On October 4, 2023, California Governor Gavin Newsom signed SB 616 into law, which amends the Healthy Workplaces, Healthy Families Act of 2014 by increasing the number of paid sick days (or hours) employees are entitled to each year. The law, which will take effect on January 1, 2024, will increase paid sick leave for employees from three days (or 24 hours) to five days (or 40 hours), whichever is greater, within a 12-month period. The law will specifically amend Labor Code sections 245.5, 246, and 246.5.

Method of Providing Sick Leave – Accrual vs. Lump Sum

Employers can still choose to provide the requisite paid sick leave either on an accrual basis or as a lump sum. 

Employers who choose the accrual method must provide no less than three days (or 24 hours) of accrued sick leave by the 120th calendar day of employment or each calendar year, or in each 12-month period, and no less than five days (or 40 hours) of accrued sick leave by the 200th calendar day of employment or each calendar year, or in each 12-month period.

Employers who choose the lump sum method will not see much change in this regard, other than the amount of the lump sum that is required.

Cap and Carryover

For employers who use the accrual method, the new law increases the accrual and carryover cap to 10 days or 80 hours. 

As with the prior law, employers who use the lump sum method and provide the five days (or 40 hours) at the beginning of each year do not need to allow for any carryover and do not need to provide any accrual.

Use of Sick Leave

Similarly, the new law will also increase the amount of sick leave an employee is able to use in each year of employment, calendar year, or 12-month period, from three days (or 24 hours) to five days (or 40 hours). 

Preemption of Certain Local Ordinances

SB 616 will also add Section 245.5(r) to the Labor Code, providing that certain subdivisions of the revised Section 245.5 will preempt any local ordinance to the contrary. This should create at least some uniformity throughout the state as it relates to paid sick leave. Specifically, Section 245.5(r) preempts any local ordinance contrary to the following state provisions: 

1. employers are not required to pay out an employee for accrued but unused paid sick days at the end of employment, although employers must reinstate unused paid sick days if an employee is rehired within one year;
2. an employer may lend paid sick days to an employee in advance of accrual at the employer’s discretion with proper documentation;
3. an employer must provide employees with written notice that lists the amount of paid sick leave available either on the wage statement or in a separate writing provided on the pay date;
4. an employer must calculate the rate of pay for paid sick leave hours for non-exempt and exempt employees as set forth in Section 245.5(l);
5. when the need for paid sick leave is foreseeable, the employee must provide reasonable advance notice and when the need is unforeseeable, the employee must provide notice as soon as practicable; and
6. an employer must pay an employee their paid sick leave hours no later than the payday for the next regular payroll period after the sick leave was taken.

Thus, any local ordinance that does not comply with any of the six issues listed above will be preempted.

Employees Covered by Collective Bargaining Agreements

The current paid sick leave law does not apply to employees covered by collective bargaining agreements (“CBAs”) that meet certain requirements. However, SB 616 will amend existing law to provide certain protections to employees subject to CBAs. Specifically, the amendment grants CBA employees the protections set forth in Labor Code 246.5. Employers must now allow CBA employees who otherwise are exempt from the paid sick leave law to use paid sick leave for the diagnosis, care, or treatment of an existing health condition of, or preventive care for, an employee or family member, and, for an employee who is a victim of domestic violence, sexual assault, or stalking.

Employers also may not require a CBA employee who takes paid sick leave for a covered reason to search for or find a replacement for the days when the employee is off work.

Lastly, employers may not deny a CBA employee the right to use sick leave, nor can they retaliate or discriminate against CBA employees who use paid sick leave. Relatedly, employees are entitled to a rebuttable presumption of retaliation if an employer takes adverse action, such as denying the use accrued sick leave, or discharging or demoting the employee, within 30 days of the employee’s protected activity (such as filing a complaint with the labor department or cooperating with an investigation).

Updates to Policies and Handbooks

Since SB 616 makes major changes to existing paid sick leave laws, employers are encouraged to review their relevant policies and employee handbooks with counsel to ensure they are compliant with the new law. Relatedly, employers should ensure that, as of January 1, 2024, the Notice to Employee that is provided upon hire (as required by Labor Code section 2810.5) reflects the correct amount of paid sick leave, as does the employee wage statement (or the separate writing provided with the wage statement).