California’s amended Paid Sick Leave (PSL) law introduced notable changes for California employers effective January 1, 2024. The amended PSL law now requires employers to provide the greater of 5 days or 40 hours in annual paid sick leave for eligible employees. Previously, the required amount was the greater of 3 days or 24 hours. Additionally, the maximum amount of paid sick leave that employees can accrue and carryover at year-end increased from 6 days/48 hours to 10 days/80 hours.

Immediate Changes to Accrual and Frontloading

California employers may still provide PSL using either an accrual or a frontloading method. Employers using the accrual method with a non-January 1 start date must increase the annual usage cap to the greater of 5 days or 40 hours. Employers who use an accrual rate other than 1 hour for every 30 hours worked must ensure that the accrual rate is high enough that employees accrue at least 24 hours by the 120th day of employment and 40 hours by the 200th day of employment.

Employers who frontload must provide employees with additional PSL to comply with the new requirements. The Department of Industrial Relations (DIR) has issued updated Frequently Asked Questions (FAQs) that provide a specific frontloading example: If an employee started on May 1, 2021, and the employer used that anniversary date to frontload 3 days or 24 hours on May 1, 2023, the employer may either provide 2 days or 16 hours on January 1, 2024, and keep the May 1 date to frontload or can “reset” the frontload date to January 1, 2024, and provide the employee 5 days or 40 hours then. Likewise, California employers frontloading paid sick leave on an employee’s employment anniversary date can choose to either frontload two additional days on January 1 or shift the yearly period measurement to January 1, 2024, and frontload the greater of 5 days or 40 hours at the start of 2024.

Rate and Amount of PSL

As before, employees must be paid PSL at either their “regular rate of pay” or at a rate calculated by dividing the employee’s compensation for the previous 90 days (excluding overtime) by the total number of non-overtime hours. Moreover, the actual amount of PSL to be provided to an employee is determined by the daily hours regularly worked by the employee. For example, if an employee works 10‑hour days, the employee will be entitled to use 50 hours of paid sick leave. An employee who works only 6 hours a day will still be entitled to use 40 hours.

Reconciling Conflicts with Local PSL Ordinances

California employers who are subject to local sick leave ordinances must comply with both state law and the applicable local ordinance. In cases of conflict, employers must provide the paid sick leave benefits that are most generous to the employee. There are limited exceptions where state law requirements preempt local ordinance requirements on issues such as wage statements, timing of paid sick leave, lending of paid sick leave, calculation of paid sick leave, notice, and payment upon termination.

Employees Exempt From PSL

Certain employees remain exempt from the PSL law including individuals employed by air carriers, retired annuitants in government entities, railroad employees, and construction employees under a Collective Bargaining Agreement (CBA). However, CBA-covered employees outside of the construction industry, though partially exempt, are provided additional PSL rights, including the ability to take PSL for all specified reasons and protection from retaliation and the need to find a replacement worker as a condition of taking PSL.

Action Items

Employers are advised to update wage theft prevention notices and revise existing PSL or Paid Time Off (PTO) policies to comply with the amended PSL. It is also recommended that employers conduct training for supervisors on the new PSL requirements with a special emphasis on preventing retaliation against employees who exercise their rights under PSL. Employers are also encouraged to review the updated FAQs issued by the DIR that address PSL issues such as employees’ annual entitlement, eligibility criteria, accrual versus frontloading, usage, payment, tracking of earned and taken leave, and information dissemination to employees.

The landscape of California employment law is dynamic, frequently imposing new requirements on employers. The recent changes to the PSL serve as one recent example why employers are well advised to consult with employment counsel, well-versed in the latest legal developments, for assistance in navigating the ever-changing California employment laws.