October 1, 2014

New California Law Will Require Nonprofits to Provide California Employees with Paid Sick Leave

4 min

Effective July 1, 2015, the California Healthy Workplaces, Healthy Families Act of 2014 will impose new paid sick leave requirements on California employers.

The New Law Covers Virtually All Employers, Including Nonprofits

Almost all employers, regardless of size, are covered by the new California law. The new law does not contain an exception for small nonprofits or nonprofits with fewer than a particular number of employees. There are very narrow exceptions to the law, such as employees who are subject to certain collective bargaining agreements. Generally speaking, all employers – nonprofit and otherwise – need to review their sick leave policies to ensure they are compliant with the new law.

The new law also applies to out-of-state nonprofit employers that have employees working in California. As long as an employee is a California resident who performs work in California, the employee must receive the law's benefits (a nonprofit's non-California-based employees would not be subject to the law). Even an employee who merely telecommutes from California would be considered a California employee and subject to the law.

Nonprofits Must Guarantee at Least Three Paid Sick Days per Year

Under the new law, once an employee works 30 days, an employer is required to provide that employee with at least one hour of sick leave for every 30 hours worked. In general, an employer must allow accrued paid sick leave to roll over to the next year. However, an employer may limit the use of paid sick leave in a year to 24 hours, or three days, in each year of employment.

No accrual or carry-over is required if an employer provides the full amount of sick leave at the beginning of each year, allowing the employee to take sick leave before he or she would have otherwise accrued it. An employer is not required to allow an employee to accrue a total of paid sick leave in excess of 48 hours, or six days. Employees are able to use paid sick time for preventive care for themselves or a family member.

An employee who uses sick leave is entitled to compensation during leave at his or her standard hourly rate; employees who earn commissions must have those commission payments factored into their sick leave payment. An employer is not required to pay out the sick leave upon termination.

Some Existing Policies May Need to Be Modified to Meet the Law's Provisions

A nonprofit employer is not required to increase the number of paid leave days provided in existing policies if the paid leave policy/paid time off (PTO) policy provides the same benefits as the new law (i.e., it provides employees at least 24 hours or three days of paid sick leave – or equivalent paid leave/PTO – for each year of employment, calendar year, or 12-month basis). However, even these general PTO policies need to be examined to ensure employees are advised that they need to use PTO for sick leave.

Notice, Poster, and Record Retention Requirements

Employers must provide written notice to new employees specifying how paid sick leave accrues and informing them of their right to use paid sick leave. Furthermore, the employer must inform employees of their right not to be retaliated against and of their right to file a complaint.

Nonprofit employers will need to prominently display posters in the workplace that include information about the new sick leave rights. A willful violation of this requirement can result in a civil penalty of up to $100 per offense.

Employers must keep records for at least three years pertaining to paid sick leave, such as worked hours and accrual and utilization of paid sick leave. Failure to maintain compliant records will result in a presumption that an employee has accrued the maximum number of sick leave hours, unless the employer proves by clear and convincing evidence that the employee accrued a lower number of hours.

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The new law will affect almost all employers, including nonprofits, in California. Employers should check existing paid leave policies to determine whether they will need to add paid sick leave days to their policies. Furthermore, employers should make sure to comport with the new written notice requirements when hiring new employees, and obtain and prominently display the requisite posters in the workplace. All records of hours worked, as well as paid sick leave days accrued and utilized, should be documented carefully for at least three years.