If you are a California employer, I hope you are preparing for the new sick leave policy that takes effect July 1, 2015. As a payroll processor, there is information we will need from you to properly report available sick leave on paychecks, and it is dependent upon decisions you will make for how it will be calculated.
Before we get to how to calculate the hours, let’s go over to whom the sick leave policy applies.
- The policy applies to all employers: no minimum number of employees required
- Applies to any employee who will work 30+ days within a year (no minimum number of hours PER DAY)
- Includes all part-time and full-time employees
- Must include temporary and seasonal workers if they’ll work more than 30 days per year
There are two methods of granting sick pay: accrual or granted. Let’s look at these in more detail.
If the accrual method is used, one hour of sick pay is earned for every 30 hours worked. An employee working 40 hours per week would accrued 69.33 hours (8.6 work days) per year. However, the law allows an employer to cap accrued hours at 48 and limit the USE of hours to 24 (3 days per year). If an employee uses their 3 vacation days prior to hitting the 48 hour cap, they could in fact accrue up to the max of 1 hour for every 30 worked, although they would not be able to use all the hours unless the employer allows more than the required 24. (It would have been much easier if they just had the law state how many could accrue in a year max, and how many could be used. With this law, there are 3 different numbers to consider).
If you have an employee on a salary in an administrative, executive or professional position exempt from overtime, it is assumed they will have worked 40 hours per week for sick pay calculations unless they regularly work less hours. Those who earn variable wages (for instance those on commission) must record all time worked in order to calculate the correct sick pay.
If you chose to accrue sick pay, you must carry over unused hours (no use it or lose it). If an employee had sick leave accrued when they left your employment and return within 12 months, all unused hours must be reinstated.
If you feel the accrual method is too cumbersome, you may use the grant method where all 24 hours of sick pay are given as of the first day of employment. However, you may impose a 90 day waiting period before a sick day can be used. If hours are granted each year, no carryover of unused hours is required (use it or lose it is permitted in this case).
If you currently have a sick pay policy in place, make sure it is in compliance in all areas (who is included, how many hours are earned, how many hours can be used, etc.)
In the next post we’ll look at more of the rules governing this new sick leave policy.
