The California Supreme Court recently issued McCarther v. Pacific Telesis Group (S.164692, 2/18/10) — an opinion that provides comfort to employers with sick leave policies, although the opinion has a narrow application. (See here for a link to the opinion.)

The Court held that California Labor Code section 233, otherwise known as California’s “kin care” law, which permits an employee to use accrued paid sick leave to care for ill parents, spouses, children, and domestic partners, does not apply to paid sick leave policies that provide for an uncapped number of compensated days off. Stated another way, if an employer’s paid sick leave policy does not provide for any kind of accumulation or cap of sick leave days, but simply triggers a leave entitlement upon an event, then the employer need not compensate employees for taking leave to care for ill parents, spouses, children, or domestic partners, and in fact may treat absences to care for such relatives as violations of the employer’s absence control policy, if one exists, and consistent with other statutes, like the California Family Rights Act and the federal Family and Medical Leave Act. 

The pertinent part of Section 233 provides that “[a]ny employer who provides sick leave for employees shall permit an employee to use in any calendar year the employee’s accrued and available sick leave entitlement, in an amount not less than the sick leave that would be accrued during six months at the employee’s then current rate of entitlement, to attend to an illness of a child, parent, spouse, or domestic partner of the employee.” (Cal. Labor Code § 233, subd. (a).) The statute defines “sick leave” as “accrued increments of compensated leave.” (§ 233, subd. (b)(4).) Labor Code section 234, in turn, prohibits discipline arising from an absence control policy that counts Section-233-protected absences against the absence limit. The statute provides for reinstatement and damages.

In McCarther, the defendant-employers’ labor contract provided that “employees be compensated for any day in which they miss work due to their own illness or injury for up to five consecutive days of absence in any seven-day period.” Once an employee returned to work following any period of absence, this compensated leave would again be triggered if the employee was absent for his or her own illness or injury. While employees could be entitled to compensated leave repeatedly under the labor contract, there was no bank of paid sick days that employees incrementally accrued over a period of time, nor was there a cap on the amount of sick days that could be taken. However, the labor contract also contained an attendance management policy, imposing progressive discipline when an employee tallied eight or more days of absence, or “occurrences” of absence. This policy was used to control the utilization of compensated sick leave.

Two employees who were never compensated (but never disciplined) for time they took off to care for relatives covered under Section 233 brought a class action, contending that they were owed damages under the statute. Pursuant to the agreement of the parties and the trial court, the issue of whether Section 233 applied to the sick leave policy was decided on summary judgment before class certification. The employers prevailed before the trial court, but lost before the California Court of Appeal, which held that Section 233 applied. The Court of Appeal reasoned that an employee’s kin care leave “accrual” entitlement could be based on the amount of sick leave that the employee actually utilizes in one year, even if this could not be known with certainty during the year.

The California Supreme Court strongly disagreed, holding that Section 233 only applies to sick leave policies where the sick leave actually accumulates on an hourly or daily basis, because the common sense definition of “accrued” entailed some fixed accumulation:

The requirement in section 233 that employers that provide sick leave permit employees to use at least the ‘amount . . . that would be accrued during six months’ for kin care cannot sensibly be applied to the sickness absence policy at issue here, because it is impossible to determine the amount of compensated time off for illness to which an employee might be entitled in a six-month period. Defendants’ sickness absence policy does not provide a bank of sick leave hours or days to which the employee is entitled in a six-month or 12-month period, but rather provides that an ill employee will be compensated for up to five consecutive days for each instance of illness. But once the employee returns to work, he or she is again entitled to compensation for another five-day period of illness. …

The Court also looked to the legislative intent to hold that the statute was intended to fix an amount of “kin care” leave with certainty, which could not happen with an uncapped and non-banked sick leave system. Finally, the Court rejected arguments that (a) “accrual” under Section 233 could be defined to be synonymous merely with an employer’s eligibility period, (b) that “accrued” could mean something other than accumulated, and (c) that the legislative intent actually supported the Court of Appeal’s analysis. The Supreme Court of California concluded by reaffirming that “section 233 does not apply” to an uncapped compensated sick leave policy, because there simply is no accumulation of leave under such a policy.

Considerations for California Employers

• California state law does not mandate sick leave, although a local San Francisco City and County ordinance currently does. So, for employers outside of San Francisco, the law makes clear, and McCarther reaffirms, that you are not legally required to have sick leave.

• Uncapped compensated sick leave policies, simply because they are uncapped, tend to be more expensive than an average accrual-based or cap-based sick policy, so employers should carefully consider whether or not McCarther actually provides a reason to change a sick leave policy in California simply to avoid extending half the annual accrual of compensated leave to cover “kin care.”

• Where an employer already has an uncapped compensated leave policy, McCarther allows the employer not to compensate for leave to take care of spouses, children, parents, and domestic partners. An employer should consider whether that makes sense, and whether the eligibility terms of the policy need to be altered.

• Counsel should be consulted before switching types of sick leave policies or changing the terms of an uncapped compensated sick leave to make sure the intended effect is legally achieved.

Should you have any questions, please contact the Arent Fox attorney with whom you work or a member of Arent Fox’s Labor & Employment Practice Group.

Harry I. Johnson, III
johnson.harry@arentfox.com
213.443.7567