The April 2015 issue of the SRBX Construction Quarterly Magazine highlighted the requirements of California’s new sick leave law. Since then Governor Brown signed into law a new measure, AB 304, providing clarification on several points of the “Healthy Workplaces, Healthy Families Act of 2014,” which went into effect in January 2015. However, the law continues to challenge employers across the state, particularly in the construction industry where employers often juggle seasonal and short-term employees as well as a variety of pay rates and different collective bargaining agreements. How can construction industry employers in the Sacramento area meet the challenges of the new law?
Review Existing Paid Time Off Policies to Ensure They Meet New Accrual Requirements
Many local construction employers already provide paid time off (PTO) to their employees. There were many questions regarding the grandfathering of these existing PTO policies. The clean-up legislation makes clear that employers are permitted to continue using policies that already provided paid sick leave or PTO to a class of employees before January 1, 2015, and used accrual methods different than providing one hour per 30 hours worked so long as:
- The accrual is on a regular basis so that an employee earns no less than one day or eight hours of paid time off within three months of employment of each calendar year, or each 12-month period; and,
- The employee was eligible to earn at least three days or 24 hours of sick leave or paid time off within nine months of employment.
Employers Relying on Existing PTO Policies, Check Existing Accrual Rates to Ensure They Meet The Minimum Thresholds
Track seasonal and short-term employees’ sick leave accrual – even if they do not stay long enough to be eligible to use the leave. Construction was one of the industries targeted by the author of the new law, which is intended to provide paid sick time to even short-term or seasonal employees. Although an employee is not entitled to use any paid sick leave pursuant to this law until the 90th day of employment, an employee who separates from employment and is rehired by the same employer within one year – such as on a seasonal basis – is entitled to reinstatement of accrued and unused sick days.
This means it is imperative for construction employers to keep detailed records regarding start and end dates of employment and balances of accrued but unused sick leave even after employment or the season ends.
Calculate and Pay the Proper Rate for Sick Time Used
It is not unusual for employees in the construction industry to be paid different rates for different jobs or even different tasks on a given project. The amendments clarify that an employee must be paid for sick leave at their regular hourly rates, calculated based upon the employee’s total wages (excluding overtime premiums) divided by total hours worked in the prior 90-days of employment. Thus, if an employee’s wage rate fluctuates, the employer must do a 90-day look back to determine the proper hourly rate for any paid sick time used.
Review Collective Bargaining Agreements – Not All Union Employees are Exempt
One of the oft-cited “exemptions” to the new law is for employees in the construction industry covered by a valid collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees. But the exemption only applies to employees who earn premium wage rates for all overtime hours worked and a regular hourly pay of not less than 30 percent more than the state minimum wage rate. Construction industry employers must therefore ensure any employee earning less than $12 per hour ($13 effective January 1, 2016) is covered by a paid sick leave policy that meets all of the requirements of the law.
The definition of “employee in the construction industry” is defined as an employee performing work associated with construction, including work involving alteration, demolition, building, excavation, renovation, remodeling, maintenance, improvement, repair work, and any other work as described by Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code, and other similar or related occupations or trades. It is unclear how broadly the Labor Commissioner will interpret “similar or related Occupations or trades,” so employers should seek legal advice before relying on this exemption.
This article original appeared in the Sacramento Regional Builders Exchange Construction Quarterly Magazine.