Governor Brown signed AB 304 and it is effective immediately. While it doesn’t fix or clarify everything, it does offer some guidance. Here are the highlights:
Unlimited Time Off programs. If your company provides “unlimited” or “nonaccrual” time off for some workers, you don’t have to also provide separate paid sick leave. The old rule required a bit of a fiction where the amount of paid sick leave had to be listed on the paystub (or other notice document) and tracked, even though the worker could really take “unlimited” time off. Now, unlimited sick time or PTO may show available paid sick leave on employees’ itemized wage statement by indicating that paid sick leave is “unlimited.” (The paid sick leave still requires in all other circumstances that employers communicate the amount of accrued sick leave an employee has on an itemized wage statement (or at the same time as the paystub is given).
Accrual Rates. The law required that employees accrue paid sick leave at the rate of one hour for every 30 hours worked. For some employers, this was confusing and limiting as existing programs were more generous, just providing the benefit pursuant to a different method. Now, employers may use any accrual method that provides at least 24 hours of paid sick leave by the 120th calendar day of employment.
Calculation of Paid Sick Leave. Employers can calculate the paid sick time using any of the following methods:
- Paid sick time for nonexempt employees shall be calculated in the same manner as the regular rate of pay for the workweek in which the employee uses paid sick time, whether or not the employee actually works overtime in that workweek; or
- Paid sick time for nonexempt employees shall be calculated by dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment; or
- Paid sick time for exempt employees shall be calculated in the same manner as the employer calculates wages for other forms of paid leave time.
Reason for Use. Employers are not required to inquire into or record purposes for which an employee uses any type of paid sick leave or PTO.