Paid sick leave has become a cornerstone of workplace compliance in California. While federal law does not mandate general paid sick leave, California has steadily expanded its protections since the Healthy Workplaces, Healthy Families Act of 2014 (AB 1522). Today, every California employer—large or small—must comply with a detailed set of rules governing accrual, use, and payout of sick leave.
For employers, this is not simply an HR policy decision. Errors in sick leave or PTO compliance can lead to lawsuits, Private Attorneys General Act (PAGA) claims, and significant penalties. Here’s what California employers need to know in 2025.
Minimum Sick Leave Requirements in California
Under state law, employers must provide employees with at least 40 hours or 5 days of paid sick leave per year (whichever is greater). Employees accrue at least one hour of sick leave for every 30 hours worked, unless the employer uses a front-loading method to grant the full amount at the start of the year.
Employees may begin using accrued sick leave on their 90th day of employment, and employers cannot require documentation for short absences unless certain exceptions apply (such as fraud or abuse).
For example, a retail worker hired in January accrues sick leave by working 30 hours. By April, the worker has enough hours banked to take a paid sick day, even though they’ve only been employed for three months.
Interaction with Local Ordinances
California is a patchwork of local wage and hour rules, and sick leave is no exception. Cities like San Francisco, Los Angeles, Oakland, and San Diego impose their own sick leave ordinances, often requiring more generous accrual caps or broader definitions of family members.
Employers with multi-location operations must be careful. A uniform statewide policy may not be compliant if it fails to meet the higher local standard.
Sick Leave, PTO, and RROP
One area that often surprises employers is how sick leave is paid. California law requires that sick time be paid at the employee’s Regular Rate of Pay (RROP), not just their base hourly rate. This means commissions, non-discretionary bonuses, and other pay differentials must be factored in.
For example, if a warehouse employee earns a base rate of $18/hour but also receives regular incentive bonuses that increase their effective rate to $21/hour, their sick pay must reflect the higher RROP, not the base rate.
Employers who overlook this rule risk underpayment claims—even if employees receive all the sick days they’re entitled to.
Use of Sick Leave
California law gives employees wide discretion in how they can use their sick leave. Covered reasons include:
- Caring for themselves due to illness, injury, or preventative care.
- Caring for a family member, which includes children, parents, spouses, registered domestic partners, grandparents, grandchildren, and siblings.
- Absences related to domestic violence, sexual assault, or stalking.
Employers cannot discipline or retaliate against employees for using sick leave for these reasons.
Carryover and Accrual Caps
Unused sick leave generally carries over year to year. However, employers may cap total accrual at 80 hours or 10 days. They may also limit usage to 40 hours or 5 days per year, provided the employee always has at least that amount available.
For example, a manufacturing company allows accrual up to 80 hours but limits annual use to 40 hours. An employee who accrues 50 hours in their bank by year two can only use 40 hours that year, but the rest carries over.
Payout of Sick Leave vs. PTO
Unlike vacation pay, unused sick leave does not need to be cashed out when an employee separates from the company. However, if an employer combines vacation and sick leave into a single Paid Time Off (PTO) bank, all unused hours must be paid out upon termination.
This creates a strategic consideration: separate sick leave and vacation banks may reduce liability at separation, but combined PTO banks can be simpler to administer.
Compliance Risks and Litigation
Sick leave violations are increasingly tied to PAGA lawsuits. Common issues include:
- Failing to calculate sick leave at the RROP.
- Applying accrual rules inconsistently.
- Using unlawful waiting periods or documentation requirements.
- Retaliating against employees for using sick leave.
Even small technical violations—like failing to list sick leave balances on wage statements—can result in penalties.
Best Practices for Employers
To stay compliant, employers should focus on three priorities:
- Audit Policies Annually. Laws change frequently, and local ordinances may increase minimum requirements beyond the state level.
- Train Managers. Supervisors must understand that employees cannot be penalized for using sick leave and that RROP rules apply.
- Leverage Payroll Systems. Modern systems should track accrual, usage, and pay rates automatically to reduce human error.
Conclusion
Sick leave and PTO compliance may not get the same headlines as overtime or meal breaks, but they represent a growing area of liability for California employers. By ensuring accrual systems are accurate, RROP is applied correctly, and policies align with both state and local rules, employers can avoid costly claims and build healthier workplaces.
This post is for informational purposes only and does not constitute legal advice. California’s meal and rest break laws are complex and vary by industry and workforce. Consult an experienced employment attorney for guidance tailored to your business. Cal Comply is a paid training provider mentioned for illustrative purposes; other compliance resources are available.
