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Paid Sick Leave Corrections Bill Signed by Governor Brown

On July 13, Governor Brown signed AB 304 (Gonzalez, D-San Diego) making several adjustments and corrections to AB 1522 (also by Assemblymember Gonzalez) passed by the California Legislature in 2014.

The process of implementation in late 2014 and early 2015 revealed a number of problems with the original sick leave mandate bill, some of which are fixed by AB 304:

  • Specifies that existing paid time off (PTO) and paid sick leave (PSL) programs that accrue in a different manner than that specified by AB 1522 (one hour of PSL for every 30 hours worked) are compliant with the PSL mandate if the accrual method used allows an employee to earn at least 24 hours of leave by the 120th calendar day of employment. This allows employers to use more common accrual methods that accrue by the pay period, rather than by the number of hours worked.
  • Excuses employers from providing additional paid sick leave if they had a PSL or PTO program in place as of January 1, 2015 that allowed employees to accrue at least one day or eight hours of PSL or PTO within three months of employment, and allowed employees to accrue at least three days or 24 hours of PSL or PTO within nine months of employment.
  • Clarifies that if an employer pays out unused PTO at termination, the employer is not required to reinstate that accrued but unused PTO if the employee returns to the employer's employment within one year.
  • Allows an employer providing unlimited paid sick leave or paid time off to report the employee's leave balance on a pay check stub or wage statement as "unlimited."
  • Allows employers to calculate the rate of pay for employees paid on commission or by piece-rate to calculate the proper rate at which paid sick leave is paid to the employee by either:Clarifies that it is not necessary for employers to maintain any records or inquire into employee's reasons for using PSL or PTO.
    • Dividing the employee's total compensation over the prior 90 days by the hours worked in the prior 90 days; or,
    • Calculating the PSL pay rate in the same manner as the employer calculates the employee's regular rate of pay for the purpose of calculating overtime.

FELS will furnish further guidance and information about the implementation of the PSL mandate as it becomes available.