The process of separating an employee from a company must be clearly set out and planned in advance.  We recommend developing a separation checklist so that all of the company’s policies are followed, as well as any applicable laws that pertain to the employer and their industry.  This article provides five issues employers should consider in developing a separation checklist for their company:

1. Documenting reason for termination

Employers should establish a protocol for documenting the reason for termination.  Some considerations for documenting could include the following:

  • Is there a company policy that was violated? This is policy in writing?  Has it been distributed to the employee, and has the employee signed an acknowledgment of the policy?
  • Who was involved in the termination decision?
  • Review reasons for termination, and have clear guidelines for seeking legal counsel to avoid any potential wrongful termination or discrimination claims.

2. Final paycheck amounts and timing requirements

An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination.  Ensure that the final paycheck will be available to the employee on a timely basis (see below for timing requirements).  If an employee had direct deposit, an employee must re-authorize direct deposit for a final paycheck, and this should be documented.  In Canales v. Wells Fargo, N.A., (2018) the court held that employers are not required to provide final wage statements (pay stubs) at the same time as the final check, but instead have until the semimonthly deadline set forth in Labor Code section 226(a).

California law requires the employer comply with the following deadlines for providing final paychecks:

  • An employee who is discharged must be paid all of his or her wages, including accrued vacation, immediately at the time of termination. This does not mean that the company cuts the check and mails it to the employee, the check must be provided to the employee at the time of termination.
  • An employee who gives at least 72 hours prior notice of quitting, and quits on the day given in the notice, must be paid all earned wages, including accrued vacation, at the time of quitting.
  • An employee who quits without giving 72 hours prior notice must be paid all wages, including accrued vacation, within 72 hours of quitting.
  • An employee who quits without giving 72-hours’ notice can request their final wage payment be mailed to them. The date of mailing is considered the date of payment for purposes of the requirement to provide payment within 72 hours of the notice of quitting.

Final wage payments for employees who are terminated (or laid off) must be made at the place of termination. For employees who quit without giving 72 hours’ notice and do not request their final wages be mailed to them, the location is at the office of the employer within the county in which the work was performed.

3. Compile list of documents to provide to separating employees

California law requires employers to provide certain documents to employees upon their separation from employment.  Here is a list of some of the common forms required often required to be provided to employees:

Employers should take time to review their obligations and forms that are required for their particular industry or situation.

4. Establishing protocol for references and disclosing why the employee left the company within the company

Employers often establish that it will only confirm the title and dates of employment for former employees, and, if authorized by the former employee, the former employee’s final pay rate. Employers do this to avoid potential claims for misrepresentation, violation of privacy, and defamation. Also, employers need to be careful about disclosing the reason for an employee departure within the company, as that may violate the former employee’s privacy rights. Employers should remind employees and management not to disclose this information to people in the company that do not have a reason to know, and remind employees about who any requests for references should be directed to within the company.

5. Evaluate whether a severance agreement would be appropriate

Under California law the obligation to provide severance to a departing employee is not required. However, employers can offer severance to employees for numerous reasons:

  • during a layoff the employer wants to provide something to the employees for their recognized service,
  • the company entered into a contract with an executive to provide severance if certain conditions were met, or
  • the separation is high risk and there is potential litigation between the parties and the employer wishes to obtain a release of claims to prevent future litigation.

If an employer offers severance payment to a departing employee, they should always have the severance agreement reviewed by an employment attorney to ensure that it contains a broad release of claims so that the employee cannot initiate litigation against the company for claims that arose during their employment. My previous article discussed in more detail issues about severance and severance agreements.

Quiet quitting has been in the news recently to describe a trend by employees to only do the bare minimum at work.  Some have described it as setting boundaries and not doing work beyond what you were hired to do, and for what you are being paid for.

The most common question I’ve been getting from employers, is if employees have the right to refuse to do work if it is not their regular job description.  From the questions I’ve been fielding from clients, this is the most common refrain from employees – they refuse to do a certain task asked of them because they say it is not in their job description.  However, a job description (if properly drafted) does not create a contract with the employee and should only set out a general overview of the duties the employee is expected to do.  Employers have the right and ability to change an employee’s job duties as needed.  It is a good reminder for employers to review their job descriptions to ensure that they are properly drafted, reflect the duties the employee is generally expected to perform, and explain that the duties may change over time.  Generally speaking, an employee does not have a legal right to refuse to perform tasks required by his or her employer because it is not in their job description or is not part of their regular job duties.

What remedies and actions are available to employers to address quiet quitters?  Here are a few considerations for employers:

1. Counseling and performance plans.

Similar to approaching any performance issues in the workplace, employers have the option of counseling employees about their substandard performance, and if necessary to put the employee on a performance plan.

2. Incentivizing through bonuses, raises, and promotions.

If employees are only performing at the bare minimum, employers have the ability to adjust the level of bonuses, raises, and promotions provided to employees.  If compensation plans are properly drafted, and bonuses and raises are discretionary, employers may lower these incentives during the next review, or forego them altogether.  It is critical that employers document the employee’s lack of performance in order to justify a lower bonus or raise at the end of the year.  That is why the counseling discussed in item #1 is so critical.

3. Recognition of top performers.

On the flipside of reducing bonuses or raises, employers should consider rewarding employees who are going above and beyond.  Employers also have the ability to publicly recognize top performing employees within the company – and this can go a long way in sending a message to the workforce that performance matters in terms of compensation.  The additional benefit is that the top performers realize that their contributions are being recognized.

4. Increased communications – don’t presume someone is a quiet quitter just because this term is in the news.

Employers are encouraged to communicate with employees they believe are quiet quitting.  It is important to attempt to understand why the employee may appear to be quiet quitting – as the employer may misread the situation where the employee is going through a difficult time in their personal life and that is impacting their work.  Just because quite quitting is a trendy term in the news today – do not assume that it is the situation for all perceived or real substandard work performance, as the situation is likely more complicated.

5. Termination is available.

If it becomes evidently clear that the employee is a quiet quitter, if the employee is an at-will employee, they may be terminated for their substandard performance.  This situation is no different than terminating an employee for substandard performance, which employers have been managing long before the pandemic.

Under California law, it is presumed that all employment is terminable at-will. California Labor Code section 2922 provides: “An employment, having no specified term, may be terminated at the will of either party on notice to the other.” The at-will doctrine means that the employment relationship can be terminated by either party at any time, with or without cause, and with or without advanced notice. There are some major exceptions to this rule, but generally California law recognizes that employers and employees may, at any time, and for any legal reason, terminate the employment relationship.  Of course, managers should consult with human resources or the appropriate executive before terminating an employee, but managers need to understand that they can terminate employees with or without cause and should be trained on the legal parameters of at-will employment.

This week, my firm rolled out its 1st annual “Sign or Veto Contest.”  The California legislature closed the 2022 legislative year and presented bills to the Governor at the end of August, which are now waiting for his veto or signature.  We created this contest for you to register what you believe will be the ultimate fate on critical California employment law bills.  Five reasons to submit your predictions in our 1st annual contest:

  1. Show off your California employment law chops. As an avid reader of the California Employment Law Report blog, we know you are looking for any reason to show off your employment law knowledge.
  2. Learn about proposed employment laws facing employers in 2023. Keeping current, and learning in the process.
  3. Test your understanding of what the California employment law landscape will look like in 2023. Apart from your employment law knowledge, let’s see how well you understand the political landscape.

    Win the best looking California employment law firm trucker hat.
  4. It is free and not graded. Don’t worry if all of your predictions are wrong – we won’t tell anyone.
  5. Winners will receive the best-looking California employment law firm trucker hat. To our knowledge – it is the only employment law firm trucker hat.

Register your predictions at the link below as soon as possible (we close the contest on September 23 – and if there are multiple winners, we have a limited number of hats, but those who vote first get priority):

https://hrlaw.io/vetosign

Governor Newsom signed AB 257, termed the Fast Food Accountability and Standards Recovery Act or FAST Recovery Act, on Monday, September 5, 2022.  The new law establishes a Fast Food Sector Council to regulate California’s fast food restaurants.  The council will be composed of 10 members who are not elected, but are appointed by the Governor, Speaker of the Assembly, and the State Rules Committee.  The council has the power to set standards for minimum wages, working hours, “and other working conditions related to the health, safety, and welfare of” fast food establishments.  California employers in the fast food industry must review the new legislation closely to see if their establishments are covered by the FAST Act.  Here are some key components of the new law:

AB 257 regulates “fast food chains”

The new law defines “fast food chain” as “a set of restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services.”

AB 257 applies to “fast food restaurants”

The law also only applies to fast food restaurants, which is defined as:

“Fast food restaurant” means any establishment in the state that is part of a fast food chain and that, in its regular business operations, primarily provides food or beverages in the following manner:

(1) For immediate consumption either on or off the premises.

(2) To customers who order or select items and pay before eating.

(3) With items prepared in advance, including items that may be prepared in bulk and kept hot, or with items prepared or heated quickly.

(4) With limited or no table service. Table service does not include orders placed by a customer on an electronic device.

Permits the council to increase the minimum wage for fast food workers to $22 per hour by January 1, 2023

The law permits the council to set standards for minimum wages, maximum hours of work, and other working conditions for fast food restaurant employees.

The law permits the council’s ability to increase minimum wage for restaurant workers, and requires that any minimum wage set by the council can be as high as $22 per hour between January 1, 2023 to December 31, 2023.  Thereafter, the minimum wage can increase at the less of 3.5% or the rate of change set by the U.S. Bureau of Labor Statistics.

If on January 1, 2029, the council is no longer operative, the minimum wage set for fast food restaurant employees in effect on December 31 shall be increased by the lesser of 3.5% or the rate of change set by the U.S. Bureau of Labor Statistics.

The law requires the council to meet at lease once every 6 months.

“Working conditions” is defined by the law to “include, but are not limited to, wages, conditions affecting fast food restaurant employees’ health and safety, security in the workplace, the right to take time off work for protected purposes, and the right to be free from discrimination and harassment in the workplace.”

The law permits “Local Fast Food Councils”

A county, or a city with a population of greater than 200,000, may establish a Local Fast Food Council.  These local councils have the ability to provide recommendations to the council.

Protects employees who disclose information to “watchdog or community based organizations”

The new law also prevents a fast food restaurant operator discharging or retaliating against any employee if the employee made a complaint or disclosed information to the media, or to a “watchdog or community based organization” regarding employee or public health or safety.

Also, employers may not take adverse actions against employees if “[t]he employee refused to perform work in a fast food restaurant because the employee had reasonable cause to believe that the practices or premises of that fast food restaurant would violate worker or public health and safety laws.”

The law deleted the aspect of the law that made franchisors jointly liable for franchisees’ violations

The final version of the law deleted language from the bill that would hold franchisors jointly liable for franchisees’ violations.

August 31, 2022 marked the deadline for the state Legislature to pass any new bills for this legislature year.  There are many employment-related bills that are now awaiting the Governor’s approval, and he has until September 30 to approve or veto the bills.  This Friday’s Five highlights five key bills that California employers need to monitor:

1. AB 257 – Fast Recovery Act fast food council (update: Governor Newsom signed AB 257 into law on 9/5/22 – read our update here)

AB 257, termed the Fast Food Accountability and Standards Recovery Act or FAST Recovery Act, proposes to establish a Fast Food Sector Council to regulate California’s fast food restaurants.  The council would be composed of 10 members who are not elected, but are appointed by the Governor, Speaker of the Assembly, and the State Rules Committee.  The council would have the power to set standards for minimum wages, working hours, “and other working conditions related to the health, safety, and welfare of” fast food establishments.  Our prior analysis of the Fast Recovery Act is here.

2. AB 152 – Supplemental paid sick leave extended until December 31, 2022

AB 152 proposes to amend Labor Code section 248.6 to extend the requirement for employers to provide supplemental paid sick leave until December 31, 2022.  Currently, California’s supplemental paid sick leave is set to expire on September 30, 2022, as we explained here.

If passed, AB 152 would extend the supplemental paid sick leave requirement until the end of 2022.  It would not change the existing reasons for paid leave, and it does not give employees who have already used supplemental paid sick leave additional time off.  The bill does provide that employers may require employees to submit to a second test within 24 hours after a positive test and provide documentation of the results.

3. AB 2188 – Prohibition on California employers to discriminate against employees for off-duty use of cannabis

AB 2188 proposes to amend Government Code section 12945 to make it illegal for employers to discriminate against employees who use cannabis off the job and away from the workplace.  The bill states that it does not create the right for the employee to be impaired while at work, does not apply to the building and construction trades, and does not preempt state or federal laws requiring employees to be tested.  If passed, this would change the status of California law, and would become effective on January 1, 2024.

In 2016, California passed Proposition 64 legalizing marijuana.  Proposition 64 expressly provides that employers may prohibit marijuana in the workplace, and will not be required to accommodate an employee’s use of marijuana.  This is also consistent with the California Supreme Court’s holding in Ross v. Ragingwire Telecommunications, Inc.  In that case the court examined the conflict between California’s Compassionate Use Act, (which gives a person who uses marijuana for medical purposes on a physician’s recommendation a defense to certain state criminal charges and permission to possess the drug) and Federal law (which prohibits the drug’s possession, even by medical users).  The court held that the Compassionate Use Act did not intend to address the rights and obligation of employers and employees, and further noted that the possession and use of marijuana could not be a protected activity because it is still illegal under federal law.

4. SB 1162 – Pay data reporting and disclosures

SB 1162 would require additional information be reported to the state of California on the employer’s pay data report.  For example, the bill would require employers to report the median and mean hourly rates for employees.  It would also require employers who hire an employee through labor contractors to submit a separate report for those employees.

The bill would also require employers to provide a pay scale to any current employee for their position currently working upon request.  Existing law requires employers to provide a pay scale to an applicant upon request.  In addition, the bill would require employers with 15 or more employees to include the pay scale for a position in any job posting.

5. AB 1949 – Bereavement leave

AB 1949 would grant employees up to five days of bereavement leave under the California Family Rights Act (CFRA).  The bill would permit employees to take the leave if they have been employed for at least 30 days prior to the leave, and the leave is for the death of a spouse or a child, parent, sibling, grandparent, grandchild, domestic partner, or parent-in-law.  The leave is unpaid, but the employee must be permitted to use vacation, personal leave, accrued and available sick leave, or compensatory time off that is otherwise available.  Employers may request documentation from the employee within 30 days which could consist of a death certificate, a published obituary, or written verification of death, burial, or memorial services from a mortuary, funeral home, burial society, crematorium, religious institution, or governmental agency.

We will continue to closely monitor these and other employment-related bills, make sure to subscribe to the blog for updates going into 2023.

AB 257, termed the Fast Food Accountability and Standards Recovery Act or FAST Recovery Act, proposes to establish a Fast Food Sector Council to regulate California’s fast food restaurants.  The council would be composed of 10 members who are not elected, but are appointed by the Governor, Speaker of the Assembly, and the State Rules Committee.  The council would have the power to set standards for minimum wages, working hours, “and other working conditions related to the health, safety, and welfare of” fast food establishments.  The bill is being voted on next week by the California Senate.  Here are five key aspects of the proposed bill to regulate California restaurants:

1. AB 257 regulates “fast food chains.”

As drafted, the bill permits the council to regulate fast food chains.  The bill defines “fast food chain” as “a set of restaurants consisting of 100 or more establishments nationally that share a common brand, or that are characterized by standardized options for decor, marketing, packaging, products, and services.”  The bill would add another layer of complexity for these restaurants in addition to the existing Labor Code.

2. Permits the Council to increase the minimum wage for fast food workers to $22 per hour by January 1, 2023.

The bill permits the council to set standards for minimum wages, maximum hours of work, and other working conditions for fast food restaurant employees.

The bill permits the council’s ability to increase minimum wage for restaurant workers, and requires that any minimum wage set by the council can be as high as $22 per hour between January 1, 2023 to December 31, 2023.  Thereafter, the minimum wage can increase at the less of 3.5% or the rate of change set by the U.S. Bureau of Labor Statistics.

If on January 1, 2029, the council is no longer operative, the minimum wage set for fast food restaurant employees in effect on December 31 shall be increased by the lesser of 3.5% or the rate of change set by the U.S. Bureau of Labor Statistics.

The bill requires the council to meet at lease once every 6 months.

“Working conditions” is defined by the bill to “include, but are not limited to, wages, conditions affecting fast food restaurant employees’ health and safety, security in the workplace, the right to take time off work for protected purposes, and the right to be free from discrimination and harassment in the workplace.”

3. Permits “Local Fast Food Councils”

A county, or a city with a population of greater than 200,000, may establish a Local Fast Food Council.  These local councils have the ability to provide recommendations to the council.

4. Protects employees who disclose information to “watchdog or community based organizations.”

The bill also prevents a fast food restaurant operator discharging or retaliating against any employee if the employee made a complaint or disclosed information to the media, or to a “watchdog or community based organization” regarding employee or public health or safety.

Also, under the bill, employers may not take adverse actions against employees if “[t]he employee refused to perform work in a fast food restaurant because the employee had reasonable cause to believe that the practices or premises of that fast food restaurant would violate worker or public health and safety laws.”

5. As currently drafted, the bill deleted the aspect of the law that made franchisors jointly liable for franchisees’ violations.

The current version of the bill published as of Friday, August 26, 2022, removes the language from the bill that would hold franchisors jointly liable for franchisees’ violations.

Recently we have been litigating and answering basic issues about employers’ obligations to provide meal and rest breaks.  It has been a few years since the California Supreme Court issued its groundbreaking ruling in Brinker Restaurant Group v. Superior Court, and there is no indication that wage and hour litigation for California employers will lighten up, so employers should constantly monitor and audit their meal and rest break policies and practices. Here are five reminders for employers:

1. Timing of breaks.

Meal Breaks
The California Supreme Court made clear in Brinker Restaurant Group v. Superior Court that employers need to give an employee their first meal break “no later than the end of an employee’s fifth hour of work, and a second meal period no later than the end of an employee’s 10th hour of work.” Here is a chart to illustrate the Court’s holding:

 

Rest Breaks
As for rest breaks, the Court set forth that, “[e]mployees are entitled to 10 minutes’ rest for shifts from three and one-half to six hours in length, 20 minutes for shifts of more than six hours up to 10 hours, 30 minutes for shifts of more than 10 hours up to 14 hours, and so on.” This rule is set forth in this chart:

In regard to when rest breaks should be taken during the shift, the Court held that “the only constraint of timing is that rest breaks must fall in the middle of work periods ‘insofar as practicable.’” The Court stopped short of explaining what qualifies as “insofar as practicable” and employers should closely analyze whether they may deviate from this general principle.

2. Rule regarding waiver of breaks.

Meal Breaks
Generally meal breaks can only be waived if the employee works less than six hours in a shift. However, as long as employers effectively allow an employee to take a full 30-minute meal break, the employee can voluntarily choose not to take the break and this would not result in a violation. The Supreme Court explained in Brinker (quoting the DLSE’s brief on the subject):

The employer that refuses to relinquish control over employees during an owed meal period violates the duty to provide the meal period and owes compensation [and premium pay] for hours worked. The employer that relinquishes control but nonetheless knows or has reason to know that the employee is performing work during the meal period, has not violated its meal period obligations [and owes no premium pay], but nonetheless owes regular compensation to its employees for time worked.

Rest Breaks
Rest breaks may also be waived by employees, as long as the employer properly authorizes and permits employees to take the full 10-minute rest break at the appropriate times.

3. Timekeeping requirements of meal breaks.

Meal breaks taken by the employees must be recorded by the employer. However, there is no requirement for employers to record 10-mintute rest breaks.

4. Implementing a procedure for employees to notify the company when they could not take a break.

If employers have the proper policy and practices for meal and rest breaks, the primary issue then becomes whether the employer knew or should have known that the employee was not taking the meal or rest breaks. Therefore, allegations that the employer was not providing the required breaks can be defended on the basis that the employer had an effective complaint procedure in place to inform the employer of any potential violation, but the plaintiff failed to inform the employer of these violations.

5. Time rounding for meal breaks is not permitted under California law.

In Donohue v. AMN Services LLC, the California Supreme Court held that employers may not use time rounding policies in context of meal periods, and time records for meal periods that are incomplete or inaccurate raise a rebuttable presumption of meal period violations.  The Court explained that rounding polices when used for meal breaks, an employee’s 30-minute meal break could lose 9 minutes due to rounding, which amounts to nearly a third of the meal break.  If an employee is not provided a full 30-minute meal break because of rounding, there is no mechanism that makes up for the premium pay owed to the employee that would average out over time.  The Supreme Court held, “The precision of the time requirements set out in Labor Code section 512 and Wage Order No. 4 — “not less than 30 minutes” and ‘five hours per day’ or ‘ten hours per day’ — is at odds with the imprecise calculations that rounding involves.  The regulatory scheme that encompasses the meal period provisions is concerned with small amounts of time.”

As employers and employees adapt to the new realities of working from home on a permanent or modified basis, employers need to be aware of the employment law issues that arise with such arrangements.  This Friday’s Five covers five items employers should review for employees working from home:

1. Confidentiality and security.

Employers are able to monitor company owned equipment and internet services at the office.  However, with employees working remotely, employers lose this control, and employees likely do not have the same sophistication when setting up security for technology.  Employers should review the need to provide training to employees about the use of public Wi-Fi, updating passwords, the use of password security management software, and other best practices.  It is also recommended to remind employees to be aware of their surroundings when discussing confidential company information – such as on phone calls in public areas.

2. Employee privacy.

Employers can generally monitor employees’ use of company provided internet at the office, employers have less rights to monitor employees while they are working from home.  The employer’s ability to monitor employees away from the office can create some issues (especially when there is no clear distinction of when the employee is on or off duty – as discussed below).  Employers should review their policies to ensure that any monitoring does not violate employee’s privacy rights and sets for a clear policy of what the employer is monitoring.  A critical aspect of the review is the company’s policies about what is being monitored, ensuring that there is a need for the monitoring, and ensuring that the monitoring does not capture data or information that the employee has a reasonable expectation of privacy.

3. Clear designation of working hours.

The Wage Orders require that California employers keep “[t]ime records showing when the employee begins and ends each work period.  Meal periods, split shift intervals and total daily hours worked shall also be recorded.”  IWC Wage Order 5-2001(7)(a)(3).

Additionally, Labor Code section 1174 requires employers to keep time records showing the hours worked daily and the wages paid, number of piece-rate units earned by, and the applicable piece rate paid.

Employers need to ensure employees have a clear method for tracking their time worked at home to meet these obligations.  In addition, employers should consider setting designated work hours, so that employees are clear on when they are expected to be responsive to work-related requests and to minimize the need for overtime work.

4. Expense reimbursement.

As explained on this blog before, California Labor Code section 2802 requires employers to pay for necessary business expenses incurred by employees, and this would include expenses for working at home, such as for computers, printers, internet usage, and other items, such as paper for printing if required by the employer.  However, as the LA Times reported, some plaintiffs are alleging that not only should employers have to pay for their printers and computers, but also for missed revenue the employee could have received for renting out their home office.  I’m a bit skeptical about whether missed rental revenue is recoverable under the Labor Code, as missed rent would be difficult to prove.

5. Minimum wage, paid sick leave, and other local requirements based on where the employee’s home is located.

Employers need to be careful about varying minimum wage and paid sick leave requirements for employees who are working from home.  The employee’s home may be located in a different jurisdiction than the employer’s workplace, and it could require the employer to pay the employee at a different minimum wage rate or provide additional paid sick leave.

Many of the local and county ordinances set forth when the city or county law will cover an employee who works within its jurisdiction.  For example:

  • Santa Monica:  Law applies to any employee working a minimum of two hours within Santa Monica in a given week (even if employer is located outside of Santa Monica).
  • City of Los Angeles: “An employee is an individual who performs at least two hours of work in a particular week within the City of Los Angeles….”
  • County of Los Angeles: “Anyone who works at least two hours in a one-week period within the unincorporated areas of Los Angeles County is entitled to the County minimum wage for the hours worked in the unincorporated area of the County.”
  • Pasadena: Applies to employees who perform at least two hours of work in Pasadena.

Employers need to review the various jurisdictions in which the employees are located when working from home to ensure the employees are provided the required minimum wage and paid sick leave that may be triggered based on where the employee is performing their work.

On February 9, 2022, Governor Newsom signed a new law requiring employers to provide supplemental COVID-19 paid sick leave during 2022 through September 30, 2022.  The law, SB 114, unlike the supplemental paid sick leave law passed in 2021, provides for no offsetting tax credits for employers to assist with the added costs this paid sick leave places on businesses across the state.  Here are five reminders for California employers about the law and its related deadlines as we approach its September 30th expiration:

1. The COVID-19 supplemental paid sick leave law took effect on February 19, 2022 and expires on September 30, 2022.

The Governor signed the law on February 9, 2022, and the paid sick leave requirement took effect 10 days after the enactment of the law – February 19, 2022.  The law applied retroactive obligation for employers to pay for qualifying paid sick leave starting January 1, 2022.  The paid sick leave requirement expires on September 30, 2022 (but employees currently using the sick leave can continue its use past the September 30th deadline).

2. Which employers are covered by the law?

The law applies to employers with more than 25 employees.

3. Which employees are entitled to paid sick leave?

Employers are required to provide employees COVID-19 supplemental paid sick leave if the employee is unable to work or telework due to the following reasons:

  1. The employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidance of the State Department of Public Health, the federal Centers for Disease Control and Prevention, or a local public health officer who has jurisdiction over the workplace.
  2. The employee has been advised by a health care provider to isolate or quarantine due to COVID-19.
  3. The employee is attending an appointment for themselves or a family member to receive a vaccine or a vaccine booster for protection against COVID-19, subject to certain limitations.
  4. The employee is experiencing symptoms, or caring for a family member experiencing symptoms, related to a COVID-19 vaccine or vaccine booster that prevents the employee from being able to work or telework.
  5. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  6. The employee is caring for a family member who is subject to an order or guidance or who has been advised to isolate or quarantine.
  7. The employee is caring for a child whose school or place of case is closed or otherwise unavailable for reasons related to COVID-19 on the premises.
  8. If the employee, or a family member for whom the employee is providing care, tests positive for COVID-19. (Note: employer may condition payment of supplemental paid sick leave for this reason upon the employee providing a positive test for themselves or the family member they are caring for.)

4. How much paid leave is required?

The employee is eligible for potentially up to 80 hours of leave available under two different banks:

  • Bank #1: Employees are entitled up to 40 hours of COVID-19 supplemental paid sick leave for full time employees based on reasons 1 through 7 above.
  • Bank #2: Employees are entitled up to 40 hours of paid leave for reason number 8 listed above (if they or a family member test positive).

Employers should therefore implement internal tracking measures to track the reason for the leave and how much of the leave the employee has taken under each of the two banks of leave available.  More information can be found on the Labor Commissioner’s FAQ page.

Calculating Amount of Leave Available

The law sets forth how employers are to calculate the amount of leave for part-time, variable scheduled employees, and full-time employees.  Employers need to review the requirements in order to make the appropriate calculations for these different classes of employees.

Calculating Rate of Pay

The law sets forth how employers are to calculate the rate of pay for nonexempt employees, and exempt employees.  Employers need to carefully review these calculations to ensure the proper rate of pay is being used when an employee takes qualifying paid leave.

Caps on Payments

However, the total paid sick leave is capped at 80 hours for the period between January 1, 2022 to September 30, 2022.  In addition, employers are not required to pay more than $511 per day and $5,110 in the aggregate to an employee (unless federal legislation changes these amounts set forth in the FFCRA).

Interaction with California’s Healthy Workplaces, Healthy Families Act and Cal/OSHA ETS Exclusion Pay, and Local Ordinances

The supplemental paid sick leave is in addition to the paid sick leave employees are entitled to under California’s Healthy Workplaces, Healthy Families Act set forth in Labor Code 246.  Moreover, employers cannot require employees to first exhaust the supplemental paid sick leave before paying exclusion leave required under the Cal/OSHA Emergency Temporary Standards (ETS).  The California supplemental paid sick leave leaves in place any employer obligation to comply with local paid sick leave requirements, such as those in Los Angeles City and County, Long Beach, and Oakland.

5. Notice and pay stub requirements.

The law requires employers to provide a notice to employees the amount of COVID-19 supplemental paid sick leave that the employee has used through the pay period that it was due to be paid.  This can be provided on the employee’s pay stub or on another writing provided to the employee on the designated pay day.  The employer shall list “zero hours used” if a worker has not used any COVID-19 supplemental paid sick leave.  This requirement took effect the next full pay period following February 19, 2022.

Employers are also required to post or distribute a notice to employees that was developed by the Labor Commissioner and can be found here.

Other provisions of the law also address firefighters and providers of in-home supportive services employees.

On July 27, 2022, California’s Department of Finance confirmed that due to the raising inflation, the minimum wage for all employers will increase by 3.5% to $15.50 per hour on January 1, 2023.

California’s minimum wage not only impacts minimum wage workers, but it also effects the salary required for employees to qualify as an exempt employee.  Here are five reminders about the California minimum wage increase and its impact upon exempt employees:

1.  As of January 1, 2023, the minimum wage in California will increase to $15.50 for all employers – large and small.

The minimum wage increase on January 1, 2023 will set the same minimum wage for large and small employers, unlike recent minimum wage increases which provided for a lower amount required for smaller employers with 25 or fewer employees.  The increase on January 1, 2023 will be especially hard for small employers given the $1.50 increase in minimum wage (increase from the current $14.00 per hour) for these companies.

2.  With the increase in the state minimum wage, there is a corresponding raise in the minimum salary required to qualify as exempt under the “white-collar” exemptions. 

To be exempt from the requirement of having to pay overtime to the employee, the employee must perform specified duties in a particular manner and be paid “a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.” (Lab. Code, § 515, subd. (a).)  Therefore, on January 1, 2023, to qualify for a white-collar exemption, the employee must receive an annual salary of at least $64,480 annually ($1,240 weekly) for all employers.

3.  The salary for exempt employees must be a guaranteed, fixed amount.

The employee’s salary cannot be reduced for quality or quantity of work.

4.  To qualify as an exempt employee, the employee must perform more than 50% of their time performing exempt duties.

More information about the types of duties that qualify for the white-collar exemptions can be read here.

5.  Employers bear the burden of proof when establishing that an employee qualifies as an exempt employee.

Employers have the burden of proof when an employee challenges an exempt classification.  California courts have made clear that the employer bears the burden of proof when asserting that an employee is an exempt employee:  “[T]he assertion of an exemption from the overtime laws is considered to be an affirmative defense, and therefore the employer bears the burden of proving the employee’s exemption.”  Ramirez v. Yosemite Water Co. (1999).