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Paid Sick Leave Laws Challenging for Retail Employers


Paid Sick Leave laws have spread like wildfire across several states and cities, each with their own unique requirements.

Employers in California may find themselves navigating a web of requirements. The state of California’s paid sick leave statute went into effect in July 2015, and there are also local ordinances in the cities of San Francisco, Oakland, Berkeley, Emeryville, Los Angeles, Santa Monica, and San Diego.

Several other states and municipalities (including Massachusetts, Oregon, New York City, Chicago, and Seattle) have their own requirements, and certain federal contractors will also soon be subject to paid sick leave requirements.

This web of regulations with unique nuances is particularly challenging for retail employers with operations in many different locations. The following are some key features to consider when building or revising a paid sick leave policy.

Sick Leave Uses

Paid sick leave laws require that employers give employees time off for their own illnesses and injuries and for their family member’s illnesses and injuries. Under the laws in California, “family member” is often defined broadly to take into account the different types of family relationships employees have.

Some of the local ordinances, such as San Francisco, also allow employees who do not have a spouse or a registered domestic partner to designate one person who is essentially — but not technically — family. In Oakland, care for a guide dog or service dog also falls under sick leave.

Additionally, sick leave can extend to specific uses outside of illness or injury. For example, in California, an employer must allow sick leave to be used by victims of domestic violence, sexual assault, or stalking, for court appearances or safety planning.

It is important to keep track of the available uses for paid sick leave because if the employer allows it to be used for other purposes, it could transform the paid sick leave into a paid time off policy, which comes with extra requirements.

Amount of Leave Required

Headlines announcing paid sick leave laws typically proclaim that employees are now entitled to a certain number of paid sick days. It seems simple enough, but there are specific requirements that define what that amount of time means.

Certain laws — including California’s state statute and Los Angeles’s and San Diego’s city ordinances — set two amounts: One is the amount of sick leave the employer must allow an employee to use in a year, and the other is the total amount of paid sick leave the employee must be allowed to accrue. California’s statute allows employers to cap an employee’s paid sick leave usage to 24 hours or three days in a year, but requires that employers allow their employees to accrue and carry over up to 48 hours or six days total.

Other laws set only a total accrual cap, and employees may use whatever time they have accrued. Oakland’s law requires that large employers allow employees to accrue no less than 72 hours and does not allow employers to limit how much time an employee uses beyond the employee’s own accrual bank.

Accrual Versus Front-Load

One of the big decisions an employer should consider when crafting a paid sick leave policy is whether they want to give employees their allotment of paid sick leave hours at the beginning of each year or if they want employees to accrue the paid sick leave.

Certain laws provide a method for front-loading paid sick leave. In California and San Diego, for instance, an employer can bump every employee’s paid sick leave balance up to the annual usage cap (24 hours or 40 hours, respectively) at the beginning of each year. This is administratively easy because sick leave balances only go up once a year, and they go up to the same total amount across the board. However, employers with high turnover or a high number of part-time and seasonal employees will likely be giving out more time than needed under this type of policy. An employee in the city of San Diego would need to work 1,200 hours in a year to accrue 40 hours of paid sick leave. If that employee works only 20 hours per week on average, it would take that employee 60 weeks (more than a full year) to earn the sick leave she or he would be granted at the beginning of the year.

The other option, currently allowed under the paid sick leave laws in California, is to allow employees to accrue paid sick leave at a rate of 1 hour of sick leave for every 30 hours worked. This individualized method carries an extra administrative burden, but could be the less costly approach, particularly for store employees.

Paid Time Off Policies

Employers may use a Paid Time Off (PTO) policy to comply with paid sick leave requirements. This is usually attractive to employers who already offer employees PTO and employers who do not care to limit what paid time off may be used for.

However, in California, a PTO policy must comply with both sick leave requirements and vacation requirements. The employees’ PTO balances must be paid out upon termination, and there are additional requirements surrounding the employees’ total PTO accrual caps.

By contrast, with a separate sick leave policy, the paid sick leave balance need not be paid out upon termination.

One Size Fit All?

Retail employers know all too well that, despite the appeal of simplicity, there are costs with making anything one-size-fits-all. It may not be realistic to have just one policy to cover home office employees and store employees and warehouse employees.

It can also be costly and complicated to create a single policy for employees in multiple cities with their own requirements. In deciding whether and to what extent you create multiple policies, the key is to remember that combined policies must comply with the requirements for all applicable laws. It’s also important to remember that separate policies may not discriminate on the basis of any protected category.

Megan Walker is an attorney in the San Diego office of Fisher Phillips, where she provides counsel to and defends employers in employment law matters.

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