California’s New Paid Sick Leave Law: What Employers Need to Know

Parameters of Paid Sick Leave Use

There are important points regarding how paid sick leave can be used:

• Employees cannot start using accrued sick days until the 90th day of employment; after that the employee can use sick days as accrued.

• Employers can limit the amount of PSL an employee can use to *three days or 24 hours per year. This limitation applies even when an employee, under the default accrual method, could have accrued six days or 48 hours of PSL (or even more if the employer did not put a cap on accrual). PSL must be provided upon an employee's oral or written request. If the need for PSL is foreseeable, an employee must provide “reasonable” advance notice. If not, the employee must provide notice “as soon as practicable.” 

• The Act does not say whether you can require the employee to provide medical certification of the need for PSL (i.e., a doctor's note). The law simply says that the employee must provide reasonable advance notification. The Labor Commissioner has stated that denying leave because an employee failed to provide a doctor’s note or other details about the leave may lead to a claim against the employer for violation of the Act. Unless the certification is required pursuant to another leave law, there is no provision in the Act allowing an employer to require certification for PSL.

Employers will need to adjust absence control policies that require a doctor’s note when employees are absent for a set number of days. Moreover, policies that discipline employees based on a specific number of absences should not count days off that are protected by this law (or any other protected leave of absence).

• An employee may determine when and how much PSL he/she needs to use. For example, the employee can decide if he/she wants to take a full day or part of a day. You cannot tell an employee that he/she needs to take a half-day off for a brief morning doctor’s appointment. An employer, however, can set a “reasonable minimum increment” of time that must be taken not to exceed two hours. In other words, you can require the employee to take a minimum of two hours of PSL at a time.

• An employer cannot require an employee to find a replacement worker for the time off.

An employer can lend paid sick days to employees in advance of accrual. According to the law this is “at the employer’s discretion, and with proper documentation.” It is unclear what “proper documentation” means under this provision of the law.

Curbing Cell Phone Use In the Workplace

While cell phones can speed work-related communications when employees are out of the office, workers’ personal use of their mobile devices while on-the-clock has become the top “productivity killer” for business. 

According to a June 9, 2016 Career Builder survey, eight out of ten workers have smartphones and most keep them within eye contact while on the job. Employee personal use of their phones for calls, texts, email, social media, and online entertainment during work hours is thus a legitimate and significant concern for employers. 

Although California and many other states regulate cell phone usage while driving, there are currently no regulations governing an employee’s access and/or personal use of cell phones during company time. However, employers can and should implement policy to address this problem. 

For example, some employers have gone so far as to entirely ban cell phones from company premises. Others simply restrict use of cell phones during working hours, but allow access for emergencies and during meal and rest breaks. Some employers may choose to address the situation only when a particular employee’s productivity is clearly suffering or that employee is acting as a distraction to others. Another solution is to limit Wi-Fi access on company premises to deter employees from using their smartphones due to concerns about exceeding personal data limits. 

Employers should decide what restrictions on cell phone usage would be best for their workplace environment and culture, and then create a consistent and comprehensive written policy to reflect this.

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Deductions From an Exempt Employee’s Salary

The “salary test” required to validate overtime exemptions provides that an employee must be paid a full weekly salary for any week in which any work is performed. There are certain limited deductions allowed.

If an employee works any part of a day, he/she must also be paid in full; no salary deduction is allowed. However, deductions can be made from any vacation, PTO or sick leave balance for the hours not worked, as explained in the examples below.

An exempt employee’s salary is subject to very limited deductions.

• Impermissible Deductions From Salary

The following types of deductions are not permitted from an exempt employee’s salary:

• Quality or quantity of work — Do not make deductions from an exempt employee’s salary for variations in the quantity or quality of work performed.

• Unavailability of work — Do not make deductions when work is unavailable because of the operational requirements of the business, if exempt employees are ready, willing and able to work. For example, if July 4th falls on a Tuesday and the business shuts down for that day and the balance of the week, exempt employees who worked on Monday of that week are entitled to a full week’s pay. If there is no work at all during the week, there is no obligation to pay. Employers should give reasonable advance notice of any shutdowns.

• Disciplinary reasons — Although federal regulations and court decisions permit deductions of less than a full week from exempt employees’ salary for limited disciplinary reasons, the Labor Commissioner issued an Opinion Letter stating that deductions for disciplinary reasons are not allowed in California.

• Jury duty, witness duty or military duty — California follows the federal law about deductions from the salary of an exempt employee who serves on jury duty, as a witness or is on military leave. Deductions cannot be made from an exempt employee’s salary for periods of less than a full workweek . If the exempt employee doesn’t perform any work within the week, you can deduct from his/her salary for the week.

Limited Deductions From Salary

The deductions listed in this section are permitted from an exempt employee’s salary:

Vacations, Personal Leave and Religious Observances

You can make deductions from an exempt employee’s salary for absences of a full day or more for personal reasons, such as vacation, personal leave and religious holidays. However, treat the religious observances of all exempt employees alike.

You can also deduct vacation from an exempt employee’s vacation or PTO accrual for a partial day absence. If the exempt employee is absent for a partial day and has no vacation or paid time off (PTO) available, the employee must be paid for a full day if he/she performs any work that day.

Example: Jeff requests a vacation day but has no PTO available. You can dock the value of a day’s pay for each full day with no work. Jeff’s annual salary should be divided by 52 for the weekly amount then divided by the number of days usually worked in a week to determine the daily rate.

Example: Joe is an exempt employee at ABC Company. He plans on coming in after lunch on Monday to extend his vacation from the prior week. ABC Company is generally open from 8 a.m. until 6 p.m. Joe arrives at work at 2 p.m. ABC Company may deduct the time missed on Monday from Joe’s accrued vacation benefit, provided he has the time available.

Example: Mary wants to leave work at 10 a.m. on Friday to participate in a golf tournament. Her normal office hours are from 9 a.m. to 5 p.m. She previously used up her vacation time and has only two hours accrued in her vacation bank. She must receive her full salary for the day because she worked for one hour. Even though she does not have enough time in her vacation bank to cover her absence, her employer cannot deduct from her salary for the time missed.

Voluntary Sickness or Disability Plans

If the organization maintains a voluntary bona fide sick leave plan, a corresponding deduction can be made from salary in certain situations. A “bona fide sick leave plan” is a plan, policy or practice that replaces compensation lost due to sickness or disability. This is separate from mandatory paid sick leave. A “bona fide sick leave plan” is one which does not create a vested benefit payable at termination. If a plan exists, you can make a deduction from an exempt employee’s salary for a full day of absence before the exempt employee qualified for the sick or disability pay and after the employee exhausted benefits under the plan.

Partial day absences caused by sickness or injury can be charged to an exempt employee’s sick pay bank, provided the employee has such sick pay available at the time of the absence.

California employers were required to begin providing mandatory paid sick leave benefits on July 1, 2015 (AB 1522/the Healthy Workplaces, Healthy Families Act). Exempt employees are entitled to paid sick days under this law. If the exempt employee needs to take time off for one of the eligible reasons under the Act, you cannot deny the exempt employee the right to use accrued mandatory leave, and must allow use of accrued paid time off for a covered absence. If an exempt employee takes a full or partial day absence under the mandatory paid sick leave law, it can be charged to the exempt employee's accrued mandatory paid sick time.

The mandatory paid sick leave law provides specific details regarding how to determine accrual for exempt employees and also has recordkeeping requirements.

Initial or Final Weeks of Work

You can prorate an employee’s salary in full-day increments for the initial and final weeks of work, paying the employee only for the days worked in the pay period. However, an employee is not on a salary basis within the meaning of the exemption if you employ him/her occasionally and pay him/her a proportionate part of the weekly salary when so employed. Under these circumstances, even the full weekly salary payments would not meet the requirement, because casual or occasional employment for a few days at a time is inconsistent with employment on a salary basis.

Family and Medical Leave

Leave under the federal Family and Medical Leave Act (FMLA) and California Family Rights Act, by an exempt employee will not affect the exempt employee’s status. You can make deductions from the exempt employee’s paid sick leave for hours taken as intermittent or reduced FMLA and CFRA leave without affecting the employee’s exempt status.

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Final Pay Deductions

Employers sometimes wish to make deductions from an employee’s wages for a variety of reasons. Doing so without knowing what the law permits can be a mistake, as California has stringent laws on what deductions are allowed.

As a general principle, employers may make deductions from wages if: (1) state or federal law requires or permits the deduction; (2) an employee authorizes the deduction in writing for such things as hospital or medical dues, insurance premiums, or other deductions that do not reduce a standard wage resulting from collective bargaining, a wage agreement, or a statute; or (3) a collective bargaining agreement expressly authorizes health, welfare, or pension plan contributions. CA Labor Code 224.

Unlawful Deductions

An employer may not:

• Collect back any part of a wage that it has previously paid to an employee. For example, if you advance commissions to employees, you may not take them back if the customer never pays unless you have a policy that correctly and legally characterizes the commissions and advances and provides when and how you may recoup them.

• Collect a debt the employee owes the company against wages without written agreement from the employee. A company also may never offset the balance of a debt owed against final wages. Barnhill v. Robert Saunders & Co. So if you loan money to an employee who later quits, you cannot subtract the remaining debt from the person’s last wages. You could work out an agreement with the person on how (s)he will pay off the debt and you can use normal collection and litigation remedies if needed.

• Make payroll deductions or require an employee to pay for any “necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, or of his or her obedience to the directions of the employer.” These expenditures include such things as uniforms, required medical examinations, travel, meals, and purchases of equipment.

• Subtract from wages the amount of tips an employee has earned.

• Deduct the amount of a bond that the employer paid for an employee or a photograph the employer required.

• Subtract from wages expenses resulting from the employee’s negligence, such as cash shortages, loss of equipment, or breakage. This rule does permit an employer to make deductions for gross negligence or dishonest or willful acts. See below.

Lawful Deductions

An employer may:

• Deduct legally required amounts for such things as federal and state income tax, unemployment, state disability insurance and paid family leave tax, Medicare, and Social Security.

• Subtract amounts under court orders for garnishment or child support up to certain statutory maximum amounts.

• In industries where an employer may need to furnish meals or lodging, deduct up to the value of those items specified in applicable IWC Wage Orders.

• Make deductions authorized by an employee in writing for such things as a 401(k) account, life insurance, health insurance, or union dues.

• Deduct other amounts that the employee agrees to in writing, such as payments on a loan the employer gave to the employee so long as it is not the last pay check, does not reduce the wages to below the amount required by a wage agreement, collective bargaining agreement, or statute, and is not more than agreed upon by the employee.

• Subtract amounts attributable to an employee’s gross negligence or dishonest or willful acts.

Before you make deductions from wages other than required withholding, it is advisable to verify that the intended deduction is legally permissible.

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REMINDER:

California’s minimum wage increases.

Employers NOT in L.A city or in an unincorporated city of L.A. County and don’t have a local city ordinance the following will apply to you:

Large businesses with 26 or more employees will begin complying in 2017 and will reach $15 per hour in 2022. Small businesses with 25 or fewer employees will not be required to begin the scheduled increases until 2018 and will have until 2023 to reach the $15 per hour rate.

Date Employers With 26 or More Employees / Employers With 25 or Fewer Employees

01/01/2017 $10.50 per hour / $10 per hour

01/01/2018 $11 per hour / $10.50 per hour

01/01/2019 $12 per hour / $11 per hour

01/01/2020 $13 per hour / $12 per hour

01/01/2021 $14 per hour / $13 per hour

01/01/2022 $15 per hour / $14 per hour

01/01/2023 $15 per hour / $15 per hour

Until the minimum wage reaches $15 per hour, the governor has the authority to suspend increases based on current economic conditions. However, this is discretionary and would happen only if there are declining state revenues from sales tax; there is a decline in the labor market; or there is a budget deficit (this decision to suspend is permitted to occur only twice).