On October 4, 2023, Governor Newsom approved a new law, SB 616, that increases the amount of paid sick leave that nearly every employer in California must offer to employees. Here are five key issues California employers need to understand about the new law and to comply with its requirements:
1. New requirements under SB 616:
As background, California’s existing paid sick leave law, the Healthy Workplaces, Healthy Families Act of 2014, became effective on January 1, 2015. The law requires employers of all sizes to provide 1 hour of paid sick leave for every 30 hours worked to employees who worked for the employer for 30 or more days. Employers may cap the accrual of paid sick leave at 48 hours and cap the use of paid sick leave at 3 days or 24 hours, whichever is greater, within a 12-month period. SB 616 increases the amount of paid sick leave employers must provide starting on January 1, 2024.
SB 616 will require employers to provide the following as of January 1, 2024:
- Requires employers to provide paid sick leave of 5 days or 40 hours.
- Employers may still offer an accrual rate of one hour of PSL for every 30 hours worked. For employers that use a difference accrual method other than 1 hour of PSL for every 30 hours worked, the employer must offer on an accrual on a regular basis of no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment or each calendar year, or in each 12-month period, and no less than 40 hours of accrued sick leave or paid time off by the 200th calendar day of employment or each calendar year, or in each 12-month period. Employers may satisfy the accrual requirements by providing not less than 24 hours or 3 days of PSL by the employee’s 120th calendar day of employment, and no less than 40 hours or 5 days of PSL by the employee’s 200th calendar day of employment.
- Employers may limit the use of PSL to 40 hours or five days in each year of employment, calendar year, or 12-month period.
- Employers may cap the accrual of paid sick leave to 10 days or 80 hours. A total of 10 day or 80 hours is also the cap that employers can place on the amount of paid sick leave an employee can carryover from year to year. However, employers who provide an upfront grant of 5 days or 40 hours at the beginning of each year do not need to provide any accrual, nor do they need to allow any carryover.
2. Update new hire packets and Notice to Employee:
Employers must update their new hire packages to include an updated Notice to Employee required by Labor Code section 2810.5. The current version (which does not reflect the new requirements going into effect on January 1, 2024) is available here: https://www.dir.ca.gov/dlse/lc_2810.5_notice.pdf
Stay tuned for updates regarding when this form is updated to comply with SB 616.
3. Update employee handbooks and workplace posters:
Employer’s paid sick leave policies in their handbooks will need to be updated to conform to the new requirements under SB 616.
4. Update pay stub information:
Also, just as required under existing law, the new law requires that employers provide notice to the employee of the amount of PSL that is available to the employee by employee’s pay date with the employee’s payment of wages. This notice can be made on the employee’s pay stub or some other writing at the time the employee is paid. Employers should start working with their payroll companies to ensure the updated amounts are reflected on pay stubs issued after January 1, 2024. It is recommended that a sample from the payroll processing company should be reviewed prior to January 1, 2024 to ensure it meets the legal requirements.
5. Do not rely on payroll company to implement these changes:
Employers must proactively contact their payroll companies to ensure that the new upfront grants or accrual rates are reflected on the employee pay stubs and that the paid sick leave is being tracked according to the new upfront grants or accrual rates after January 1, 2024. Do not rely on your payroll company to automatically update the pay stubs and tracking of paid sick leave – make sure your payroll company starts working on this sooner than later.