SB 616 Raises California Paid Sick Leave Requirements Beginning January 1, 2024

Beginning January 1, 2024, SB 616, signed by Governor Newsom last week, will bring significant changes to California’s paid sick leave (PSL) requirements. SB 616 still permits employers to choose between frontloaded “lump sum” and accrual-based sick leave policies. However, changes to frontloading requirements, accrual caps, and use limitations will increase the number of paid sick hours employees may take each year, and many employers will need to adjust their policies to ensure compliance by January 1. Below are the highlights of the changes to California’s law.  

Frontloaded “Lump-Sum” PSL Policies Must Provide More PSL Each Year 

Currently, California law allows employers to provide PSL in a frontloaded “lump sum” of at least 3 days or 24 hours at the beginning of each year of employment, calendar year or 12-month period, without requirements to “accrue” PSL or carry-over unused amounts. Under SB 616, the lump sum rates will rise to 5 days or 40 hours each year of employment, calendar year, or 12-month period.   

Additional Requirements for Accrual-Based Policies 

SB 616 does not change California’s accrual requirement of at least one hour of PSL for every 30 hours worked. Also, SB 616 continues to permit accrual policies on a different basis, such as accrual of a set number of days or hours per pay period or per month.  Such policies must continue to provide accrual on a regular basis such that employees have 24 hours of PSL by the 120th day of employment, each calendar year or twelve-month period. SB 616 adds the requirement that the employee have at least 40 hours by the 200th day of employment, each calendar year or twelve-month period. SB 616 also makes updates to the accrual requirements for the “new hire” accrual method and for “grandfathered” policies in light of the new standards.  

SB 616 will impose new requirements relating to accrual caps and use limitations on accrued sick leave that will result in employees being able to accumulate and use more sick leave each year.  

Accrual Caps: California law requires that accrued sick leave be carried over and currently allows employers to place an accrual cap of 6 days or 48 hours on accrued sick leave.  Under SB 616, accrual caps must be at least 80 hours or 10 days. 

Use Limitations: California law currently allows employers to limit employees’ use of accrued sick leave per year to 3 days or 24 hours. Under SB 616, employers may limit the use of paid sick leave to 5 days or 40 hours.  

Other Changes

SB 616 makes other changes to California’s sick leave law: 

Interaction Between State and Local Laws: Employers subject to local sick leave ordinances frequently struggle to establish policies that comply with both state and local laws. SB 616 attempts to alleviate this struggle by preempting local laws as to some issues. While certainly welcome, the issues that SB 616 expressly preempts are not the source of current major differences between state law and existing local laws, and may be of limited utility to employers drafting sick leave policies. Preempted issues include:

• No obligation to pay sick leave on termination of employment, but requirements to reinstate sick leave if rehire occurs within a year;
• Allowing employers to lend employees sick leave in advance of accrual; 
• Requiring paystub information about sick leave balances; 
• Establishing calculations for the rate at which sick leave absences must be paid; 
• Limiting requirements for advance notice by employees of sick leave use; and 
• Requiring payment for sick leave no later than the next regular payday after the sick leave was taken.   

IHSS Providers: SB 616 amends the in-home supportive service providers (IHSS) schedule to five days or 40 hours in each year beginning January 1, 2024.

Employees Covered By Certain CBAs: SB 616 extends certain protections of the sick leave law (covered uses for sick leave, not having to find a replacement worker, and anti-retaliation provisions) to employees not otherwise covered by the sick leave law because they work under certain collective bargaining agreements.

Takeaways for Employers 

• Review California sick leave policies and practices to ensure that they comply with or exceed California’s new standards, as well as other requirements, such as local sick leave ordinances, federal government contracts, and collective bargaining agreements.  
• Monitor state and local agency guidance in the coming months.  
• Get started early so that appropriate changes can be in place by January 1, 2024.  

For any questions about how the new standards impact your business, please contact the authors of this alert or the RJO attorney with whom you regularly work.