(March 19, 2014) The Assembly Labor and Employment Committee today is considering adding to the already growing number of costs for California businesses by requiring both small and large employers to provide their employees with mandatory, protected, paid sick leave.
The bill, AB 1522 (Gonzales; D-San Diego), a "job killer" bill, increases employer mandates by requiring all employers, large and small, to provide all employees in California with paid sick leave, and threatens employers with statutory penalties as well as litigation for alleged violations. The California Chamber of Commerce and a large coalition of employers groups and local chambers remain opposed to the bill unless it’s amended.
AB 1522 mandates that all employers, except those with collective bargaining agreements, provide any employee who has worked in California for seven days with paid sick leave, at an accrual rate of one hour for every 30 hours worked.
After the 90th day of employment, employees would be allowed to utilize their paid sick leave to care for themselves or a family member. Pursuant to AB 1522, any unused sick leave accrued in the preceding year could be carried over to the next year, which is a significant change in existing law. While many employers voluntarily offer sick leave for full-time employees, expanding this to a mandate to provide sick leave for temporary, seasonal and part-time employees will create a huge burden on employers.
In July 2014, employers in California already will be facing a significant cost increase due to the $1 increase in minimum wage that will take effect. This $1 increase is in addition to the cumulative impact of other cost hikes employers are already facing, including increased taxes under Proposition 30, increased workers’ compensation rates, loss of the federal unemployment insurance credit, increased energy costs, and increased health insurance costs associated with implementation of the Affordable Care Act. California employers cannot absorb all these costs and be forced to provide paid sick leave as well, without cutting other costs, such as labor. Accordingly, AB 1522 will have an impact on both jobs and future growth.
In addition, CalChamber and the coalition are opposed to AB 1522 unless the following other issues can be addressed. In its current form, the bill:
- Creates a private right of action for employees and unions;
- Jeopardizes an employee’s exempt status;
- Creates an unfair rebuttable presumption against the employers by presuming any corrective action within 90 days of an employee's complaint is retaliation;
- Imposes unfair penalties through the Labor Commissioner process;
- Gives local counties and cities the authority to adopt more stringent requirements, creating inconsistency and confusion for California employers that operate in different jurisdictions;
- Imposes a huge cost on all employers that currently offer paid sick leave;
- Mandates unlimited paid sick leave for certain conditions;
- Creates new posting, notice requirements on employers; and
- Adds to the myriad of California-only protected leaves that must be compensated.
California Should Incentivize Paid Sick Leave, Not Mandate
Given the cumulative costs and existing protected leaves of absences with which California employers are already struggling, California should refrain from implementing new mandates such as AB 1522. Rather, California should incentivize employers to offer these additional benefits by reducing costs in other areas.
One area in which California can reduce costs on employers so that they have the capacity to offer paid sick leave is daily overtime. California is one of only three states that mandate both daily and weekly overtime, creating a huge cost for employers. If this cost were reduced by conforming to federal law and mandating only weekly overtime, employers would more likely have the ability to offer paid sick leave as well as provide a more flexible schedule for working families.
Another option to partially offset the burden on employers to provide paid sick leave is to provide small employers with 50 or fewer employees, with a tax credit for the amount expended each year on paid sick leave up to a maximum of 125% of minimum wage, thereby targeting lower-wage employees. Just recently, the State Controller released a statement indicating that California’s revenue for February 2014 was approximately $1 billion higher than the Governor projected. A portion of this unexpected revenue could be utilized for a tax credit for those small employers that provide and pay an employee for sick leave, as proposed under AB 1522.
Follow @CalChamber on Twitter to see how the Assembly Labor and Employment Committee votes.
Staff Contact: Jennifer Barrera