California's Paid Sick Leave Law: Accrual, Carryover, and Usage Rules for Small Employers

"We only have a few employees" isn't much of a defense when it comes to California paid sick leave. A lot of California employment laws have rules that depend on how many people a business employs. Paid sick leave isn't one of them. California’s paid sick leave law requirements can apply whether you have one employee or one hundred, and the rules changed in 2024. That means a policy that worked perfectly fine a few years ago may now be using outdated numbers. Before assuming your current policy still covers the basics (and your company’s back), it helps to look at who qualifies, how much leave employees must receive, and what employers have to track.

Key Takeaways

• The Healthy Workplaces, Healthy Families Act codified at Labor Code §§ 245-247, applies to virtually every employer in the state regardless of size.
• California's paid sick leave law covers any employee who works 30 or more days for the same employer within a year of starting.
• Since SB 616 took effect January 1, 2024, employers must allow employees to use at least 5 days (40 hours for full-time employees) of paid sick leave per year.
• Under Labor Code § 246, employers using the accrual method (one hour for every 30 hours worked) may now cap total accrual at 80 hours (10 days).
• Employees cannot use accrued sick leave until their 90th day of employment.

California's Paid Sick Leave Law Has No Employer Size Exemption

Under Labor Code § 245, public and private employers of any size must provide sick leave. The law applies even if the employer only has one employee. Any employee is covered, including full-time, part-time, temporary, or seasonal. The employee must work in California for the same employer for 30 or more days within a year of starting employment.

There are exceptions to California’s paid sick leave law requirements. However, they are narrow. Exceptions apply to certain employees covered by a qualifying collective bargaining agreement with equivalent or superior paid sick leave terms, and certain air carrier flight deck or cabin crew employees.

SB § 616 Raised the Usable Amount and the Accrual Cap in 2024

The state legislature expanded mandatory paid sick leave starting January 1, 2024. There are two approved methods that employers can use to meet California’s paid sick leave requirements. These include:

• Front-load method: Employees are credited the full 40 hours (5 days) at the start of each year. It could be done by the calendar year or a 12-month period. No accrual tracking or carryover is required.
• Accrual method: Paid sick leave is credited at a rate of one hour per 30 hours worked. Accrued sick leave must carry over from year to year, but can be limited to a total of 80 hours (10 days). Employers can cap usage at 40 hours (5 days) per year.

One method isn’t inherently better than the other. Employers may favor the front-loaded method because it’s easier to manage administratively. Employees may prefer the accrual method because they can bank their paid sick leave across multiple years.

Employees Can Use Sick Leave for a Broad Scope of Reasons

Employees aren’t strictly limited in how they use their available paid sick leave. While it’s generally understood that it can be used when an employee is physically ill, the coverage is much broader, and continues to expand. Qualifying uses include:

• Employee's own health: Sick leave can be used for preventative care, vaccines, diagnosis, care, or treatment.
• Family member's health: The same purposes are covered for family members. Children, parents, spouse or registered domestic partner, grandparents, grandchildren, and siblings are covered.
• Domestic violence, sexual assault, or stalking: Sick leave can be used when obtaining victim services or participating in related legal proceedings.
• Designated person: Employees can name one individual outside of covered family relationships per 12-month period. Employers may limit this to one designated person per period.

Employers cannot require a doctor's note or other certification as a condition of allowing the leave.

Carryover Only Matters for Employers Using the Accrual Method

Unused accrued sick leave carries over from year to year unless the employer uses the front-load method. The front-loading already gives the employee the full annual amount without any need to bank time from a prior period. If an employer chooses to use the accrual method, they can cap the total amount an employee can accrue. Unused time can be capped at 80 hours (10 days), preventing employees from accruing an unlimited balance.

There is no statute that requires employers to pay out unused sick leave when an employee separates. If sick leave is combined with vacation into one general PTO policy, however, the payout rules that apply to vacation extend to the whole combined balance. In this situation, the employer will be required to pay out the balance of unused sick leave, because the vacation time is required to be paid out upon separation.

Paystub Notice and Recordkeeping Rules Apply, Regardless of Method

Under § 246(i), employers are required to show an employee’s total available sick leave for each pay period. This can be done on the employee’s paystub as an itemized line item or in a separate document that’s provided with the paystub. Employers that offer truly unlimited paid sick leave can satisfy this by stating "unlimited" instead of a specific number.

Employers are required under Labor Code § 247.5 to keep records of hours worked, sick leave accrued, and sick leave used for at least three years. They must also make the records available to the employee and the Labor Commissioner on request.

Waiting Periods, Usage Limits, and Anti-Retaliation Protections Still Apply

Once an employee is hired, they begin accruing sick leave on day one. However, employers generally limit their employees’ ability to use the accrued sick leave until their 90th day of employment. California laws enable employers to place increment limits on how employees use their sick leave. However, the minimum increment needs to be reasonable and cannot exceed two hours.

Employers are not permitted to discipline or terminate an employee for using or requesting accrued sick leave. Doing so violates § 246.5(c). Several California cities have their own paid sick leave ordinances. If the local ordinance is more generous than the state minimum, employers should confirm which law is the controlling one.

Work With a California Employment Attorney to Build a Compliant Sick Leave Policy

For California employers, the safest approach is to stop treating paid sick leave as a rule that only affects larger companies. California’s paid sick leave law requirements reach businesses of all sizes, and a policy that hasn't changed in several years may be due for some attention. JDS Law can help you update an existing policy, work through the front-load versus accrual decision, and make sure the required notices and records aren't being overlooked. Schedule a meeting to discuss your paid sick leave policy and ensure you are compliant with California law, before paid sick leave becomes a headache for your company.