Friday, December 9, 2022

Calculating Sick Leave for Employee with Multiple Rates of Pay

How do I pay for sick leave under California’s new law when an employee has more than one rate of pay? Do I pay the rate they would have earned on the day they called in sick?

Under California’s new Healthy Workplaces, Healthy Families Act, an employer can pay sick leave at the employee’s “regular rate of pay” for that week, which is based on a weighted average of all rates the employee earned in that workweek.

Example

If an employee works on Machine A at $10 per hour, and Machine B at $12 per hour, and each week the number of hours on each machine varies, the weighted average regular rate of pay will vary from workweek to workweek, and thus the sick leave pay would vary as well.

If an employee worked 24 hours on Machine A and 8 hours on Machine B during the workweek, add the $240 he/she earned on Machine A and the $96 he/she earned on Machine B for a total of $336. Divide the $336 by the total number of hours worked (32), which would result in a regular rate of pay for that week of $10.50. If the employee took 8 hours of sick leave that week, he/she would be paid his/her sick leave at a rate of $10.50 per hour.

Machine A ($10/hour) x 24 hours = $240

Machine B ($12/hour) x 8 hours = $96

$240 + $96 = $336 earned in the week

$336 ÷ 32 hours worked = $10.50 regular rate of pay

8 hours sick leave used: 8 x $10.50 = $84

If instead the employee worked 8 hours on Machine A and 24 hours on Machine B during a workweek, his/her regular rate of pay for that week would be $11.50 per hour ($80 + $288 = $368, divided by 32 hours = $11.50). Thus any sick leave taken in that week would be paid at $11.50 per hour.

Optional 90-Day Look Back Method

An employer also has the option of a 90-day “look back” calculation that requires dividing the employee’s total wages, not including overtime premium pay, by the employee’s total hours worked in the full pay periods of the prior 90 days of employment.

Commissions/Piece Rates/Bonuses

For employees who earn commissions, piece rates or bonuses, see the examples on how to calculate the regular rate of pay provided in the California Division of Labor Standards Enforcement Manual, Section 49, available online at www.dir.ca.gov/dlse/DLSEManual/dlse_enfcmanual.pdf.


The Labor Law Helpline is a service to California Chamber of Commerce preferred and executive members. For expert explanations of labor laws and Cal/OSHA regulations, not legal counsel for specific situations, call (800) 348-2262 or submit your question at www.hrcalifornia.com.

Staff contact: Ellen Savage

Ellen Savage
Ellen Savage
Ellen Savage joined the CalChamber in 1990 and currently serves as an HR adviser. She has been assisting employers on the Helpline since 1993. She was the editor of eight editions of the California Labor Law Digest and author of the CalChamber's California Hiring to Termination Guide. Her experience also includes practicing at a large Sacramento law firm and presenting at dozens of employment law seminars statewide. She holds a J.D. from Lincoln Law School.

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