California New Mandatory Paid Sick Leave

The implementation of the new rules regarding California Sick Leave, which, as of July 1, 2015, will apply to all employees, whether part-time or full-time.

Essentially, there are two (2) different methodologies: (i) the “accrual method”; and (ii) the “allotment method”.

The accrual method basically allows each employee to earn one (1) hour of sick leave, for every thirty (30) hours worked, which applies to both part-time and full-time employees. Although the accrual of sick leave occurs upon employment, it does not vest until after the first ninety (90) days of employment. This method requires a substantial amount of administration, since the law actually allows up to forty-eight (48) hours of sick leave annually, but allows the employer to cap sick leave at twenty-four (24) hours per year. Under this method, there is an ability to roll over unused sick leave annually, of up to forty-eight (48) hours.

The other methodology, the “allotment method”, allows all employees, from July 1, 2015 (or ninety-one (91) days after employment for new employees), to have twenty-four (24) hours annually. (This applies to an employee who joins the company in July, which employee would have twenty-four (24) hours for the remainder of the year.) Like the accrual method, it requires an employee to have worked for the company for at least ninety (90) days. However, the twenty-four (24) hours of sick leave vests immediately and can be used at any time by the employee during the calendar year. There is no rollover from year-to-year.

Each employee, at the beginning of each calendar year, would start with a clean slate; i.e., another twenty-four (24) hours, i.e., a new “piggy bank” of sick leave.

The “piggy bank” is noted on each employee’s pay stub, and shows a reduction, in the event that there is the usage of sick leave. There is no need to set up a separate fund, since, if an employee takes sick leave, they would just receive their regular pay, as if they worked.

Please also note that there is no obligation of an employer, upon termination or under any circumstances, to “payout” monetary compensation, equal to any accrued and untaken sick leave.

After weighing the possibilities, and the pros and cons of the “accrual method” versus the “allotment method”, it is preferable to go with the “allotment method”. From an administrative perspective, it is a much cleaner methodology, and there is no downside to the company. Again, no funds are set aside and each employee has the right, whether part-time or full-time, to accrue up to twenty-four (24) hours. (Please note that the sick leave hours are applied on an hour-by-hour basis. For example, if an employee works a four (4) hours shift, and takes sick leave on that day, then they would use four (4) hours of accrued sick leave.)