Lawsuit Prevention for Employers

Effective July 1, 2015, almost all California employers, regardless of size, are required to provide paid sick leave benefits to eligible employees (those who have worked 30 or more days during the last year) beginning on the 90th day of employment.

In essence, the statute’s baseline requirement is that employers must provide over eight and one-half days (69 hours) of paid benefits annually, and allow any unused benefits to be carried over from year to year. However, the law allows employers to substantially reduce exposure for paid benefits as follows: employers with a “pre-existing” policy otherwise in compliance with the new law may 1) limit the use of benefits to three days each year and to 2) limit carryover of unused benefits to a maximum of six days (48 hours). Employers without such a pre-existing policy will be obligated to provide eight and one-half days per year with unlimited carry over of unused benefits.

Minimizing The Impact

Otherwise stated, the new law provides that employers who already provide paid sick leave do not need to provide “additional” paid sick days if 1) there is already a paid sick leave policy or paid time off policy, 2) the employer makes available an amount of leave that may be used for the same purposes and under the same conditions as specified in the new law and 3) the employer’s policy either satisfies the accrual, carry over and use requirements of the new statute or it provides that three days (24 hours) of paid sick leave are immediately available for use at the commencement of each benefit year.

In other words, employers can eliminate the obligation to carry over unused benefits entirely by “front loading” the three days of paid benefits available each year for the use of employees by making them available for use immediately, i.e., before they have been earned on pro-rated basis. Employers who avail themselves of this option are apparently not exempt, however, from complying with the remaining requirements of the law related to posters and notices, and record-keeping.

Revise Employee Handbooks Now or Pay Later

Obviously, employers who are aware of these ameliorating features of the new law will want to seriously consider minimizing their exposure by modifying existing employee handbooks as soon as possible (so that the “pre-existing” policy is in place well before July 1, 2015) to include a new paid sick leave policy to take advantage of these provisions by scrupulously complying with the statute’s requirements.

A Separate “Sick Leave” Policy is Essential

Some additional significant features of the new law are summarized as follows. Even though the new law appears to allow a paid time off policy (“P.T.O”) in lieu of a separate “sick leave policy,” this is not recommended, for the following reasons. California law treats any paid leave that can be used for vacation or to extend a vacation as subject to all legal regulations that apply to vacation benefits. Consequently, any earned but unused leave that can be used as vacation must, according to the California Division of Labor Standards Enforcement, be paid to departing employees on a prorated basis, identical to vacation benefits. This would clearly apply to a paid time off policy that can be used, in whole or in part, for vacation.

Consequently, it is recommended that the employer’s new paid sick leave policy be set forth in a separate written policy, preferably in the employee handbook, as opposed to a Paid Time Off (PTO) policy, where sick leave, vacation and other paid leaves are treated interchangeably.

Employers may establish a reasonable minimum threshold requirement for the incremental use of sick leave benefits, provided that it does not exceed two hours.

The new law requires that eligible employees be allowed to use paid sick leave benefits for their own preventative health care, or that of a family member, or for the diagnosis, care or treatment of their own or family member’s existing heath condition. The term “family member” means a child, parent, spouse, registered domestic partner, grandparent, grandchild or sibling.

Employers must also provide paid sick leave for an employee who is the victim of 1) domestic violence, 2) sexual assault or 3) (as of January 1, 2015) stalking, as defined by Labor Code, sections 230 and 230.1.

The new law requires employers to provide written information, at the time of hire, for the purpose of advising employees about their legal rights under the new law. Specifically, the statute requires that the “Wage Theft Prevention Act” notices, which have been required of employers since 2012, be modified to include language advising employees of their right to accrue and use paid sick leave, and related matters. Although the law is presently unclear on the issue, it appears that this requirement, as well as those pertaining to notices, posters and recordkeeping, took effect on January 1, 2015, as opposed to the substantive portions of the statute, which don’t take effect until July 1, 2015.

For this reason, employers are advised to distribute the revised Wage Theft Prevention Act forms and to comply with the notice, posting and record-keeping requirements of the statute without delay.

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Jay G. Putnam is a Petaluma labor lawyer who has specialized in representing California employers for over three decades. His practice is devoted to preventing lawsuits against his clients, without sacrificing workplace authority or management prerogatives.

While no one can guarantee a future free of lawsuits, Putnam has compiled a remarkable record of success: Not one employer-client has been sued in 36 years with his system of precautions in place.

For those clients who have arrived with pending lawsuits, Putnam has established an excellent track record of success as well. 

You are invited to visit Mr. Putnam’s website, where you will find in-depth discussion of the most common mistakes made by California employers, and how to avoid them. www.jaygputnam.com/articles-by-jay-g-putnam/