New California Employment Law AB 1522 Requires Employers to Provide Paid Sick Leave

The “Healthy Workplaces, Healthy Families Act of 2014” (AB 1522) was signed into law on September 10, 2014, making California the second state to require that employers provide paid sick leave to its employees. This new law ensures that all working individuals receive adequate time off to tend to their personal healthcare needs or those of their immediate family members.

Who is Impacted?

The new law applies to nearly all employers regardless of size or government affiliation. Exemptions to AB 1522 include employees covered by most collective bargaining agreements, as well as select in-home support providers.

Scope and Application of AB 1522

Accrual Rules
The law provides that each employee shall accrue no less than one hour of paid sick leave for every 30 hours worked; however, an employer may limit paid sick leave to six days per year. The law requires existing employees to begin accruing paid sick leave at the effective date, no later than July 1, 2015. For new hires, paid sick leave begins accruing on the first day of employment, which the employee is eligible to begin using after 90 days.

Usage Rules
Unused sick leave shall carry over to the following year; however, employers may limit the amount of sick leave carried over to three days per year. This carryover can be alleviated if an employer grants the sick leave at the beginning of the year, as opposed to accruing for hours worked.

Notice & Posting Rules
Employers are required to advise all existing and new employees of their right to accrue and use paid sick leave without fear of retaliation. This includes written notification to existing employees, as well as visible posters provided by the Labor Commissioner.

Record-Retention Rules
In addition, employers must maintain a minimum of three years of payroll records detailing hours worked, as well as paid sick leave accrued and taken by each employee. Failure to comply with these new policies can result in civil action from the Labor Commissioner or the Attorney General.

If an employer already provides sick time to employees and their current policy meets or exceeds the criteria outlined above, they are not obligated to provide additional paid sick leave.

Cost Per Employee

If an employee works 30 hours per week, they will accrue 52 hours of paid sick leave per year. If the employer limits the accrual to the 48 hours required by the new law and the employee’s wage is $12 an hour, the annual cost to the employer will be $576.

The table below outlines additional scenarios:

ab1522-cost-per-employee

Effective Date

The effective date for implementation is July 1, 2015.

Prepare Your Business for the Update

Although the law does not take effect until July 2015, employers should begin taking steps now to ensure a smooth transition. For assistance in implementing California Employment Law AB 1522 from an accounting standpoint, contact Signature Analytics today.

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