum cap) carries over from year to year. And unlike the California law, which permits employers to limit paid sick leave use to 24 hours or three days per year, the Ordinance does not place an annual use limit on accrued paid sick leave.

As a result, employees may be entitled to use more than 72 hours of paid sick leave in a year. For example, suppose an employee’s paid sick leave balance is at the 72-hour accrual cap on December 31 of a particular year. The employee’s entire balance carries over to the following year. The employee is ill in February and uses all 72 hours. Accordingly, she resumes accruing paid sick leave in February and continues to accrue paid sick leave throughout the year until she again reaches the 72-hour cap. And, because there is no annual use limit, she may use paid sick leave after it has accrued even though she used 72 hours earlier in the year.

The Ordinance provides that employees are entitled to use paid sick leave after the first 90 days of employment.

What about Frontloading?

Unlike the California Paid Sick Leave Law, the Ordinance does not expressly allow for frontloading of paid sick leave at the beginning of each year. And because there is no annual paid sick leave accrual cap (only a point-in-time cap) and no annual use limit, frontloading very likely is not an option under the Ordinance.

When Does Paid Sick Leave Accrual Begin?

If an employee works for an employer on or before July 1, 2016, then the employee begins accruing paid sick leave on the “operative date” of the Ordinance (presumably July 1, 2016). Under the Ordinance, new employees begin to accrue paid sick leave 90 days after the commencement of employment. But recall that new employees, under the California Paid Sick Leave Law, begin to accrue paid sick leave immediately upon hire, although an employer may forbid new employees from using any accrued paid sick leave until their 90th day of employment. Accordingly, a Santa Monica employer cannot limit accrual during the first 90 days under the Ordinance and, instead, must comply with the state law’s more generous provision.

What Are Other Key Provisions?

Other than the accrual caps and the absence of an annual use limit, the Ordinance essentially mirrors the California Paid Sick Leave Law’s notice, usage, and anti-retaliation provisions. For example, the Ordinance states that employers may require reasonable notification for use of paid sick leave. The Ordinance also provides that employees may use paid sick leave consistent with state sick leave laws. And like the state law, the Ordinance does not require employers to pay out accrued, unused sick leave upon separation from employment.

The Ordinance does not contain posting or recordkeeping requirements, so Santa Monica employers should continue to comply with the state law’s requirements.

What Do I Do Now? (Proactive Next Steps)

Employers with employees who perform work in Santa Monica should take steps now to ensure they can achieve full compliance with the Ordinance by the July 1, 2016 operative date. These are among the actions to consider:

  • Review and, as necessary, revise existing paid sick leave or PTO policies and procedures to ensure they meet the Ordinance’s requirements or, alternatively, establish a separate paid sick leave policy that complies with both the California Paid Sick Leave Law and the Santa Monica Ordinance.
  • If applicable, update internal systems so that they allow for paid sick leave accrual of up to 72 hours (for employers with 26 or more employees).
  • Take this opportunity to review and, as necessary, revise anti-retaliation, attendance, conduct, and discipline policies to prevent retaliation and interference claims under the Ordinance or the California Paid Sick Leave Law.
  • Train Santa Monica supervisory and managerial employees, as well as HR and payroll personnel, on the Ordinance’s requirements.
  • Monitor the City of Santa Monica’s website (http://www.smgov.net) for updates, frequently asked questions (FAQs), and other publications that provide guidance on how to comply with the Ordinance’s requirements.

Questions

If you have any questions about the new Santa Monica Ordinance or about California’s Paid Sick Leave Law, please reach out to Ann Marie Zaletel or another member of our California Workplace Solutions group for additional guidance.

Edited by David D. Kadue, Colleen M. Regan, and Coby M. Turner.

Counting moneyWe normally write about how California law differs from American law generally. Today, though, we highlight a recent California case that rejected the notion that California law should deviate from analogous federal wage and hour law. That case is Alvarado v. Dart Container Corp. of California. More detailed information appears here.

In Alvarado, the California Court of Appeal ruled that an employer complies with California law when it uses the federal method of calculating the regular rate of pay in determining the overtime premium pay owed on a “flat sum” bonus.

Why are we writing about this? Well, under both California law and federal law, employers must pay overtime premiums based on the regular rate of pay. The regular rate is also important in California because it is the rate at which benefits under the California Paid Sick Leave Act must be paid to non-exempt employees (unless the 90-day lookback method is used). Therefore, knowing how to calculate the regular rate is important to ensure that employers make these payments properly.

Calculating the regular rate includes all items of remuneration paid to non-exempt employees, except for those items that are specifically excludable. The regular rate thus includes almost all payments, including non-discretionary bonuses. Employers, in paying those bonuses, sometimes forget to add overtime premium pay. The employer in Alvarado remembered to make that payment, but used a method of calculating the regular rate that an employee then challenged

The employee was paid a $15 attendance bonus for working weekend shifts. The employer calculated the overtime pay due on this bonus by using the FLSA method of calculating the regular rate of pay. Under the FLSA regulations, an employer may derive the regular rate of pay by simply adding the bonus to the other includable compensation paid and then dividing the sum by the total number of hours worked. The regulations provide an example: an employee works 46 hours in a week, earns $12 an hour, and receives a $46 production bonus for the week.  Under the FLSA formula, the regular rate of pay would be $13 an hour [(46 hours x $12/hour) + $46 bonus] / 46 hours].

California statutes do not specifically address how to calculate the regular rate of pay in computing the overtime pay due on a non-discretionary bonus. Thus, like many employers, the employer in Alvarado used a formula that was consistent with the FLSA formula.

The California Department of Labor Standards Enforcement, meanwhile, has taken a different, peculiarly Californian position: the DLSE has opined that the regular rate must be the sum of all compensation divided by only the regular (non-overtime) hours worked.  Otherwise, the DLSE has reasoned, the regular rate would be diluted in a way that would conflict with a general California public policy discouraging the use of overtime hours.

The Alvarado court, noting the absence of specific statutory guidance on this subject, rejected the DLSE’s position. The Court of Appeal held that the DLSE’s view was not valid and that employers do not violate California law when following the federal standard.

Now, California employers who pay “flat sum bonuses” in the same pay period that they are earned should be able to rely on the FLSA regulations for calculating overtime payments.  It turns out that, in this particular respect, California is not so different after all.