Sick Leave

PAID SICK LEAVE IN CALIFORNIA

California’s new sick leave law went into effect on July 1 of this year.  It applies to all employers, no matter how many employees an employer has.  There are very few exceptions, so all California employers need to know the law.  The limited exceptions to the new sick leave law are: (1) Certain union employees, (2) State in home care workers, (3) Some air carrier employees.

Employers must give sick leave to employees who have worked at least 30 days within the employment year.  The sick leave accrues at the rate of 1 hour for every 30 hours worked.  Employers may provide only 24 hours (3 days) of sick leave per year if the employer offers its employees three sick days at the beginning of the employment year.  Barring that, an employer must allow its employees to accumulate up to 6 days of sick leave per year.  Nevertheless, an employer may still limit sick leave to just 3 days per year.  In that case, unused leave must be carried over to the next year.  After 90 days of employment, employees may begin to use accrued sick.

Employers must track sick leave accumulation either on employee wage statements or on separate sick leave statements.  An employer can avoid the tracking headache by creating a policy in which employees receive at least 24 hours of sick leave at the beginning of each year.  In that case, the only thing to track is the amount that the employee uses during the year.  Employers must maintain records that track the accumulation and use of sick leave for a period of 3 years.

If tracked separately from vacation or PTO, California will not consider sick leave as a wage.  In that case, an employer will not need to pay remaining balances to a terminated employee at the time of termination.  However, if an employer includes sick leave with either vacation or PTO, then the sick leave will become a wage and will need to be paid out as wages at the time of termination.

Sick leave may be used for an employee’s health condition or for the health condition of a family member of an employee.  The code defines “family” very broadly: Child, Parent, Spouse or registered domestic partner, Grandparent, Grandchild, and Sibling.  An employee can also use sick leave for preventive care, domestic violence, sexual assault, and stalking.

No employer may retaliate against an employee for requesting sick time off or for attempting to enforce sick leave rights.  The employer may require employees to us a minimum amount of sick leave, but that minimum amount may not be greater than 2 hours.  Nevertheless, employees have the right to determine how much sick leave to use as long as they use at least the minimum amount.  An employer must display a poster describing the requirements of the law.

The associated fines are very stiff.  An employee can collect up to $250 for each withheld sick day, up to a maximum of $4,000.  If the employee suffers other related harm, such as a wrongful termination, then the employer can suffer civil penalties of $50 for each day the violation remains uncorrected, up to $4,000.  In addition, if an employer does not promptly comply with the law after receiving notice of its violations, then the state can collect a daily penalty of $50 with no limit.  The Private Attorney General Act will allow collective penalties to accumulate.  The prosecuting party can get fines, special damages for the employee(s), costs of suit, and attorneys’ fees.

Employers must be aware of this law.  Ignoring it, or the rights conferred, can come at a hefty price.

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Class Action Waiver

CLASS ACTION AND REPRESENTATIVE ACTION WAIVER UPDATE

AT&T Mobility v. Concepcion, (2011) 131 S.Ct. 1740 established that arbitration agreements may contain enforceable class action waiver provisions. More recently, the United States Supreme Court extended that doctrine. (American Express Co. v. Italian Colors Restaurant, (2013) 133 S.CT. 2304.)

In American Express, plaintiff Italian Colors Restaurant (ICR) filed an antitrust class action on behalf of a class of merchants whom American Express was allegedly overcharging for the use of its credit cards. ICR claimed that it could not pursue the claim for its own damages alone because the cost would exceed $1,000,000 and the potential recovery was capped at $40,000. Thus, ICR further claimed that the only economically feasible way of proceeding was as a class action. That would allow it to multiply the $40,000 potential damages by the number of class participants. The Supreme Court said that ICR had no right that would trump the class action waiver even though its individual claim was not economically feasible.

On a different note, the United States Supreme Court ruled that class action arbitration can be enforceable under the right circumstances. (Oxford Health Plans, LLC v. Sutter, (2013) 133 S.Ct. 2064.) A class of doctors alleged in a lawsuit that Oxford Health violated its contract by refusing to pay the prescribed fees for services performed. The agreement had an arbitration provision that did not waive class actions. The parties both agreed to have an arbitrator decide whether the class actions claims could be pursued in arbitration. The arbitrator ruled that the class claims could proceed in arbitration. The insurer Oxford Health appealed. The Supreme Court said that the insurer was stuck with arbitrator’s decision because it had agreed to arbitrate the issue of class action waiver. Had Oxford Health insisted on having a Court rule on the issue, the Supreme Court might have ruled differently.

Labor Code §2699 Private Attorney General Act claims are not necessarily waived by a class action waiver in an arbitration agreement. (Brown v. Superior Court, (2013) 216 Cal.App. 4th 1302.) The Court ruled that PAGA claims can only survive as representative claims, i.e., where one aggrieved employee may seek to claim Labor Code penalties for the state of California on behalf of all employees who suffered the same violations that allow for such penalties. The named plaintiffs had signed an arbitration agreement with a class action waiver. Despite that, the Court found that the waiver did not prevent plaintiffs from seeking PAGA penalties because those claims are not waivable.

The ruling in Brown may not stand because the issue is now before the California Supreme Court in a different case: Iskanian v. CLS Transportation of Los Angeles, (2011) 206 Cal.App.4th 949, review granted, (2012) 147 Cal.Rptr.3d 324.  

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