California Paid Sick Leave: The 40-Hour Floor and the Local Rules That Beat It

By Ryan Danz, Founding Attorney, Employer Guidance Group PC

Most California employers know they owe paid sick leave. Far fewer can answer the follow-up question correctly: how much, accrued which way, capped at what number, and does your city require more than the state does? Get any one of those wrong and you're looking at a Labor Commissioner claim under a dedicated penalty statute, on top of a possible PAGA notice.

Paid sick leave isn't news — it's been the law since 2015, and Senate Bill 616 raised the floor in 2024. What hasn't caught up is how many SMB handbooks and payroll setups still run on the old 24-hour number, or ignore the local ordinance sitting on top of state law entirely.

The State Floor: 40 Hours, Not 24

Under Labor Code § 246, any employee who works 30 or more days for you within a year in California is entitled to paid sick leave — full-time, part-time, temporary, and per diem workers all qualify. There's no small-employer exemption from the statute itself.

The current minimum, in place since January 1, 2024, is 40 hours or five days per year — up from the original 24 hours or three days. Employees can start using accrued leave on their 90th day of employment, even though accrual begins on day one.

Three Ways to Comply, One Way to Get It Wrong

The statute gives you three compliance paths. Pick one and apply it consistently — mixing them by department is where audits go sideways.

Method	How it works	Carryover required?
Standard accrual	1 hour of paid sick leave for every 30 hours worked	Yes — unused balance carries to the next year
Alternative accrual	Any schedule that front-loads at least 24 hours by day 120 and 40 hours by day 200	Yes
Up-front (lump sum) grant	Full 40 hours available at the start of each 12-month period	No — no accrual to carry over

If you accrue, § 246 lets you cap use at 40 hours per year and cap the accrued balance an employee can carry at 80 hours. Below that ceiling, unused hours must roll forward — "use it or lose it" policies are illegal under the accrual method. The up-front grant sidesteps the carryover fight entirely, which is why it's simpler for employers without payroll software tracking accrual.

Exempt Employees Still Accrue — Just Differently

A common mistake: assuming exempt managers don't need a sick leave line item because they're salaried. They do. Under § 246, an employee exempt from overtime as an executive, administrative, or professional employee is deemed to work a 40-hour workweek for accrual purposes — unless their normal workweek is shorter, in which case accrual follows that shorter schedule. Don't leave exempt staff off the accrual tracker just because you don't track their hours for overtime.

When Your City's Ordinance Beats the State's

California sets the floor. Several cities set a higher one, and the state law does not preempt them — you owe whichever is more generous to the employee, ordinance by ordinance, for anyone who works within city limits.

Jurisdiction	Annual accrual/grant	Carryover cap
California (state)	40 hours / 5 days	80 hours (accrual method only)
San Francisco	1 hr / 30 hrs worked	72 hrs (10+ employees) or 40 hrs (under 10)
Los Angeles (City)	48 hours upfront, or 1 hr / 30 hrs worked	72 hours

If you have employees in San Francisco, Los Angeles, San Diego, Oakland, Berkeley, Santa Monica, or another California city with its own ordinance, check that city's rule before assuming your statewide policy covers everyone — the single most common gap in multi-location handbooks.

Prove You Paid It Right

Non-exempt sick pay is calculated at the regular rate — either that workweek's non-overtime earnings divided by non-overtime hours, or the prior 90 days' non-overtime compensation divided by non-overtime hours worked, applied consistently. Exempt employees are paid the same way you calculate their other paid leave.

Separately, § 246 requires you to show each employee's available sick leave balance on the wage statement itself or on a document issued the same day as the paycheck. That's distinct from the nine wage-statement items under Labor Code § 226 — see our pay stub guide — but the two get audited together, and a missing balance disclosure is its own violation.

What It Costs When You Get This Wrong

Labor Code § 248.5 gives paid sick leave its own penalty scheme, separate from PAGA's default tiers. Wrongfully withholding sick leave costs the greater of three times the dollar value withheld or $250, capped at $4,000 in the aggregate. Other violations — denying use, retaliating, disciplining an employee for taking leave — run $50 per day per employee, also capped at $4,000. On top of that, the Labor Commissioner can order reinstatement, back pay, interest, and attorney's fees. Because § 248.5 already sets its own penalty, most sick leave violations don't separately stack the PAGA default tiers — but a pattern of violations can still support a broader PAGA claim built on other Labor Code violations found in the same audit.

Action Checklist

1. Confirm your current accrual or up-front method actually delivers 40 hours/5 days by the required milestones.
2. Check every city where you have employees for a local ordinance that beats the state minimum.
3. Verify exempt employees are accruing based on a 40-hour (or shorter, if applicable) workweek.
4. Confirm your wage statements or paydate notices disclose available sick leave balances.
5. Audit whether any "use it or lose it" language survives in your handbook — if you accrue rather than front-load, it shouldn't.
6. Re-run your regular-rate calculation method for sick pay against actual payroll data, not just the policy on paper.

If your handbook was written before 2024, assume it's wrong on the number and check it against this list before your next Labor Commissioner audit does it for you. For a full policy and payroll review, start with our wage and hour compliance audit, or talk to us directly about wage and hour exposure or a PAGA notice you've already received. Contact us to get your policy reviewed before it becomes a claim.

Disclaimer

This article is general information about California law. It is not legal advice, and reading it does not create an attorney-client relationship. Employer Guidance Group PC is not your attorney unless and until you have signed a written engagement agreement with the firm.

California employment law changes constantly. The information here may be incomplete, out of date, unverified, or incorrect, and it does not account for your specific facts — and outcomes turn on facts. Do not act, or refrain from acting, on the basis of this article. Consult a licensed attorney about your own situation before making any employment decision.

This communication may constitute attorney advertising. Prior results do not guarantee a similar outcome.