California Payroll Calculation and Sick Time Legislation

by Admin

Sick Time Accrual Legislation and Your Payroll

California has passed new legislation requiring employers to award sick time to all employees.  The Healthy Workplaces, Healthy Families Act of 2014 (AB1552) will take effect July 1st, 2015 and require changes which manual payroll calculation methods are ill-equipped to handle.


What does this mean for California employers?

The following are guidelines.  Some additional conditions may apply, and for the purposes of this article we will ignore such topics as discrimination or the finer points of sick time usage.  There are several exceptions to this legislation—most of whom are groups which have collectively bargained their terms.  Please refer to California lawfor more complete details.

  • Full time, part time, exempt, and temporary employees who work at least thirty hour per week will earn paid sick leave at a minimum rate of one sick hour for every thirty hours worked.
  • Individuals begin accruing sick time after 30 calendar days of employment.
  • Individuals must be employed at least 90 days before they may use any paid sick leave.
  • Employers can cap unused sick time at six days (48 hours).
  • Employers may limit the use of paid sick time to three days (24 hours) per year.
  • Employers must allow unused sick leave to carry over to the following year, but may still limit usage to three days in one calendar year.  This allows employees who get sick in January, for example, to use the time they have already earned.
  • If an employer chooses to distribute three or more sick days in a lump-sum at the beginning of the year, no carry over is required.
  • Employers who already exceed these accrual rates or provide at least three days of paid leave per year do not need to provide additional paid sick leave.
  • An employer is not required to pay unused sick time to a terminated employee, but must reinstate their previously earned sick accrual if rehired within one year.
  • The pay rate for used sick time is the same as an employee’s regular hourly rate.  For commission or piece-rate employees, the rate is equal to their total average hourly compensation during the previous 90 days.
  • Employers must display a poster in the workplace which explains the sick leave accrual requirements and also inform new employees of their rights, in writing.
  • Employers must provide a written statement to each employee with their accrued sick time after each pay period and effective as of that same date.  This can be listed on their pay stub or a separate document.
  • Employers are required to keep records of hours worked and accrued sick time for three years.  These records must be provided to the employee or Labor Commissioner if requested.

The final two points are particularly notable—is your company able to provide regular updates to your employees and comply with the long-term record keeping requirements?


How will this affect your payroll  and record keeping?

These types of laws are not just found in California.  Connecticut already has similar legislation and several other states are likely to follow suit.History tells us regulations and laws expand, not contract. Regardless of where you do business, you can expect time tracking and payroll regulations to continue this trend. It is important to keep sufficient documentation to ensure compliance should your company be audited or face a labor dispute. Record keeping for payroll has become so cumbersome that it has become nearly impossible to do manually.  Timekeeping payroll programs can automate many aspects of time tracking and payroll management, helping to maintain updated records and compliance with current laws.


TimeClick® is prepared for these new laws and more.

Most payroll software or services can accrue time, but having software which complies with changing legislation is critical. TimeClick® can do the following, and so much more;

  • Keep and review past employee hours indefinitely.
  • Define sick time accrual parameters to meet the new standard minimums.
  • Up to 8 different accrual rates and categories for vacation, sick, and PTO to accommodate all staff positions or seniority.
  • If granted permission, employees may view their own accrual banks at any time.
  • Employee timesheets show accrued time for the pay period.
  • Run reports which show accumulated totals.
  • Run reports which show an employee’s usage for the entire year or any chosen interval.
  • Access years of TimeClick® data with just a few mouse clicks instead of sifting through file cabinets of records.
  • Administrators can print reports to comply with documentation requirements.

The Healthy Workplaces, Healthy Families Act of 2014 takes effect next July.  Don’t be caught unprepared for the new legislation.


Ask one of our associates to show you just how simple legal compliance can be with TimeClick®