It's time to add hand sanitizer and medical face masks to your company's office supply list. The cost of doing business in California just went up (yet again!) especially as it pertains to lost employee time due to illness. Over the Labor Day holiday weekend, the California legislature worked feverishly to beat the deadline to pass new legislation, and approved the largest expansion of employer-paid sick leave in the nation.

Assembly Bill 1522, which was promptly signed by the Governor and becomes effective on July 1, 2015, provides that all employees who work at least 30 days per year must accrue paid sick leave at the rate of one hour for every thirty (30) hours worked. This means that every full-time (40 hours per week) employee could earn as many as 70 hours per year of paid sick leave.

The legislature did provide a small reprieve by allowing employers to put a "soft cap" on the accrual of the new benefits, as long as every employee receives a minimum of three (3) days or twenty-four (24) hours of paid sick leave each year. Part-time employees accrue at the same rate, and may be subject to the same "soft cap." Much like vacation time, the new paid sick leave benefits will carry over to the next calendar year (though the maximum accrual from year-to-year can be capped at six (6) days or forty-eight (48) hours). Unlike vacation time, however, sick leave does not need to be paid out at the time of separation (e.g. resignation, termination or layoff).

The new law provides that paid sick leave may be used to take care of the employee, as well as family members (including parents, grandparents, domestic partners, etc.). The law also specifically forbids discrimination or retaliation against an employee who requests paid sick days. Failure to provide notice to all employees or failure to comply with the new requirements will subject the employer to statutory penalties, liability for lost wages/benefits, interest and, of course, plaintiff's attorneys' fees and costs.

Employers of any size are required to comply. Employees may begin using their accrued benefits after 90 calendar says of continuous service. The legislature also specifically indicated that "exempt" employees (those employees who are not subject to the wage and hour requirements set forth in the Industrial Wage Commission's Wage Orders) are subject to the new protections. This poses an interesting problem for business owners, since it will effectively require them to track and confirm that exempt employees are receiving the appropriate benefits, even though the employer would generallynot track the exempt employee's work hours.

The only employees who are specifically excluded are: (1) Union employees subject to a collective bargaining agreement that provides sick leave and earn 30% more than the state minimum wage; (2) Construction employees subject to a collective bargaining agreement that specifically waives the protections of the new law; (3) flight crew members covered by the federal Railway Labor Act; and (4) certain in-home supportive services providers.

What should you do if you are a California employer? First, contact competent employment law counsel to discuss revising any existing sick leave policies and procedures to comply with the new law, and to ensure that the "soft cap" language is properly drafted, limiting your liability. In addition, all wage statements (a/k/a paystubs) should be updated to reflect accrued sick leave pursuant to Labor Code section 226. Finally, the latest "Wage Theft Notification" poster, which will include updated information regarding sick leave, should be posted beginning on January 1, 2015. Though obtaining a new poster may be the least of your concerns, there is a $1,000 penalty for failure to have an up-to-date notice.

While the motivation behind this new law seems fair and just on its face (protecting workers from losing income due to illness), the legislature has been unable to articulate why it should be the employer's burden to bear the cost of employee illness, especially during a period when more businesses are leaving the state, than coming in. California small business owners may be forced to take a sick day of their own after realizing what the cost of AB 1522 will be on their business!

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