Employers can choose between four different accrual methods and one lump-sum method that avoids accrual and carryover requirements. The lump sum method is less administratively burdensome.

The following are the five options:

• The statutory mandated accrual method — one hour for every 30 hours worked;
• An optional accrual method that provides no less than 24 hours by the 120th day and 40 hours by the 200th day;
• An alternative accrual method for new hires;
• A pre-existing employer policy (a policy in effect prior to January 1, 2015); or
• A lump-sum approach.

Employers who use one of the first four accrual options will also want to consider placing a cap on the maximum amount of paid sick time that can be accrued. For more information, see “Cap On Accrual” in Calculating Leave - Employer Options.

Employers that provide specific sick leave or annual leave benefits to specified state employees or officers by statute or the provisions of a memorandum of understanding will also meet the requirements of the paid sick day law.

An employer can, of course, choose to have a more generous plan, allowing the employee to use and accrue more than the minimum amounts required under the Act.

The PSL mandate does not change an employer’s obligation to comply with a contract, collective bargaining agreement, employment benefit plan or other agreement providing more generous sick days to an employee than required by the mandate.2

• You do not have to pay out sick leave at termination, but you do have to pay out PTO. If you elect to provide PTO instead of sick leave, you will need to pay out any unused, accrued PTO when employment ends. For more information, see Employee Leaves Employment and Reinstatement and Paid Time Off.

Companies need to decide which approach works best for their needs. Whichever method is used, check eligibility and usage requirements in your policy. For example, make sure that all workers are covered, not just full-time employees. Review your policies to ensure that sick leave can be used for all the same purposes and meets all the same conditions required by law.

This page contains the following information:

• Statutory Mandated Accrual Method
• Optional Accrual Method That Provides no Less Than 24 Hours by the 120th Day
• Alternative Accrual Method for New Hires
• Pre-Existing Employer Policy (Policy in Effect Prior to January 1, 2015)
• Lump-Sum Method
• Cap On Accrual
• Non-Traditional Work Schedules and Providing the Full Amount of Leave
• In-Home Service Providers

Statutory Mandated Accrual Method

The first option available to employers is the statutory accrual method. Under the statutory accrual method, an employee earns one hour of sick pay for every 30 hours worked.3

Important points regarding accrual under the Act:

• Both regular and overtime hours are counted toward the accrual rate of one hour for every
  30 hours worked.
• Employees exempt under the administrative, executive or professional exemption are deemed to work 40 hours per workweek, but if the normal workweek is less than 40 hours then accrual will be based on their normal workweek.4
• Any accrued but unused time must carry over to the following year of employment. However, an employer can cap the employee’s total accrued amount at 80 hours or 10 days. For more information, see “Cap On Accrual” on this page.
• Employers can also limit the amount of leave an employee can take in any one year. For more information, see Parameters of Paid Sick Leave Use.

Optional Accrual Method That Provides No Less Than 24 Hours by the 120th Day, 40 Hours by the 200th

Some employers may not want to use the statutory accrual rate because, for example, their company tracks sick leave by pay period instead of hours worked. If this is the case, employers have some flexibility to use a different accrual method as long as the chosen method meets certain specific requirements.5

An employer may use a different accrual method, other than providing one hour per every 30 hours worked, provided that the accrual is on a regular basis so that an employee has no less than 24 hours of accrued sick leave or paid time off by the 120th calendar day of employment and 40 hours by the 200th calendar day or each calendar year, or in each 12-month period.

• If you decide to choose this option, make certain that the accrual method that your company uses meets the 120th day and 200th day requirements.

Again, employers also have the option to cap the employee’s total accrued amount at 80 hours or 10 days and/or to limit the amount of leave an employee can take in any one year.

Alternative Accrual Method for New Hires

Labor Code section 246(b)(4) states “an employer may satisfy the accrual requirements ... by providing not less than 24 hours or three days of PSL that is available to the employee to use by the completion of his or her 120th calendar day of employment and no less than 40 hours or 5 days of paid sick leave that is available to the employee to use by the completion of the employee’s 200th calendar day of employment.”

The exact intent of this language is unclear given the optional accrual method described above. However, it appears that this option would allow an employer to use any sick leave accrual rate that would result in an initial hire having three days or 24 hours available to use on the 120th calendar day of employment and five days or 40 hours by the 200th day. This option applies to only PSL, not to PTO. Again, employers also have the option to cap the employee’s total accrued amount at 80 hours or 10 days and/or to limit the amount of leave an employee can take in any one year.

Pre-Existing Employer Policy (Policy in Effect Prior to January 1, 2015)

If your organization had a policy that provided PSL or PTO to employees before January 1, 2015, you can continue using your pre-existing accrual method instead of the statutory accrual method of one hour per 30 hours worked, as long as the accrual method meets certain requirements.

Accrual under the pre-existing policy must be on a regular basis and meet both of the following requirements:6

• An employee has no less than one day or eight hours of accrued sick leave within three months of employment, each calendar year, or each 12-month period; and
• The employee was eligible to earn at least five days or 40 hours of sick leave or paid time off within six months of employment.

If an employer modifies the accrual method used in the policy it had in place prior to January 1, 2015, the accrual method is no longer grandfathered in under the Act and must now comply with either:

• The statutory accrual method;
• The optional accrual method that provides no less than 24 hours by the 120th day and 40 hours by the 200th day;
• The alternative accrual method for new hires; or
• The lump-sum approach discussed below.

An employer can, however, always increase the accrual amount or rate.

This fourth option can also apply to employees hired after January 1, 2015, so long as you had a pre- existing policy that applied to the class the new employee is hired into and that meets the above requirements.

Employers will want to look at the cap on accrual and limits on use options. See “Cap on Accrual” on this page and Parameters of Paid Sick Leave Use for more information.

Lump-Sum Method

The final option available to employers allows the employer to avoid the accrual and carryover provisions by having a policy that uses a “lump-sum method.” Here, the employer grants the full amount of leave (five days or 40 hours) at the beginning of each year of employment, calendar year, or 12-month period.7

In this lump-sum situation, an employee will not be able to carry over unused sick days, but will get 40 hours or five new sick days at the beginning of the following year. Many employers find this method less administratively burdensome.

The following specific requirements must be satisfied:

• The paid sick days must be offered at the beginning of each year of employment, calendar year, or 12- month period. For example, if you provided five days/40 hours on July 1, 2024, you would need to provide another five days/40 hours on July 1, 2025.
• The employee must receive a minimum of 40 hours or five days.
• The employer must put all the PSL into the employee’s leave bank at once.
• The employer’s lump sum policy must allow employees to use the leave for all of the same purposes and conditions specified under the Act. For more information see Permissible Usage and Parameters of Paid Sick Leave Use.

A straight statutory accrual method with no cap could provide more accrued leave for the worker than a “lump-sum” approach — nearly nine days for a full-time employee.

Employers can use the lump-sum approach to avoid accrual and carryover issues and for ease of administration.

Another option for employers is to offer a lump sum of five days or 40 hours of PSL that can be used for all of the purposes under the Act and then offer additional employer provided sick days that are outside of the scope and requirements of the Act. The lump-sum days would count as protected PSL under the Act and have to meet all the legal requirements of the Act. The optional employer provided sick days would not.

For more information, see Optional Additional Paid Sick Leave.

Cap On Accrual

Unless an employer uses the lump-sum approach, any accrued but unused time must carry over to the following year of employment. However, the amount of accrued leave can be capped at 80 hours or 10 days. You can always provide a more generous cap.

• If an employer chooses any one of the accrual options, the employer should consider whether it wants to institute a cap on the maximum accrual.

In addition to an accrual cap, an employer can also limit the amount of leave an employee can take. For more information, see Parameters of Paid Sick Leave Use.

Non-Traditional Work Schedules and Providing the Full Amount of Leave

The Labor Commissioner’s office issued an opinion letter regarding California’s PSL law.8 The opinion letter answers questions relating to how an employer provides “24 hours or three days” of PSL (written prior to the 2024 expansion to 40 hours or five days) when you have employees that don’t work a traditional eight-hour day schedule. How does the law work, for instance, if you have workers with an alternative workweek schedule of four 10-hour days or part-time employees who work six-hour shifts?

The essence of the opinion: Whichever application of the law provides the most benefit to the employee is the one which should be applied. Though the opinion letter was written when the amount of leave was 24 hours or three days, the Labor Commissioner’s PSL guidance states that the letter’s rationale still applies after the 2024 PSL increase to 40 hours or five days.

Here are some specific examples that the Labor Commissioner addressed:

Question 1: Company A uses the lump-sum approach under Labor Code section 246(d) (full amount of leave front-loaded at the beginning of each year; no accrual or carry-over). Company A has employees that work regular 10-hour shifts. Does Company A provide these employees with a lump-sum of 30 hours of leave (three days at 10 hours per day) or only with 24 hours of leave on the theory that a “day” is limited to a maximum of eight hours?

Answer 1: If an employee’s regular work hours are 10 hours per day, a paid sick day for that employee would be their normal full day of work — which in this instance is 10 hours. According to the Labor Commissioner, “[t]he ‘full amount’ of leave for this employee would need to be front loaded at the beginning of the year, meaning that three 10-hour days (which, if translated into hours would be 30 hours) must be front loaded at the beginning of the year.” Any other interpretation would mean that Company A’s employees with 10-hour workdays would receive less than the minimum of three days of PSL required by law, said the Labor Commissioner.

Question 2: Company B uses the lump-sum approach. Company B has employees that work regular six hour days. What is the amount of time that must be provided as a lump-sum for these employees at the beginning of the year?

Answer 2: The Labor Commissioner states that “the ‘full amount of leave’ the employer would need to front load for these employees would be a minimum of 24 hours (not three six-hour days).” If Company B only front-loaded three six-hour days (i.e., 18 hours) it would “undercut the mandatory minimum standard of 24 hours for these employees.”

Question 3: Company C uses the accrual method. However, Company C limits the amount of PSL an employee can actually use in any given year to 24 hours or three days a year (under Labor Code section 246(d)). How does that limitation apply to employees working regular 10-hour shifts?

Answer 3: If Company C’s employee has accrued 30 hours or more of PSL in their leave bank and has a regular work hours of 10 hours per day, “the employee must be able to use and be paid for the full three days at 10 hours per day.” Company C cannot limit the employee’s use to 24 hours. Doing so would “undercut the Legislature’s intent that employees be entitled to take a minimum of three days of PSL, without losing any compensation they would normally earn during their regular working hours.”

Question 4: Company D also uses the accrual method and limits use of PSL to 24 hours or 3 days per year. How does Company D’s limitation apply to part-time employees working regular six-hour shifts?

Answer 4: If Company D’s part-time employee has accrued 24 or more hours of PSL in their leave bank and has a regular work schedule of six hours per day, Company D cannot “limit the employee’s use of accrued PSL to only three days.” In other words, Company D cannot limit the use of PSL to three six hour days or 18 hours, but must allow the employee to use 24 hours.

• In the opinion letter, the Labor Commissioner emphasized the Legislature’s intent that each class of employees should be treated fairly. “To limit a part-time worker who works four-hour days to only 12 hours of PSL, based on a ‘three day’ standard, disregards the statutory reference to a minimum of 24 hours and would defeat the legislative objective of providing low wage workers with at least a minimum of 24 hours of PSL per year,” said the Labor Commissioner’s office.

As mentioned above, the Labor Commissioner’s guidance regarding nontraditional schedules is still applicable after PSL was expanded to 40 hours or five days. Applying the Labor Commissioner’s rationale to the current amounts of leave required, employers should provide 40 hours of leave to employees regularly working less than 8 hours per day and five days to employees working more than eight hours per day, e.g., 10-hour shifts.

• While the Labor Commissioner’s opinions are not legally binding, they provide valuable guidance as to how the Labor Commissioner will enforce the law. Failure to follow the guidance can result in administrative citations. If you have any questions on these issues, consult legal counsel.

1. Lab. Code sec. 246