When California’s new sick-leave law went into effect last year, many employers viewed it with a healthy skepticism. The low accrual rate and tight usage limits permitted under the law, formally dubbed the Healthy Workplaces, Healthy Families Act, drew criticism for being draconian and cumbersome, particularly from national employers that prefer a one-size-fits-all approach to leave.
Moreover, since a number of companies already provided more leave than the minimum required under the new law, many opted to keep their current policies in place; others made only minor revisions.
Unfortunately, however, making those well-intentioned and seemingly straightforward choices can bring an unintended consequence: the inability to hold employees accountable for the excessive use or perceived abuse of their sick-leave or paid-time-off (PTO) entitlement.
The good news is, with a bit of planning, HR professionals in California can work within the constraints of the legislation to craft policies that allow a company to be generous without exposing it to unnecessary risk.
Shifting Legislative Landscape
HR professionals and managers commonly counsel, discipline and sometimes even terminate employees who miss excessive amounts of work time. In the past, many of them operated under so-called no-fault policies, which regarded the reason for the absences as irrelevant.
However, beginning with the Americans with Disabilities Act in 1990 and the Family and Medical Leave Act (FMLA) in 1993—both of which offered protections for absences related to disabilities or dependent care—employers became somewhat constrained in their ability to reconcile their attendance policies with their performance review practices. California companies became further limited by various state laws such as the California Family Rights Act (CFRA) and the “kin care” statute, which allows the use of sick leave to care for a sick child, parent, spouse or partner. These employers—and their lawyers—eventually came to accept that they must not count legally protected absences, including those covered by FMLA or CFRA intermittent leave and those that accommodate a disability, against an employee’s performance record.
Against that backdrop came the new sick-leave law in 2015, which gives California employees the right to accrue and take paid sick leave for a variety of reasons, including a family member’s illness or need for preventive care. Under this legislation, employers must provide almost all workers with a paid-sick-leave program that meets certain minimum standards. Although the law provides for a variety of methods for awarding sick leave, the most straightforward is the accrual method: one hour of paid sick leave for every 30 hours an employee works.
The California legislation allows employers to cap sick-leave accrual and usage—the former on a rolling basis at either 48 hours or six days per year (whichever is greater) and the latter at 24 hours or three days per year (whichever is greater). The usage cap gives employers the option of complying with the law by simply awarding employees 24 hours or three days of sick leave at the beginning of each year instead of having them accrue it. This is known as the “upfront” method.
Note, however, that employees in San Francisco, Oakland, Emeryville and Santa Monica are covered by local ordinances that have higher accrual caps and do not permit usage caps—so employers’ options in those cities are more limited and challenging.
Risk of Retaliation Claims
A fundamental mandate of the new law is that employees cannot face retaliation—in the form of discipline, negative performance evaluations, or denial of any benefit or entitlement to which they would otherwise have access—as a consequence of using the time off afforded to them by the law.
This aspect of the legislation creates a challenge for all California employers. For example, even those that have opted to continue providing sick leave or PTO on terms more generous than what the law requires face a harsh reality: If they have not differentiated in their record-keeping between the sick leave or PTO offered under the mandate vs. under their own policy, they cannot easily apply attendance-based performance standards if the time off that an employee takes meets the criteria for proper use under the law.
In other words, no matter how much sick leave or PTO employees use, any related discipline or counseling exposes the employer to a claim of unlawful retaliation, since the worker could claim that the time off is governed by the new state law, which prohibits such action.
Of course, if an employee fails to report an absence, fabricates the reason for using sick leave or takes advantage of it for reasons that aren’t protected under the law, the employer can apply normal attendance and discipline standards.
This vulnerability to retaliation claims is leading many California employers to revisit their method of complying with the law. One increasingly popular solution is the “two-bucket” approach: Employees are given one bucket of sick leave that complies with the new law and uses the upfront method and a second bucket that is more generous than the law requires.
An employee’s use of the first bucket—the “protected” one—is without repercussion, but his or her use of the second bucket is subject to the employer’s normal attendance standards and discipline policies.
This solution is not without its challenges. A big obstacle is the amendment to California’s kin care law that became effective on Jan. 1, 2016. Although the amendment did not change the amount of sick leave an employee can use (one-half of the amount he or she can accrue in a year under the employer’s policy), it expanded the protected use of this time off to align it with the new sick-leave law.
Hence, kin care now relates to not only the illness and preventive care of the employee’s family members but also the employee’s own illness and preventive care. (The name “kin care” is no longer apt in light of this change, but it lingers nonetheless.)
What this means is that care must be taken to ensure that the amount of sick leave or PTO that is provided in the second “employer-policy-based” bucket does not exceed twice the amount provided in the first bucket.
As for implementation, a two-bucket approach should stipulate that employees must use any time available in their first bucket before using time available in the second one. Then it is important to track from which bucket time off is taken and to ensure that only unprotected use of time off from the second bucket is considered for evaluation and discipline purposes.
Given the many complexities of California’s sick-leave law, especially with the overlay of city ordinances, employers should review their existing policies and make sure that those responsible for administering them are in compliance with each part of the sick-leave law and the newly amended kin care law, including the notice and posting requirements as well as the no-retaliation requirements. And if the original plans for complying with the laws are proving unworkable, a careful rewriting of existing policies may be in order.
Judith Droz Keyes is an attorney with Davis Wright Tremaine in San Francisco. The author wishes to thank her colleagues, especially Neal A. Fisher Jr., for their help writing this article.