TECHNICAL GLOSSARY

What Is Accrued Leave?

The term "accrued leave" refers to the total amount of paid time off an employee has earned by way of paid time off, but have not yet taken time off from the work place. The employer’s leave policy establishes the amount and method in which an employee may accrue time off, including but not limited to, holidays, personal days, sick leave, and vacation days.
Accrued leave provides employees the tremendous benefit of taking time away from work while still receiving a paycheck, in turn supporting a work/life balance and at the same time helping employers maintain predictable staffing and payroll expenses.

How Accrued Leave Works

Accrued leave is governed by company policy, employment agreements, and applicable state and federal laws. While policies vary, most accrual systems follow similar principles.
Accrual Method and Rate
Employers often determine how to calculate the means by which employees will accrue leave. Employers can use the following methods of calculating leave accrual:

• By hours worked; or
• By each pay period (e.g., every two weeks)

A specific amount of PTO (paid time off) accrued per pay period is documented in the employee’s written PTO policy (or in another form) and should be provided to each employee consistently.
Carryover Rules
Some employers will let employees roll over any unused accrued leave from one year to the next and some employers have caps on how far an employee may carry over accrued leave into the following year. Certain employers have an “use-it-or-lose-it” policy that requires employees to utilize their accrued leave due to the limitation of state law.
Accrued Leave at Termination
If you have accrued annual leave when employment terminates could be governed by state law or employer policy. In most states that allow for an employer to pay out any annual leave unused at the time of termination, although not all states will require sick leave to be paid at termination.

Accrued Sick Leave in California

In California, the Healthy Workplaces, Healthy Families Act (2014) is the law governing accrued sick leave. This act sets a minimum paid sick leave standard that all employers must follow for their employees.
Eligibility:
This law covers employees who work in California for the same employer at least 30 days within the previous year. This includes full-time, part-time, temporary, and seasonal employees.

• Employees accrue at least one hour of paid sick leave for every 30 hours worked
• Employers may cap accrual at 48 hours or six days
• Accrual pauses once the cap is reached until sick time is used

Use and Carryover

After completing their first 90 days of employment, employees can start taking sick leave that has accrued since their hire date. Sick leave can normally be accrued indefinitely from one year to the next; however, employers have the option to impose limitations on annual use of sick leave (e.g., either a maximum number of hours or a maximum number of days).
No Payout at Separation
Paid time off (PTO) as well as unused Holidays would not become part of your employees' pay at the time of termination of employment. However, if an employee is rehire within a year, their unused sick leave would be reinstated to them.
Employer Compliance Requirements

The following are the expectations of employers in California:

• Employers are to record sick leave accumulation and use for at least three years.
• Employers must provide an employee’s sick leave balance through either their pay statement or a separate notice.
• Employers are required to post information about employees’ rights in the workplace.