UPDATE TO SICK PAY LAW: DO YOU KNOW HOW YOU ARE GOING TO ACCRUE HOURS?

Since we first heard of the new “Healthy Families” law in the State of California, there has been some clarification of responsibilities.  If you click here: https://s3-us-west-2.amazonaws.com/lockton-corporate-website/Compliance-Alerts/14_12_24_CA_Sick_Leave_Final.pdf  you will see an article that explains the process is clear detail.  It is not a long article, but I highly recommend you read it and make sure your bookkeeper reads it as well.

One of the key features of the act is that we must inform your employees how you plan to accrue the sick pay hours.  There are 4 choices, but really most of you only have 2 choices.  You can make sure your existing sick pay policy is as good or better than the state plan and that means the employees can still earn at least 24 hours within the first 720 hours of work (one hour accrued for every 30 hours worked).

The second is if you have a collective bargaining agreement already in place (usually if you are a union shop).

Third, you can accrue each payday based on the hours worked.  The formula is 1 hour of sick pay accrued for every 30 hours worked until you reach 24 hours.  This method requires a lot of time calculating every employee separately.  Overtime hours are included in the calculation as worked hours.  Your paycheck stub must have a line on it showing Sick Pay with the hours earned for that pay period and a total showing the total accrued sick pay hours.  Once the 24 hours is reached, you do not have to accrue any more for the rest of the 12 month period.  On the beginning of the next 12 months, you start accruing again.  In between those times, if an employee uses any sick pay hours, you would show a minus amount in the pay period column and subtract that amount from the total year to date number.

The Final and OUR RECOMMENDED BEST WAY  to handle the sick pay hours is to “grant” the hours up front.  In other words, start the employee with 24 hours in the year to date total.  They cannot access it until they have worked 90 days for your company so there is very little risk that you are paying ahead.  Also, at termination, you are not required to pay out any unused sick pay, so the risk of loss is very low and the savings in time is very high.  You also stay in compliance and out of trouble. 

As your HR company, we need to know which method you are going to use so we can provide the correct information in your employee packets as required by the law.

If you have any other questions regarding this law, please give Jeff at call at our office: (559) 625-2322.  We will continue to update material as it becomes available.