Early Growth
January 12, 2016

This guest post is from Kaspars Upmanis, the founder of CAKE HR.

The Healthy Workplaces, Healthy Families Act of 2014 was passed to allow most types of employees in California to be eligible for paid sick leave. With this passage, California becomes the first state in the Union to require all employers, regardless of size, to offer sick leave to its employees. Unlike a similar law in Connecticut, which requires only companies of more than 50 employees to offer paid sick leave, this law affects even the smallest of startups.

Introduction of the Act

The law went into effect as of July 1, 2015. The first, and probably largest, piece of this legislation is that it provides paid sick leaves to all employees in the state – including temporary, seasonal, and part-time workers. The only exceptions would be in-home support services employees and airline flight deck or cabin crew employees who have similar benefits. Moreover, employees covered under a collective bargaining agreement are also exempt from this act, but only if the agreement provides them pay at not less than 30% more than the state minimum wage, along with premium overtime wages, paid sick leave, and binding arbitration of paid sick leave disputes.  

Details of the Act

The text of the Act specifies the following:

  • Who is eligible? Your employees are eligible for paid sick leave if they work at least 30 days in a year, and they can begin using sick days after 90 days of employment. As mentioned above, certain in-home support services employees and airline flight deck or cabin crew employees.
  • How is sick time accrued? Accrual rate is one hour of paid sick time for every 30 hours that are worked. As an employer, you can place a cap on paid sick leave accrual up to 48 hours, but sick leave can be carried over from year to year.
  • How is sick leave taken? Employee sick leave can be limited 24 hours per year. Employees can also be required to use sick time in at least two hour increments (but not more than two hours).
  • Justification for using sick time. This new law for paid sick time allows for the following: To take sick leave for their own health condition or the health condition of a family member, including preventative treatment. “Family member” is loosely defined and can include a spouse, domestic partner, parent, child, parent-in-law, grandparent, grandchild, and sibling. Employees may also use sick time in the event of domestic violence, sexual assault, or stalking.
  • Up-front instead of accrual? If you prefer to offer paid time off at the beginning of the year rather than using an accrual system, 24 hours of paid sick time can be given up-front.
  • Paying out upon termination?  If an employee leaves the company, they do not have to be paid out for any accrued sick time. In the event an employee leaves and is rehired within a year’s time, their accrued sick time must be returned.
  • How long do we keep records? In addition to recording the amount of accrued time on a document for employees (such as a pay stub), companies must also keep track of sick time accrual/use for a period of three years.
  • Is a poster needed? Yes, a poster is needed. Please check with your HR professional on where/how to get one posted in your workplace.  

How the Act will affect your business

As a business owner, can be easy to imagine this type of legislation providing impetus for exploitative abuse by employees. But the reality is only half the workers with paid sick leaves ever use their days at all. And among those who do, workers with paid sick leaves only take one more day off per year than their counterparts to take care of their health.

Moreover, not only does provision of paid sick leave lower healthcare costs for businesses, according to the National Opinion Research Center, but it increases productivity by discouraging “presenteeism” and reducing the risk of spreading infections – which can be a giant problem when it comes to a small office with 3 or 4 people working during crunch time to meet deadline. And all this is on top of obviously improving employee loyalty to the workplace, while reducing turnover rates to enhance the profitability of businesses.

Also, keeping mind that some cities in California have different legislation that is more worker-friendly than the statewide law. San Francisco is a great example.

So, numbers and statistics aside – what do you think about these legislative changes? Leave your feedback in the comments on what the Act looks like from the side of a startup founder.

Early Growth
January 12, 2016