SACRAMENTO – Governor Gavin Newsom signed SB 616 by Senator Lena Gonzales (D-Long Beach) guaranteeing workers at least five paid sick days per year, up from the current three days, while also increasing the accrual and carryover amounts.
Beginning January 1, 2024, California employers must provide employees with five days or forty hours of paid sick leave. Employers still may limit annual use and accrual, although at a higher level than before. SB 616 also extends nonretaliation and procedural protections to collective bargaining agreement employees.
The current law — a minimum of three days or 24 hours per year for workers — only looks good in comparison with most states that don’t mandate any paid leave at all. Among the 15 states (and the District of Columbia) that do, California’s nearly decade-old provision ranks last.
The measure isn’t perfect; it’s not even what Gonzalez originally sought. As introduced, SB 616 would have increased paid sick leave from three days to seven, but that got hammered down to five days in a compromise after the powerful Assembly Appropriations Committee placed the bill on suspense, a procedural move that left it in danger of being shelved altogether.
Even in its watered-down form, though, the bill is the target of the California Chamber of Commerce, which placed SB 616 on its job killer list and is urging Newsom to veto it as a dangerous drag on businesses, especially those with small profit margins such as food and retail.
“Those businesses that can afford to offer more than three days of sick leave are doing so, but many, many businesses cannot absorb that cost,” the chamber said in a letter to Newsom opposing the measure that was provided to Capital & Main. “These mandated, increased labor costs will inevitably either be passed on to consumers as higher prices for goods and services, or force employers to reduce jobs or cut wages or other benefits.”
But does expanding paid sick leave cost businesses money — or save it? Research from the California Budget & Policy Center leans strongly toward the latter.
In a letter delivered to members of the Legislature in August, state policy analyst Hannah Orbach-Mandel noted that paid sick leave policies have been shown to reduce “presenteeism,” in which employees show up for work but aren’t fully functioning because they’re sick. Researchers at Drexel University’s LeBow College of Business, meanwhile, found that across the country, the introduction of state-level paid sick leave benefits led to a 6% increase in labor productivity and a 1.6% increase in firm profitability.
Enhanced paid sick leave may also reduce job turnover, Orbach-Mandel noted, which is a significant cost for businesses both large and small. According to the Washington Center for Equitable Growth, Seattle’s paid sick leave policy reduced such turnover for low-wage workers in small firms outside the food and accommodation industries by approximately 5% overall, and by more than 5% for those in short-term jobs — a subset of the full job market, to be sure, but also a description that fits hundreds of thousands of California residents.
Using paid sick leave can lessen the impact and duration of an illness, and it also may help reduce the transmission of viruses at work, health experts said. A study published last year in the journal Health Affairs found that state-mandated paid sick leave reduced emergency room visits by 5.6%.
“We should ask ourselves: Do we want someone with a bad cough, whether it’s from COVID, the flu, RSV, pertussis, to be working in your childcare center, the classroom of your children, factories or nursing homes?” asked Dr. Curtis Chan, San Mateo County’s deputy health officer, in August in support of the bill. “Sick individuals must have time to rest, heal and isolate themselves from others.” The current provision of three days, Chan added, doesn’t allow for that.
Specifically, the new law will modify existing paid sick leave law by:
- Increasing the annual amount of PSL an employee is entitled to under either the frontload or accrual method from 24 hours or three days to 40 hours or five days;
- For employers who utilize an accrual model, increasing the number of PSL hours owed to 40 hours by their 200thday of employment, in addition to accruing at least 24 hours of PSL by their 120thday of employment;
- Increasing the number of days of carried over PSL an employee can use each year from 24 hours or three days to 40 hours or five days;
- For employers who offer paid leave, increasing the number of days of paid leave an employee is eligible to receive from 24 hours or three days within nine months of employment to 40 hours or five days within six months;
- Increasing the cap on an employee’s accrual of PSL from 48 hours or six days to 80 hours or 10 days;
- Extending certain procedural and anti-retaliation provisions of existing law to employees who are covered by a valid collective bargaining agreement that provides for different paid sick leave obligations; and
- Preempting any local cities’ PSL ordinances with less generous leave requirements to establish the state-wide minimums described above.
Preparing For This Law: 5 Steps to Take
Take several steps now to proactively ensure you are in the best possible position come January. These steps include:
- Review whether any of the local PSL ordinances applicable to your organization are preempted by the new law or whether they will remain unaffected.
- Update your written sick leave policies, employee handbooks, and training materials to ensure compliance, as handbook language regarding sick leave that is not compliant with these modifications could be used in an attempt to establish violations.
- Train managers and supervisors on the increased amount of PSL to which employees are now entitled and the carry over and accrual cap changes affecting their workforce.
- Train your human resources and benefits specialists on these changes to ensure that employees can begin accruing the correct amount of PSL. Make sure you are correctly carrying over and capping the appropriate amounts of PSL employees are entitled to.
- Review the new law with your company’s payroll processor to ensure that the accrual and frontloading allowances are correct and that wage statements accurately reflect the PSL to which each employee is entitled.
Because of the broad reach of California’s new PSL laws and the expensive consequences employers will face for noncompliance, it is well worth reviewing these changes now and preparing well in advance of when they will take effect.
