[vc_row][vc_column width=”1/1″][vc_column_text width=”1/1″ el_position=”first last”]Businesses in Torrance will begin implementing one of the largest employee benefit mandates in recent years when paid sick leave must be afforded to nearly all workers in California, to include part-time employees. The law, AB 1522, authored by Assemblymember Lorena Gonzalez (D-San Diego), requires businesses to provide three days of paid sick leave at an accrual rate of one hour per every 30 hours worked. The law has taken effect; however, the right to accrue and take sick leave does not occur until July 1, 2015.

Small businesses will likely be among the hardest hit. Kirk Rossberg, owner of Torrance Bakery, estimates the unfunded mandate will cost his business tens of thousands of dollars per year. “The new sick leave policy is another hurdle that we must jump over. My best guess is that this will cost me an additional $40,000 a year. That’s a lot of donuts!” He added, “I hope our customers understand when we have to raise our prices to help cover the cost.”

The Torrance Chamber, who opposed the bill throughout last year in part for its lack of economic considerations towards small businesses, has shifted its focus to aiding businesses implement the policy effectively. Last week, the Torrance Chamber hosted a labor law seminar for Torrance businesses with an emphasis on implementation strategies for the mandated sick leave. Event panelist and Managing Director & Principal Consultant at Odyssey Human Resource Consulting, Phil Ray, stressed simplicity as the most cost-effective approach to implementation for small businesses. “Complexity drives the cost of doing business,” he said to the businesses in attendance, “I would suggest that you consider how do I drive out complexity and create simplicity in complying with this new law.” He went on to recommend to lessen the administrative burden by either combining all leave polices into one paid time off policy (PTO) or provide the three days to employees in one lump sum at the start of the year. “Simplify your systems,” he stressed, “you don’t want to spend your time doing administrative work on this…get on to your business which is to go out and make money and revenue for your business.”

Employers that have a sick leave or PTO policy in place that exceeds the new mandate do not need to change their policy; however, AB 1522 adds enough complexity in the PTO arena that employers may be forced to adapt their policies despite already meeting the intent of the law. Karl Schmidt, Chairman of the Labor & Employment Department of the law firm, Parker, Milliken, Clark, O’Hara & Samuelian, believes the breadth of circumstances outlined in the statute where sick leave may be used will force most businesses to adapt their current policy. “Businesses have to expand their policy to be more explicit about ways in which sick leave can be used…I don’t think many business’s sick pay policies say all of the (AB 1522 language) right now unless they have jumped the gun and complied with the statute already.”

Sick Leave Mandate

The TACC hosted Small Business Owners and HR professionals for the 2015 Labor Law Update this past week. Panelists: (pictured left to right) Rob Van Lingen (moderator), Karl Schmidt, Phil Ray, Loretta Raftery, and Dana Brooks highlighted strategies to implement the new paid sick leave law and provided insights to labor litigation trends surprising businesses in the state.

Panelist Dana Brooks, Director of Human Resources for Americas Pelican Products, Inc., noted that Pelican already provides paid sick leave to non-exempt employees more generously than the new mandate. However, she will be forced to update her policy regardless. “We are concerned for our salaried employees. We did not have a sick pay policy for exempt employees because, according to current wage and hour law, we have to pay them a week if they worked any portion of that week so it seemed irrelevant. Now that this sick pay law requires a policy for everyone, we have to revisit our nonexempt policy and create a provision for exempt.” She also discussed an added payroll cost that AB 1522 will likely induce. “When we met with our major payroll provider…we thought they would have no issue doing this (update an accrual)…but because they haven’t done an accrual with all the nuances AB1522 requires, they have voiced concern about their ability to configure our desired accrual and administration methodology. Agreeing to their hourly bill rate for this project could prove costly if they don’t figure this out before starting the project.”  

Schmidt also believes the law establishes opportunities for unnecessary retaliation and discrimination claims made by disgruntled employees that could affect all businesses, regardless of their current sick leave policy. “I believe maybe 50 or 75 percent of every new wrongful termination complaint I get will have a sick pay allegation in there…this is the hand of the plaintiffs bar in here messing with all of you (business owners) saying we want more occasions for you to have to bet your business to defend some vague policy,” Schmidt said referencing a section of the statue that outlaws employer retaliation against employees that ask to use their sick leave benefit. 

Peter Maginnis, owner of American Self-storage, was in attendance to better understand what new laws in 2015 may impact his business. “The update was very informative and a great help in understanding the new laws. This panel discussion gave me lots of info that would take me days if not weeks to research myself. To have all of these experts in one place to ask and answer questions was definitely a benefit to me,” he said following the seminar.

The Torrance business community still has time to prepare for paid sick leave. This resource is available on the Torrance Chamber’s website, which includes a published version of the panel discussion from last week’s event. “Creating a strong local economy is a central component of the Chamber’s mission. Helping our businesses adjust to policies that increase the cost of doing business in our state is of upmost importance,” commented Heidi Cunningham, Chairwoman of the Chamber’s Board of Directors.

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Brandon Matson

Brandon is the Governmental Affairs Coordinator for the Torrance Area Chamber of Commerce. His primary responsibilities include facilitating the Chamber’s Governmental Affairs Policy (GAP) group, planning Chamber events with legislators, and facilitating the Chamber’s Political Action Committee (PAC). Feel free to contact him at any time.[/vc_column_text][/vc_column][/vc_row]

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