Alert! New Paid Sick Leave Requirements for Small Employers in California Apply Retroactively!

by Jennifer Kaiser

Last Friday, Governor Newsom signed Senate Bill 95 (SB 95) into law creating new Labor Code Sections 248.2 and 248.3 that, among other things, effectively mandate employers with more than 25 employees to provide an additional 2 weeks or 80 hours (prorated for part time employees)1 of Supplemental Paid Sick Leave (SPSL). SB 95 is effective through September 30, 2021 and applies retroactively2 to January 01, 2021 to any employee who is/was unable to work or telework due to any of the following reasons:

  1. The employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidelines of the State Department of Public Health (CDPH), the federal Centers for Disease Control and Prevention (CDC), or a local health officer who has jurisdiction over the workplace.
  2. The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  3. The employee is attending an appointment to receive a vaccine for protection against contracting COVID-19.
  4. The employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework.
  5. The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
  6. The employee is caring for a family member (i.e., child, grandchild, grandparent, parent, sibling, or spouse) who is subject to an order or guidelines described in (1) or who has been advised to self-quarantine, as described in (2).
  7. The employee is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19 on the premises.
  8. Employees who are excluded from the workplace due to Cal/OSHA’s Emergency Temporary Standards (ETS) or Aerosol Transmissible Diseases Standard (ATDS) may be required to exhaust SPSL by their employer.

Payroll tax credits may be available to employers with less than 500 employees if the use of the SPSL benefits also apply to qualifying events through the American Rescue Plan Act of 2021 (ARPA-2021). Separate documentation would be required to take advantage of the tax credits.

In no instance, is an employer obligated to pay more than $511/day or $5,110/aggregate to an employee for these qualifying events. California’s Labor Commissioner has prepared this model notice for employers to disseminate to their employees by either posting at the workplace or distributing electronically to employees who do not frequent a workplace.

There is some good news for employers who have been subject to one or more of California’s 11 local ordinances3 in effect during this year. All employers who provided paid compensation after January 1, 2021 to employees for any of the qualifying reasons in an amount equal to or greater than the amount of the SPSL that the employee was entitled to, may count those hours toward the total number of hours of SPSL that the employer is required to provide under SB 95. Due to the change in SPSL calculations under SB 95, employers will need to use caution to ensure that previous benefit payments were higher or equal to the new calculated rate, otherwise additional payments to employees will be due. Further, this additional SPSL compensation must be in addition to any paid sick leave under California’s Healthy Workplaces, Healthy Families Act (i.e., the 24 hours/three days of regular paid sick leave required for all employees in California).

URGENT PAYROLL REQUIREMENTS:

Unfortunately, employers do not have much time to ensure compliance with the payroll requirements mandated by SB 95.

  • Available SPSL is required to be displayed on employee paycheck stubs no later than the first full payroll period after March 29, 2021. For example, if the next full pay period begins on April 1, and ends on April 15, it must be present on the paystub for that pay period.
  • SPSL must appear as a separate item from the standard paid sick leave already available under California’s Healthy Workplaces, Healthy Families Act.
  • For part time employees, or employees who do not work a set schedule, employers are directed to perform the initial calculation of available SPSL and indicate “variable” next to that calculated amount. The calculation must be updated when employees request the use of SPSL for eligible reasons.
  • Retroactive payment corrections requested by the employee must be paid on or before the payday for the next full pay period after receiving the request from the employee. The number of hours of SPSL corresponding to the amount of the retroactive payment shall count towards the total amount of SPSL that the employer is required to provide. This retroactive payment must appear on the paystub for the pay period during which payment is made.

It is more important than ever for employers to utilize California employment law attorneys and human resource professionals when deciding on policy changes that could impact your bottom line. As always, we are here to support any questions or concerns you may have!

Sincerely,

The Holden Law Group Team

1 There are two calculation formulas. Employers must pay the highest pay rate determined by either calculation. If the applicable state or local minimum wage is a greater than either of the calculated rates, employers use that amount for the SPSL rate.

The first pay rate calculation uses the employee’s regular rate of pay for the workweek in which the covered employee uses SPSL, regardless of whether an employee works overtime in the workweek.

The second calculation requires the employer to divide the employee’s total wages, not including overtime premium pay, by their total hours worked in the full pay periods of the prior 90 days of employment. Employees who have worked for an employer for at least 6 months and who work a variable number of hours, receive 14 times the average number of hours they worked each day in the six months preceding their leave date. Employees who have worked for an employer between 15 days and 6 months, use this same calculation but over their entire period of employment. Employees who worked 14 days or fewer receive leave hours equal to their total number of hours worked.

2 Employers are not required to provide retroactive payments unless they receive an oral or written request from employees for retroactive payments.

3 Long Beach, Los Angeles (City and County), Oakland, Sacramento (City and County), San Jose, San Francisco, San Mateo County, Santa Rosa, and Sonoma County