This week the California Legislature returned from its final month-long break of the current legislative session. While the future of several workplace-related bills will be decided in the coming weeks, perhaps none are more significant to California private sector employers than AB 1522.  If passed, AB 1522 creates the “Healthy Families, Healthy Workplaces Act of 2014,” which requires employers to provide paid sick days for an employee who works for thirty (30) or more days in a calendar year.

Similar bills mandating paid sick leave were passed by the Assembly Committee on Judiciary in 2008, 2009, and 2011, but each was subsequently held in suspense in the Appropriations Committees. It is believed that AB 1522  has a greater chance of being passed as it is more limited than its predecessors insofar as it provides employees with a minimum of only 24 hours/three days of paid sick leave rather than the 72 hours/nine days there were provided under the previous three proposals.

The Rationale In Support of Mandatory Paid Sick Leave In California

AB 1522 is intended to address the six million California workers (about 40% of the state’s workforce) who are not provided paid sick days through their employer.

The author and sponsors of the bill state that the lack of paid sick days in California – which affects more than 75% of the state’s low-wage workers — is a public health hazard insofar as it forces ill workers to go to work sick and to send their sick children to school or child care, thus spreading contagion throughout their respective communities. Sponsors argue the passing of AB 1522 would encourage sick workers and children to stay home from work and school to prevent the spread of disease and contagion in the community and workplace.

Citing to various reports and studies, the bill’s sponsors argue that providing sick days to workers will save money for businesses by reducing turnover, reducing the spread of illness in the workplace and improving workers’ overall morale and productivity.

“Employers” and “Employees” Under AB 1522

Under AB 1522, the term “employer” is broadly defined to include the state and its political subdivisions, including municipalities. The bill’s definition of “employee,” however, exempts all employees covered by collective bargaining agreements which provide paid sick leave policies, as specified, or construction industry employees covered by collective bargaining agreements that either waive the requirements of AB 1522 or are entered into before January 1, 2015.

What The Law Would Mandate

If passed, AB 1522 would entitle employees working in California for thirty (30) or more days in a calendar year to paid sick days – accrued at a rate of at least one hour for every thirty (30) hours worked – which the employee may use for personal illness/preventive care, to care for a sick family member, or to recover from domestic violence or assault, as specified.

Employees would only be entitled to use accrued paid sick days beginning on the ninetieth (90th ) calendar day of employment, after which point the employee may use his or her paid sick days as they have accrued.  Employers, at their discretion, may lend paid sick days to an employee in advance of accrual, as specified.

While an employee’s accrued paid sick days are to carry over to the following calendar year, employers may limit the employees’ use of paid sick days to 24 hours or three days in each calendar year.

Employers would not be required to provide accrued, unpaid sick leave compensation to an employee upon separation from employment.  However, should the employee be rehired by the employer within one year’s time, any previously accrued and unused paid sick leave must be reinstated by the employer.

Finally, to ensure proper accounting, employers would be required to retain records for five years documenting an employee’s hours worked and accrual and use of paid sick leave days, as specified.

Employers Offering Matching Paid Sick Leave Policies Exempt

To the extent employers currently have paid sick leave policies in place that already meet or exceed the accrual requirements of AB 1522, such employers are not required to provide any additional paid sick days to their employees. The bill expressly states that its requirements only establish minimum standards and will not limit employers from offering equivalent or more generous paid sick leave policies.

Arguments in Opposition to The Bill

Opponents to AB 1522 – including the California Chamber of Commerce – argue that while many employers voluntarily offer sick leave for full-time employees, expanding this mandate to all employers in the state will create a huge financial and administrative burden on employers including requiring many employers who already have paid sick leave policies in place to completely change their existing policies in order to mirror the accrual rates proposed under the bill.

Moreover, because AB 1522 provides for a private right of action, there is a belief that unions may use this law to file lawsuits against employers on behalf of employees, thereby significantly expanding the scope and threat of civil litigation against California employers both large and small.

Opponents cite to their own surveys of jurisdictions that have already adopted mandatory paid sick leave policies and suggest that such policies have a negative impact on both growth and jobs, and often force employers to reduce employees’ hours, compensation, or other paid benefits in order to balance the additional cost of providing paid sick leave.  Rather than enacting a law making paid sick leave mandatory, opponents argue the legislature should incentivize employers to offer paid sick leave by reducing costs in other areas (i.e., tax credits).

Remaining Legislative Deadlines for AB 1522

August 15 is the last day for fiscal committees to approve AB 1522 and pass the bill out of committee.  State lawmakers will then have one week to amend AB 1522 from the floor before the August 31 bill passage deadline.  Governor Brown then has until September 30 to sign or veto the bill.

If signed into law, the provisions of AB 1522 would become effective on and after July 1, 2015.