Rate of Pay Calculation
Non-exempt employees. Employers now have an option on how to pay sick days for non-exempt employees. The Amendment requires an employer to calculate paid sick time for non-exempt employees using one of the following methods:
calculate 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
divide 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.
Exempt employees. The Amendment requires that paid sick time for exempt employees be calculated in the same manner as the employer calculates wages for other forms of paid leave time.
Importantly, the Amendment eliminates the prerequisite that an employee earns commissions, piece rate, varying pay rates or be paid as a salaried nonexempt to trigger any special calculation method.
Alternative Accrual Methods
While employees may continue to accrue paid sick leave at the rate of not less than one hour for every 30 hours worked, the Amendment now allows employers to use the following alternative methods of accrual:
New Alternative Accrual Option. In a welcome change for employers with paid time off policies, the Amendment allows an employer to provide for sick leave accrual on a basis other than one hour for every 30 hours worked, provided that the accrual is on a regular basis and the employee will have 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment of each calendar year, or in each 12-month period.
Pre-January 1, 2015, Policies. The Amendment permits an employer to use a prior paid sick leave or paid time off policy which applied to employees before January 1, 2015, using an accrual method different than providing one hour for every 30 hours worked, provided that the accrual is on a regular basis so that an employee, including an employee hired into that class after January 1, 2015, has:
no less than one day or eight hours of accrued sick leave or paid time off within three months of employment of each calendar year, or each 12-month period; and
the employee was eligible to earn at least three days or 24 hours of sick leave or paid time off within nine months of employment.
Front Load Method
An employer may still satisfy the accrual requirements of the law by providing not less than 24 hours or three days of paid sick leave. The Amendment provides that the accrued time must be available to the employee to use by the completion of his or her 120th calendar day of employment.
Reinstatement of Prior Accrued Time
The Amendment clarifies that an employer is not required to reinstate accrued paid time off to an employee who is rehired within one year of separation from employment and whose accrued time was paid out at termination, resignation, or separation.
Recordkeeping
Existing law requires an employer to keep records for three years, documenting the hours worked and paid sick days accrued and used by an employee and to make those records available to the Labor Commissioner upon request.
The Amendment provides that the employer has no obligation to inquire into or record the purposes for which an employee uses sick leave or paid time off.
Notice for Unlimited Sick Leave or Paid Time-Off Policies
The Amendment permits an employer who provides unlimited sick leave or unlimited paid time off to its employees to satisfy the law’s notice requirements by indicating “unlimited” on the employee’s itemized wage statement or the separate writing provided on the designated pay date with the payment of wages.
By Cynthia L. Filla, Susan E. Groff, Jonathan
We hope this information is valuable to you. If you have any questions, please do not hesitate to contact Holman HR for assistance.