This alert has been updated to reflect the fact that SB 616 has been signed into law, and to add detail concerning provisions in the final version of the bill.

On October 4, 2023, California Governor Gavin Newsom signed into law SB 616, which had been passed by the California state legislature on September 13, amending the state’s 2014 Healthy Workplaces, Healthy Families Act (HWHFA).  The amendments, which take effect on January 1, 2024, expand existing paid sick leave requirements to provide eligible employees with up to five paid sick days per year.

Background

• California was the second state in the nation to pass a paid sick leave (PSL) mandate, after Connecticut.
• The existing California PSL law applies to almost all employees who work in California for at least 30 days within a year, including full-time, part-time, temporary, and seasonal employees.
• Under the previous PSL requirement, employers could “front load” 24 hours (three days) of PSL at the start of each benefit year or allow it to accrue over time at a rate of one hour of PSL per 30 hours worked, up to a rolling “point-in-time” 48-hour maximum accrual. Employers could impose a 120-day waiting period for PSL use for new hires, and annual PSL use could be capped at 24 hours.
• Employers were allowed to use an alternative accrual method as long as the method allowed employees to receive at least 24 hours of accrued PSL by their 120^th calendar day of employment, and by the 120^th day of each subsequent calendar year.

PSL Amendment: Accrual and Use

• S.B. 616 increases the annual PSL usage cap to 40 hours (five days). The new usage cap applies whether an employer front loads PSL or allows it to accrue.
• The bill also increases the rolling accrual cap to the greater of 80 hours or 10 days. The rolling accrual cap does not apply to employers that front-load the minimum required amount of leave each year.
• For employers that use an alternative accrual method, the bill adds a requirement that employees receive no fewer than 40 hours of accrued PSL by their 200^th calendar day of employment, and by the 200^th day of each subsequent calendar year.
• When leave is allowed to accrue, employers can impose up to an 89-day waiting period for PSL use by new hires. Employers that avoid carryover requirements by front-loading leave are required to grant new hires at least 24 hours of PSL for use as of the 120^th day of employment and at least 40 hours of PSL for use as of their 200^th calendar day of employment. NOTE: California is the only state that allows employers to grant new employees front-loaded PSL in piecemeal fashion rather than all at once.
• Employees who accrue PSL over time continue to have the right to carry over accrued, unused PSL at the end of each benefit year.

Collective Bargaining Agreements

• The HWHFA does not apply to employees covered under a collective bargaining agreement (CBA) when certain conditions are met:
  • Expressly provides for employees’ wages, work hours, and working conditions
  • Provides paid sick days, leave, or time off
  • Requires binding arbitration of paid leave disputes
  • Provides premium wage rates for all overtime worked
  • Establishes regular hourly pay not less than 30% more than the state minimum wage
• SB 616 extends some of the HWHFA’s protections to employees covered under a CBA:
  • Leave policy under the CBA must allow use of paid sick time/leave for diagnosis, care, or treatment/preventive care for an employee or family member’s health condition
  • CBA must allow use of paid leave for reasons related to domestic violence, sexual assault, or stalking
  • Employers may not require employees to find their own replacements when taking leave, and may not retaliate against an employee for using/attempting to use paid leave use; a rebuttable presumption of retaliation applies when prohibited action is taken within 30 days of an employee’s complaint or participation in an investigation with respect to HWHFA rights.

Preemption of Local Ordinances

• SB 616 amends California Labor Code section 246, providing that certain parts of this section preempt any local ordinance to the contrary:
  • Unused PSL is not required to be paid to the employee when employment ends; however, it must be reinstated for any employee rehired within one year (unless the employer elected to cash it out upon separation)
  • Employers may choose to advance leave to employees at the employer’s discretion and with proper documentation
  • For each pay period, employers must provide an accounting of HWHFA paid time accrued and used
  • HWHFA standards for calculating rate of pay and determining employee notice requirements for foreseeable/unforeseeable absences preempt those included in any local paid leave ordinance
• The practical impact of the preemption provisions is likely to be minimal, as there are few significant differences between the requirements in existing local paid leave ordinances and those in SB 616.