A new California law (SB 616) regarding sick pay will take effect January 1, 2024. This article will help you understand how this new law affects you and provide step-by-step instructions for how to set up your Sick Pay Plans for 2024.
What’s Changing?
Beginning January 1, 2024, CA employers will need to provide 40 hours (5 days) of paid sick leave per year to their employees; this applies whether they use a lump sum or accrual paid sick leave plan.
Accrual Plans: CA employers using an Accrual plan must allow their employees to carry over up to 40 hours (5 days) of accrued, unused sick time from year to year. This means the total amount of paid sick leave that employers must allow employees to accrue over time and carry over from one year to the next is 80 hours (10 days). However, employers may limit the use of sick time to 40 hours each year.
Lump Sum Plans: Employers using a Lump Sum plan can choose to give their employees 3 days of sick pay by the 120th calendar day of employment and then the extra 2 days of sick pay by the 200th day of employment.
As of right now, Sick Pay Plans can only be set up with one set of rules. This means your Sick Pay Plan would need to be set up for 40 hours (5 days).
However, you may choose to set up two plans that still meet the requirement. First, assign new employees to a plan with 24 hours (3 days). Then use the Employee List to determine which employees have reached their 200th day and manually change their plan. More information will be posted on our blog regarding these options.
Some attorneys we have consulted with say lawmakers intended for this provision to apply to any accrual policy. We are currently getting more clarification and will consider additional programming as needed.
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Why Do Datatech Customers Need to Be Aware of This Change?
All Datatech customers required to pay CA sick pay will need to set up a new Sick Pay Plan in the program that reflects the requirements of SB 616.
In addition, if you are updating hours on a lump sum plan, you will need to download the latest software update before using the Change Sick Pay Plan utility. To download the update go to Tools > Check for Updates.
HELPFUL TIP: Before setting up the new Sick Pay Plan, carefully review your existing plan policies to determine what kind of plan your employees are currently on (Accrual or Lump Sum).
To do this, go to Payroll > Sick Pay Plan Setup. In the Plan ID entry, enter your current Sick Pay Plan ID or use the lookup button to select it.
In the Sick Pay Plan Setup window, the Method entry shows whether you are currently using the Accrual method or Lump Sum method.
Step-by-Step Instructions
The instructions provided below will walk you through the steps of setting up your new Sick Pay Plan. The set of instructions you follow will depend on which situation(s) currently applies to your employees.
Keep in mind a company can have some of it’s employees on an accrual plan and other employees on a lump sum plan. If that is your case, you will need to follow more than one set of instructions.
Which instructions should I follow?
First, decide whether or not your company will be keeping the method you are currently using for accruing and paying sick pay. Then, select the instructions that match your situation.
IMPORTANT! The new Sick Pay Plan setup must be done:
- Before printing your first payroll checks that have a check date in January 2024 and
- After printing your last payroll checks that have a check date in December 2023.
Instruction List
Make sure to download the latest update by going to Tools > Check for Updates before following these instructions.
NOTE: Datatech Support Representatives cannot tell you which steps your company should follow. If you are not sure how you to proceed after reviewing your company’s current sick pay policies and the instructions provided, please seek the assistance of an HR or labor law expert.
The information in this article should not be construed as legal, accounting or tax advice. Our customer service representatives are not accountants or lawyers and they also do not provide accounting, tax or legal advice. You should consult with a professional advisor familiar with your particular factual situation for advice concerning specific accounting, tax or legal matters before making any decisions.