Having a fair and meaningful disciplinary process can be a helpful tool for employers to improve employee performance. In this episode of California Employment News, employment attorneys Meagan Bainbridge and Nikki Mahmoudi share their best practices for implementing effective disciplinary procedures in the workplace.

Watch this episode on the Weintraub YouTube channel.

Shauna:
Hello. Thank you for joining us for this installment of the California Employment News. My name is Shauna Correia, and I’m a shareholder here at Weintraub Tobin in the Labor and Employment department. And I’m joined by my partner, Beth West. As you probably know, California has had a paid sick leave law in effect since 2015, and that law has been amended effective as of January 1, 2024. So today we’re going to discuss Senate Bill 6116, which amended the Healthy Workplace Healthy Families Act. And, Beth, would you be so kind as to summarize the law for us? Sure.

Beth:
Thanks, Shauna. So, under the Healthy Workplace Healthy Families Act, most full-time, part-time, and even temporary employees are entitled to earn paid sick leave, often referred to as PSL. If the employee works for the same employer in California for at least 30 days within a year. PSL can be used by an eligible employee for themselves or a family member for various reasons, such as preventative care or diagnosis, care for treatment for an existing health condition, or for specific purposes for things like victims of domestic violence, sexual assault, and stalking. As stated in the statute, there are different methods that the employer can use to provide PSL to employees. One is the statutory accrual method. Under this statutory accrual method, an employee earns 1 hour of PSL for every 30 hours worked upon commencement of employment. There’s an alternative accrual method that’s permitted that allows the employer to provide PSL under a company policy, either sick leave or PTO policy, provided certain conditions are met, and Shauna will explain in more detail based on SB 1616, excuse me, what those conditions are. There’s also a provision in the statute for grandfathered policies. In some cases, if an employer had a policy in place before the law went into effect in 2015, the employer can continue to use that policy to meet its obligations under the law, provided the policy meets the conditions outlined in the statute.

And again, Shauna will explain what those are because they were modified by SB 616. There’s also a nonaccrual method, an alternative to providing PSL, often referred to as the lump sum or front-loaded method, and that allows the employer to provide employees with the required amount of PSL at the beginning of a year-long period. And Shauna will explain what SB 1616 states is required to be provided to employees under that method. If an employer is using an accrual method, the law allows the employer to place a cap on the total amount of paid sick leave an employee can accrue, provided the cap is no less than the cap stated in the statute. Also, the law permits an employer to limit the total amount of paid sick leave an employee can use in a given year, again, provided that the limit is no less than that stated in the statute. Under the law, the employer gets to determine the applicable twelve-month measurement period in which paid sick leave is earned and used, for example, a calendar year or the employee’s anniversary year. And then finally, while accrual of paid sick leave begins upon higher or is earned all at once if the employer is using the front load method, an employer may choose to implement a 90-day waiting period before an eligible employee can use earned paid sick leave.

Shauna, why don’t you now explain SB 616 and the changes it made to the sick leave law?

Shauna:
Sure. So, SB 616 amended the Healthy Workplace Healthy Families law in a few key ways. I’ll go through the major changes, which are minimum accrual use, minimum leave carried over the alternative accrual methods, and preemption of local ordinances, and then I’ll also discuss the changes required to make sure that these grandfathered plans that Beth was just talking about are still compliant with the new law. So, for the minimum use cap, the standard accrual method on the statute is still 1 hour for every 30 hours worked. But before, an employer could cap an employee’s use of leave in a given year to three days or 24 hours, and now the law requires that that increases to five days or no less than 40 hours of sick leave that can be used in a calendar year or whatever other twelve month period the employer chooses. And so after the end of that calendar year, sometimes employees haven’t used all of the time, and they get to carry some of that over. And their employers are not required to cap accrual, but can choose to cap accrual of carried-over sick leave to the following year of employment, they can still limit that.

Beth:
But any limitation on the use of the carried-over sick leave must be increased to at least 40 hours or five days in each year of employment. And the minimum that you can allow employees to carry over from year to year used to be 48 hours or six days. And so, effective January 1 of, 2024, that is now 80 hours or 10 days. So the minimum accrual cap that an employer can have be the 80 hours in their bank before the employee uses sum up, and then could start accruing again once they deplete their bank. So employers who self-administer their payroll, in particular, should review their carryover rules in the system to make sure that the leave carried over from 2023 satisfies this new requirement. And then with regard to these alternative accrual methods, as Beth mentioned, employers can establish alternative methods such as a lump sum grant as long as it meets certain conditions. And so for employers who have a paid sick leave or PTO policy that have some different accrual plan other than 1 hour for every 30 hours, the law previously said, well, it just must ensure that employees have at least 24 hours or three days of paid sick leave available to be used by their 120th day of employment while beginning this year in 2024.

Shauna:
Employers who have an alternative method, like a lump sum method, must ensure that the employees also have at least 40 hours accrued by the 200th calendar day of employment or in each twelve-month period. So if the employer is going to deposit a lump sum, they must deposit the full at least 40 hours or at least five full days of paid sick leave at the beginning of that year. Now, when we say 40 hours or five days, it’s important to note that this five-day requirement could be more than 40 hours if the employee is in a job where they typically work more than an eight-hour shift. So if they work 10 hours, then five days would be 50 hours. Finally, with regard to the grandfathered plans that Beth was describing earlier, if an employer has a paid time off PTO or PSL policy that was grandfathered from prior to 2015, they can continue to maintain those plans, but they do need to satisfy these conditions that I’ve just discussed in the new law. And so, the use and carryover caps must reflect these new minimums and an employee must be eligible to earn at least 40 hours or five days of sick leave or paid time off within six months.

And in particular, if the PTO or grandfathered PSL policies have different provisions or prorated accrual for part-time employees, these need to be reviewed to make sure that the part-time employees meet these new minimums. So if an employer has a grandfather plan using an alternative accrual method, we’ll have to also make sure that if they use a lump sum, for example, they’ll have to provide an annual minimum lump sum that satisfies these increased use and carryover caps. And finally, because the new state law now might be more generous than local ordinances, the state law now preempts those local ordinances to the extent that they’re inconsistent or provide fewer hours. So if you’re in a location like Los Angeles or Berkeley where you have a local sick leave ordinance, you must still require the minimums under the new state law. One last thing I’d like to just mention is that in the past couple of years, the legislature has enacted unpaid bereavement and reproductive loss leave statutes. So employers now must allow employees to use their paid sick leave or their PTO for those otherwise unpaid time off under those new laws. And we’ll discuss the new reproductive loss leave in a coming installment of California employment news.

Beth:
Thanks, Shauna. That was a really good oversight of SB 616. Well, that’s it for today, everyone. You can continue to find installments of California employment news on our blog at www.theeleleblog.com or wherever you listen to your favorite podcasts. Thanks for joining us. See you next time.