San Anselmo Chamber

2ndQuarter 2015 • SanAnselmoNetworkSuccess 10 LegalLectern:PaidSickLeaveII:AdvancedIssues ByJayW.Luther,AttorneyatLaw, LawOfficesofJayW.Luther (415)456-6197•jluther@lutherlaw.com I n the last column– email me if you missed it– there were four important takeaways about our new California paid sick leave (PSL) law. First, every employer with at least one employee must adopt a written policy that complies with the law. Second, all employees must be notified of that policy by giving them a statutory form available from the website of the Division of Labor Standards Enforcement (DLSE). Third, an information poster, also available from the DLSE website, must be prominently posted. Fourth, employees must be notified of the amount of sick leave they have accrued on each pay stub or on an equivalent document. If the employer adopts the accrual system, employees will accrue one day of sick leave for every 30 hours worked. Perhaps the biggest downside of not having a written policy is that the employer is unable to take advantage of the statute's permissible cap on accrual and use of sick leave to three days per year. Worse, it can't prevent leave from carrying over from year to year. Put simply, alot of sick leave can accrue, and the employer has to honor it. In my own law practice, I've found that a good solution for many employers is to adopt a so-called "frontloaded" plan instead of using the accrual method, because it's simple to administer. Under this plan, employees get all three days credited—frontloaded—into their sick-leave banks at the moment the law and the plan become effective, on July 1, 2015. Employees may draw against their banks at any time during the next 12 months, but on the anniversary date—the first would be July 1, 2016— any time remaining in the bank is lost and replaced with a new three days of leave. And this continues to go on, year after year. There are a few frontloading wrinkles. For employees hired after July 1, they'll be frontloaded with the three days on the day of hire. But under the law, you don't have to allow them to use any sick days from their banks until the 90th day after the date of hire—a "probationary period." On the other hand, since an employer can always adopt a more generous policy than that required by law, it can waive or shorten the probationary period. There's a second wrinkle with new hires: The employer has a choice to pick the last day that the employee can use "this year's" banked leave days. Since the employee is entitled at minimum to three days every 12 months, the last allowable date of use is the day before the employee's anniversary with the employer. However, for convenience, the employer can simply use the same turnover date as other employees, July 1 in our example. This would make June 30 the last day of allowable use. It is allowable, again, because it is more generous than the statutory scheme. The ne w emplo ye e is effectiv ely given more than three days of leave a year since the turnover date comes up in less than 12 months, but it's a lot easier to administer than different PSL turnover dates for every employee. Those of you who don't do work in San Francisco or Oakland should stop here, under pain of the severe brain cramps that result from trying to administer three similar but different statues together. But if you do work in those cities, sorry, you have to continue. In one situation, frontloaded plans have few, if any, advantages over the accrual method. This is where an accrual system is used by local laws. The state program does not preempt local PSL ordinances, but instead requires employers to apply whichever law provides the greatest benefits to employees, so we really have a mix and match system. PSL ordinances currently exist in San Francisco, where PSL has been the law since 2007, and Oakland, where it has been effective since March 2, 2015. Unless frontloading is used, the state PSL law provides for up to three days to accrue per year at the rate of one day for every 30 hours worked for the employer. The San Francisco ordinance also uses the formula of one day for every 30 hours worked (although it starts 90 days after the date of hire), but the maximum annual accrual is five days (40 hours) for employers with fewer than 10 employees per week—that's 10 employees total, not just those working in the City—and eight days (72 hours) for those with 10 or more. Accrual is in full hour increments, e.g., one leave day after 30 hours, two after 60, and so on, with nothing added in between; there are no fractional leave days. Unused sick leave carries over from year to year. Unlike the state statute, the ordinance does not allow an employer policy to cap usage to three days per year, so all that has been accrued or carried over, up to the full five or eight days, can be used at any time. So how does this apply to a Marin-based employer? If it has employees who perform work in the City, the employees accrue leave for hours worked in San Francisco only if they perform 56 or more hours of work there within a calendar year. Examples might include a Marin law firm that sends an associate to the City to engage in a three-week jury trial, a delivery service with stops in the City, and a construction firm performing a San Francisco contract. Employees who work outside of San Francisco and who travel through, but do not stop in the City as a purpose of their work, are not covered by the ordinance. As with other statutes, the wage rate of sick leave is the regular wage rate, but not less than the City's minimum wage of $12.25. The Oakland ordinance is much like San Francisco's, uses the same formulas and carryover rules, and is subject to the same minimum wage. Also like San Francisco, and unlike the state PSL law, it under certain circumstances allows a covered employee without a spouse or registered domestic partner to designate one person for whom the employee may use paid sick leave to provide aid or care. Unlike San Francisco, employees are eligible to accrue paid sick leave if they work at least two hours per week in the City of Oakland and are not exempt from state minimum wage requirements; there is no 56-hour safe harbor. Oakland requires pertinent payroll and leave records to be retained for four years, while the state and SF require only three. Both Oakland and San Francisco have a required poster available on their websites to advise employees of their rights, so if you do work in both places, you'll have three postings: one for the state, and one for each city. Where this all gets very complicated is when you have to do the arithmetic combining the benefits for a given employee who works both in Marin and in one or both of the cities with a local PSL law. I think that leave that is frontloaded into employee banks is credited against accruals under the two cities' laws. In other words, my best guess is that leave accruing in Oakland does not have to be added to an employee's Legal Lectern continued on page 11

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