United States: Riding The Paid Sick Leave Wave–Santa Monica Edition

We've previously covered California's sweeping Paid Sick Leave Law that took effect July 1, 2015 here and here. Now Santa Monica – not to be outdone by Bay Area sister municipalities in San Francisco, Oakland, and Emeryville – enacted its own paid sick leave ordinance ("Ordinance") on January 26, 2016 – just two weeks after it was initially proposed.

The Santa Monica Ordinance, like its Northern California counterparts, mandates that most employers provide paid sick leave well in excess of California requirements, and allows covered employees of employers with 26 or more employees to accrue up to 72 hours of paid sick leave. Further, unlike California law, the Ordinance does not place an annual use limit on accrued sick leave.

Because the Ordinance is not preempted by California law, covered Santa Monica employers must comply with both the California Paid Sick Leave Law and the Ordinance. When the two conflict, the employer must follow the provision that is more generous to the employee.

Unless there is a referendum, the Ordinance will become law after 30 days, on February 25, 2016. The Ordinance provides that paid sick leave begins to accrue as of the "operative date" of the Ordinance. That term is not defined. According to the Santa Monica City Council's office, the effective date of the Ordinance's paid sick leave provisions is July 1, 2016.

And now, the key provisions of the Ordinance:

Who Is Covered?

The Ordinance generally covers any employee who works at least two hours a week in Santa Monica, subject to limited exceptions noted below. "Hotel workers" (excluding those employed in a managerial, supervisory, or confidential role) whose primary place of employment is at a Santa Monica hotel are covered by the paid sick leave provision of the Ordinance, regardless of how many hours they work in Santa Monica in a particular week.

Employees excluded from coverage are federal, state, county, and city government employees (including those employed by government agencies, school districts, and all other public entities). The Ordinance also does not cover employees who have waived their paid sick leave rights in a collective bargaining agreement (CBA)if the waiver is explicitly set forth in the agreement in clear and unambiguous terms.

How Much Sick Leave Must Be Provided? (Accrual, Accrual Caps, and Carry Over)

The Ordinance mandates paid sick leave in excess of the state requirement. Like the California Paid Sick Leave Law, the Ordinance provides that employees accrue one hour of paid sick leave for every 30 hours worked (including overtime hours). Significantly, however, the Ordinance's accrual cap for employers with 26 or more employees far exceeds the state law's 48-hour accrual cap. Specifically, employers with 26 or more employees must permit employees to accrue up to 72 hours of paid sick leave. Employers with 25 or fewer employees must allow employees to accrue up to 40 hours of paid sick leave.

These accrual caps are point-in-time caps – not annual accrual caps. Also, all accrued, unused paid sick leave (up to the maximum cap) carries over from year to year. And unlike the California law, which permits employers to limit paid sick leave use to 24 hours or three days per year, the Ordinance does not place an annual use limit on accrued paid sick leave.

As a result, employees may be entitled to use more than 72 hours of paid sick leave in a year. For example, suppose an employee's paid sick leave balance is at the 72-hour accrual cap on December 31 of a particular year. The employee's entire balance carries over to the following year. The employee is ill in February and uses all 72 hours. Accordingly, she resumes accruing paid sick leave in February and continues to accrue paid sick leave throughout the year until she again reaches the 72-hour cap. And, because there is no annual use limit, she may use paid sick leave after it has accrued even though she used 72 hours earlier in the year.

The Ordinance provides that employees are entitled to use paid sick leave after the first 90 days of employment.

What about Frontloading?

Unlike the California Paid Sick Leave Law, the Ordinance does not expressly allow for frontloading of paid sick leave at the beginning of each year. And because there is no annual paid sick leave accrual cap (only a point-in-time cap) and no annual use limit, frontloading very likely is not an option under the Ordinance.

When Does Paid Sick Leave Accrual Begin?

If an employee works for an employer on or before July 1, 2016, then the employee begins accruing paid sick leave on the "operative date" of the Ordinance (presumably July 1, 2016). Under the Ordinance, new employees begin to accrue paid sick leave 90 days after the commencement of employment. But recall that new employees, under the California Paid Sick Leave Law, begin to accrue paid sick leave immediately upon hire, although an employer may forbid new employees from using any accrued paid sick leave until their 90th day of employment. Accordingly, a Santa Monica employer cannot limit accrual during the first 90 days under the Ordinance and, instead, must comply with the state law's more generous provision.

What Are Other Key Provisions?

Other than the accrual caps and the absence of an annual use limit, the Ordinance essentially mirrors the California Paid Sick Leave Law's notice, usage, and anti-retaliation provisions. For example, the Ordinance states that employers may require reasonable notification for use of paid sick leave. The Ordinance also provides that employees may use paid sick leave consistent with state sick leave laws. And like the state law, the Ordinance does not require employers to pay out accrued, unused sick leave upon separation from employment.

The Ordinance does not contain posting or recordkeeping requirements, so Santa Monica employers should continue to comply with the state law's requirements.

What Do I Do Now? (Proactive Next Steps)

Employers with employees who perform work in Santa Monica should take steps now to ensure they can achieve full compliance with the Ordinance by the July 1, 2016 operative date. These are among the actions to consider:

• Review and, as necessary, revise existing paid sick leave or PTO policies and procedures to ensure they meet the Ordinance's requirements or, alternatively, establish a separate paid sick leave policy that complies with both the California Paid Sick Leave Law and the Santa Monica Ordinance.
• If applicable, update internal systems so that they allow for paid sick leave accrual of up to 72 hours (for employers with 26 or more employees).
• Take this opportunity to review and, as necessary, revise anti-retaliation, attendance, conduct, and discipline policies to prevent retaliation and interference claims under the Ordinance or the California Paid Sick Leave Law.
• Train Santa Monica supervisory and managerial employees, as well as HR and payroll personnel, on the Ordinance's requirements.
• Monitor the City of Santa Monica's website (http://www.smgov.net) for updates, frequently asked questions (FAQs), and other publications that provide guidance on how to comply with the Ordinance's requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.