San Francisco "Paid Leave" Ordinance

February 1, 2007

The San Francisco “Paid Leave Ordinance” (Chapter 12W of SF Administrative Code, adopted as Proposition “F”), went into effect February 5, 2007. The ordinance is being closely watched by business groups, employee rights activists, and government and private practice lawyers because San Francisco fashions itself as a legal trendsetter on issues of employee benefits law.

In a nutshell, the ordinance makes it a requirement for all employers to provide paid sick leave to all employees working in San Francisco. Note that the Ordinance includes “all employers” i.e. employers located inside and outside of California.  For example, you may have an employer outside San Francisco with employees working in San Francisco. The ordinance would apply.

The term “employee” includes full-time, part-time, temporary and undocumented workers as well as “household  employees.”
Independent contractors are excluded.  Note, however, that labeling someone an “independent contractor” does not make it so. Rather, fact-specific inquiries should demonstrate that the person is an “independent contractor” under CA law. Thus, it is important to determine, for example, whether a commissioned worker is truly an independent contractor or an “employee”.

Accrual of Paid Sick Leave
For employees working for an employer on or before February 5, 2007, paid sick leave begins to accrue on that date. For employees hired after February 5, 2007, paid sick leave begins to accrue 90 days after the employee’s first day of work. For every 30 hours worked, an employee accrues one hour of paid sick time. Paid sick leave accrues only in hour increments, not in fractions of an hour.

For employees of employers for which fewer than 10 persons (including full-time, part-time, and temporary employees) work for compensation during a given week, there is a cap of 40 hours of accrued paid sick leave. For employees of other employers, there is a cap of 72 hours of accrued paid sick leave. An employee’s accrued paid sick leave does not expire; it carries over from year to year.

If an employer has a paid leave policy, such as a paid time off policy, that makes available to employees an amount of paid leave that may be used for the same purposes as paid sick leave under the law and that is sufficient to meet the accrual requirements under the law, the employer is not required to provide additional paid sick leave.

All or any portion of the applicable requirements shall not apply to employees covered by a bona fide collective bargaining agreement to the extent that the law’s requirements are expressly waived in the collective bargaining agreement in clear and unambiguous terms.

Use of Paid Sick Leave
An employee may use paid sick leave not only when he or she is ill, injured, or for the purpose of receiving medical care, treatment, or diagnosis, but also to aid or care for a family member or designated person (discussed below) when they are ill, injured, or receiving medical care, treatment, or diagnosis.

If an employee has no spouse or registered domestic partner, the employee may designate one person for whom the employee may use paid sick leave to provide aid or care. Employers must offer the opportunity to make a designation no later than 30 work hours after the date paid sick leave begins to accrue.  The employee has 10 workdays to make this designation. Thereafter, employers must offer the opportunity to make or change the designation on an annual basis, again with a window of 10 workdays for the employee to make the designation.

Additional Employee Rights & Employer Responsibilities
Employers must post a notice informing employees of their rights in a location where employees can read it easily. OLSE provides this notice through the city’s annual business registration mailing.  A downloadable version of the notice is also available on OLSE’s website.

Employers must retain records documenting hours worked by employees and paid sick leave taken by employees, for a period of four years, and shall allow OLSE access to such records.

Employees who assert their rights to receive paid sick leave are protected from retaliation.

Employees who are denied their rights under the law may file a complaint with OLSE.

Records To Be Kept By Employer
Employers must retain records documenting hours worked by employees and paid sick leave taken by employees for a period of four years and must allow OLSE access to such records.  In the case of Exempt Employees, employers must maintain records of work schedules and days worked, but do not need to maintain records of actual hours worked.  Employers must retain employee records for a period of four years even if the employee ceases to perform work in San Francisco or if there is a separation of employment.

Common Questions:

Is the sick leave pay paid at termination?
No.  Sick leave must be paid no later than the payday for the next regular payroll period after which the employee took the sick leave.  However, if the employer has a reasonable verification requirement, the employer is not obligated to pay sick leave until an employee has complied with the verification requirement.

Once the employees hit the 72 hours cap of paid sick leave, does the cap remain until they used it?
Yes.  Unused hours of paid sick leave that employees have accrued do not expire.  However, once the employees hit their cap of paid sick leave, they no longer accrue paid sick leave until they use some of the hours they have “in the bank”.

For example, Jane works for a Small Business.  From January through July, Jane accrues 40 hours of paid sick leave.  As an employee of a Small Business, that is her cap.  She continues to work, without using any of the paid sick leave that she has accrued, for the next two years.  At that point, she still has only 40 hours of paid sick leave “in the bank”.  Jane then falls ill and uses 8 hours of her paid sick leave.  She now has 32 hours of paid sick leave left.  When she returns to work, she will begin to accrue new hours of paid sick leave back up to her cap.

Can the employees use their vacation day instead, and allow their sick pay to remain?
Yes.  That is up to the employer’s policy.  The focus of the Ordinance is to make certain that employees have paid leave when sick, whether that is straight sick leave or vacation is up to the employer. (Continued on Page 8)

What is the rate of pay for employees who are paid by commission?
For employees who are paid by commission (whether commission only or base wage plus commission), the sick leave rate of pay shall be calculated as follows:  divide the employee’s total earnings for the prior calendar year by the total hours worked during the prior calendar year.  For employees without a prior calendar year’s work history, divide the employee’s total earnings since the employee’s date of hire by the total hours worked since that date.