Employers should review their policies to ensure that their paid sick leave and/or PTO policies comply with the updates to the Healthy Workplaces, Healthy Families Act now so that the fully compliant policies and any changes are in place by January 1, 2024.

On October 4, 2023, California Governor Gavin Newsom signed into law SB 616, expanding California’s current paid sick leave mandate―the Healthy Workplaces, Healthy Families Act of 2014―effective January 1, 2024. The new law will increase paid sick leave amounts for employees statewide, while leaving local paid sick leave ordinances that are more generous than the new requirement intact.

Summary of the Healthy Workplaces, Healthy Families Act

Beginning July 1, 2015, all employers were required to provide at least 24 hours or three days (whichever is greater) of paid sick leave each year to their employees in California who worked for the employer for at least 30 days. A “year” under the 2014 act is any 12-month period, such as a calendar year, anniversary year, fiscal year or other period defined by the employer. Employers had the option of either front-loading the full amount of paid sick leave each year on a use-it-or-lose it basis or allowing employees to accrue the leave at a rate of one hour per 30 hours worked, and allowing employees to roll over paid sick leave subject to a cap on an annual basis. Subsequent amendments allowed employers to satisfy their legal obligations through their existing paid time off policies, provided that the PTO would cover all uses under the law and that employees accrue 24 hours by the 120th calendar day of each year of employment. See our previous Alert.

What’s New in the 2024 Amendments?

Starting January 1, 2024, the following pertinent changes to the Healthy Workplaces, Healthy Families Act will take effect:

Increased Minimum Annual Paid Sick Leave

SB 616 increases the amount of paid sick leave an employee is entitled to from 24 hours or three days to 40 hours or five days per year.

Increased Alternative Accrual Rates

While employees continue to accrue sick leave at a rate of one hour for every 30 hours worked, up to a cap, the minimum accruals are now phased. For employers that provide paid sick leave either through a PTO policy or alternate accrual method, in addition to ensuring their employees accrue 24 hours of paid sick leave by the 120th calendar day of employment, there is an added requirement that the employees must also accrue at least 40 hours of paid sick leave by their 200th calendar day of each year of employment.

Increased Carried-Over Sick Leave

Employers who front-load the full amount of required annual paid sick leave are not obligated to roll over the balance from year to year. (Lab. Code § 246(d).) For employers who do not front-load paid sick leave, SB 616 does not change the requirement that unused accrued leave carries over to the following year of employment. However, where before the employer had no obligation to allow the total accrual to exceed 48 hours or six days, now the “cap” has increased to 80 hours or 10 days. (Lab. Code § 246(j).) Reminder: Accrued leave provided as part of a PTO policy must be both rolled over and cashed out at the end of employment.

Impacts on Collective Bargaining Agreements

As currently written, the law contains an exemption for employees covered by a qualifying collective bargaining agreement (CBA) negotiated between the employer and a labor union. Specifically, such employees are not subject to the Healthy Workplaces, Healthy Families Act’s requirements, but rather, the terms of their negotiated CBA governs. The 2024 amendments continue to exempt such employees, however, it now extends some existing protections. This includes: (1) reasons for use of paid sick leave; (2) no retaliation for use of paid sick leave; and (3) not requiring the employee to find a replacement worker as a condition for using paid sick leave.

Partially Preempts Local California Paid Sick Leave Laws

Seven California cities have their own local paid sick leave laws providing even greater protections to employees. These cities are San Diego, Santa Monica, Los Angeles, Emeryville, Berkeley, Oakland and San Francisco. SB 616 contains a new section that partially preempts local California paid sick leave ordinances on the following topics:

1. Compensation for accrued, unused paid sick days upon separation;
2. Reinstatement of previously accrued and unused paid sick leave upon rehire;
3. Advancing paid sick leave;
4. Written notice of unused paid sick leave available;
5. Method of calculation of paid sick leave;
6. Employee’s advanced notice of foreseeable sick leave; and
7. Payment of sick leave.

Local paid sick leave laws that have standards that are contrary to those set forth in SB 616 will be preempted, and SB 616’s standards on the above topics will govern. But, ordinances that are simply more generous likely will not be preempted as to those provisions, so it is important to remain vigilant for additional requirements in each jurisdiction.

What Does This Mean for Employers?

Employers should review their policies to ensure that their paid sick leave and/or PTO policies comply with the updates to the Healthy Workplaces, Healthy Families Act now so that the fully compliant policies and any changes are in place by January 1, 2024. Employees and supervisors (and payroll teams) will need to be apprised of these important updates, potentially through training, policy and handbook updates. In addition, with the renewed focus on sick leave policies, now would be a good time to confirm that your company is properly calculating the regular rate. Reminder: Paid sick leave is paid at the employee’s regular rate of pay, which may be different from an “hourly wage.”

For More Information

If you have any questions about this Alert, please contact Shireen Yvette Wetmore, Brooke B. Tabshouri, Poline Pourmorady, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.