New California Law Should Spur Employers to Review Leave Policies

News Updates

Now that a bill expanding California’s Paid Family Leave program has been enacted, employers should review their leave policies and be prepared for many questions from workers, according to employment attorneys.

In September Gov. Jerry Brown signed Senate Bill (S.B.) 770, which will enable workers to receive disability compensation to care for seriously ill grandparents, grandchildren, siblings or parents-in-law. The state’s 2002 Paid Family Leave law allowed workers to receive these benefits to bond with a new child or to care for an extremely ill child, parent, spouse or domestic partner.

The new law doesn’t have a direct financial impact on employers because it’s completely funded by employees through mandatory payroll deductions. Nevertheless, it has implications for businesses. Attorneys say that S.B. 770 could be a source of confusion because it doesn’t actually provide a new right to a leave of absence; rather, it offers partial income replacement for eligible workers who are able to take time off to care for a grandparent, grandchild, sibling or parent-in-law.

The upshot: Companies need to decide whether they’re going to grant time off for these new categories and figure out how to communicate that decision to employees.

Tips for Employers

Like the initial Paid Family Leave law, the new legislation, which goes into effect on July 1, 2014, provides up to six weeks of disability insurance benefits.

Attorneys believe that the state’s Paid Family Leave program is poorly named. James McDonald, an attorney at Fisher & Phillips in Irvine, Calif., explained that it gives employees a right to be paid through the California Employment Development Department (EDD) for time off, but only for specified reasons. Employees need to understand that the program doesn’t provide a right to job-protected leave, said McDonald.

Companies will need to clearly explain this distinction to workers who inquire about S.B. 770.

“Employees are likely to be confused because they think it gives them the right to take time off, and it doesn’t,” said San Francisco lawyer Judith Droz Keyes of Davis Wright Tremaine.

Although the federal Family and Medical Leave Act (FMLA) and the California Family Rights Act (CFRA) give workers the right to job-protected leave for certain reasons, these two laws don’t apply to the categories specified in S.B. 770. Under the FMLA and CFRA, eligible workers can take up to 12 weeks of unpaid leave to care for a new child; for an extremely ill parent, spouse or child; or for their own serious medical condition. Both laws apply to companies with 50 or more employees within a 75-mile radius.

With all of this in mind, companies need to decide whether to grant time off for the reasons provided in S.B. 770, said Jamerson Allen, a San Francisco attorney at Jackson Lewis. When deciding what to do, employers should weigh the “employee-relations impact” of granting time off for these new categories against the potential disruption to the workplace, he added.

On the one hand, providing time off for these purposes might reduce turnover, improve attendance rates and boost productivity, Allen said, noting that if employees have a positive view of their organization, they’re less likely to look for a new job.

On the other hand, companies also have to consider their own business needs, Allen pointed out. California employers must comply with a wide variety of mandatory leaves of absence, including those for jury duty, organ donation, and alcohol or drug rehabilitation. So they potentially could face situations where many employees are simultaneously out on leave.

If a business decides not to provide leave for these new categories, then the HR department must be prepared to clearly explain this to workers, McDonald advised. If many employees are asking questions or requesting leaves for these purposes, it might make sense for HR to send a companywide educational notice about the policy, he said.

Meanwhile, employers also need to address other issues. If companies opt to grant personal leave for the new categories, they need to decide if they will continue health insurance during the leave, said Michelle Brauer Abidoye, a Los Angeles attorney at Ford Harrison.

In addition, they need to comply with updated notice and posting requirements by July 2014, Abidoye added. Under the state program, employers must post notices and provide brochures about the Paid Family Leave benefit. EDD spokesman Dan Stephens said the agency is identifying actions required to comply with the new law.

Although the California Chamber of Commerce objects to many of the laws coming out of Sacramento, the group took no position on S.B. 770. The chamber explained its reasoning in an online post, noting that “any leave taken to care for the serious condition of one of these new family members would not be required by law, but rather would have to be approved by the employer.”

The group added: “CalChamber believes this is the right approach for any leaves of absences from work. Instead of mandating new leaves of absences through statute, any leave of absence from work should provide the employer with the discretion to balance the employee’s need for a leave of absence with the existing demands of the workplace.”

Broader Definition of Family

California’s Paid Family Leave program aims to help employees juggle the sometimes-conflicting demands of work and family. The state needed to expand the program to reflect the realities of family life, according to advocates of the new law.

The measure will help thousands of workers care for their loved ones without having to risk their financial security, explained the Legal Aid Society-Employment Law Center, which sponsored the S.B. 770.

“At Legal Aid Society-Employment Law Center, we regularly hear from workers who are the only relatives available to care for ailing siblings, grandparents, grandchildren and parents-in-law,” said Sharon Terman, the organization’s senior staff attorney. “These workers pay into the Paid Family Leave program but, until now, have been unable to access the benefits because the law’s definition of family was far too narrow. The new law recognizes the diversity of families in our state and will more accurately reflect California workers’ caregiving obligations.”

A 2007 report on the state’s paid-family-leave program found that about 10 percent of denied claims were filed for those who didn’t meet the definition of family member. Among the excluded categories were siblings, grandparents, mothers-in-law and fathers-in-law.

“The large number of rejected care claims filed by those who need to care for siblings and grandparents raises an important question: should the paid family leave program be expanded to cover these family members as well?” stated the 2007 report from the California Senate Office of Research.

S.B. 770 author state Sen. Hannah-Beth Jackson, D-Santa Barbara, decided to advance the cause. She had strong support from the California Work & Family Coalition, a project of Next Generation. The coalition is an alliance of nonprofits, labor unions and community groups advocating for family-friendly workplace policies. A key member of the coalition is S.B. 770 sponsor the Legal Aid Society-Employment Law Center.

The coalition also pushed for California’s 2002 law, which was the first paid-family-leave law in the United States. And it continues to advocate policies that ensure economic security for all families in the state, coalition Director Jenya Cassidy said.

“This is especially important in California, where we have the second highest percentage of multigenerational households in the country,” Cassidy said. “Also, nearly half of Californians are single and their closest relative may be a sibling or another extended relative.”

She emphasized that the Golden State has an especially high cost of living, and workers shouldn’t have to choose “between caring for their loved one in a health emergency and their paycheck.”

The coalition is keenly aware of the real-life struggles of Californians, and this motivated the organization to work on the bill, Cassidy said. In the coalition, advocates see many siblings and other family members who are the primary caregivers of people with cancer, Alzheimer’s and other diseases.

“Many of our legal groups host help lines and hear daily from siblings who want to take time off from work to care for a sibling or grandparent and money is an issue; meanwhile, they pay into paid family leave and can’t access the funds because they care for a grandparent, in-law or sibling,” Cassidy noted. “We applaud the governor and the Legislature for acknowledging the diversity of families and how important these workplace supports are.”

Advocates also say that research shows the need for an expanded Paid Family Leave program. One study revealed that nearly 40 percent of caregivers of Alzheimer’s patients weren’t covered by the definition of family in California’s Paid Family Leave law, said Terman, citing The Shriver Report: A Woman’s Nation Takes On Alzheimer’s. And about 20 percent of the main caregivers of the chronically disabled are neither the spouse nor the child of the person who is receiving care, according to a report from Georgetown Law’s Workplace Flexibility 2010 and the Berkeley Center on Health, Economic & Family Security.

One California resident welcoming the new law is David Holland, whose sister needs a lung transplant. In order to care for her, he will need time off from his job as a computer technician at a Mendocino County winery. He said he was shocked to learn that the definition of family in the original paid-leave law didn’t include siblings.

“I’m really happy they’ve done it,” said Holland, referring to the passage of S.B. 770.

Experiences with the 2002 Law

Research has shown that the Paid Family Leave program hasn’t been an issue for employers, but it has been extremely beneficial for employees who have used it, according to Cassidy.

She cited research by economist Eileen Appelbaum, of the Center for Economic and Policy Research, and Ruth Milkman, a sociology professor at UCLA and City University of New York. In a high-profile report, the researchers examined surveys conducted in 2009 and 2010 about experiences with the California Paid Family Leave law, which took effect in 2004.

Of 253 employers, the vast majority said the law had either a “positive effect” or “no noticeable effect” on productivity, profitability, turnover and morale.

Significantly, the survey found that the 500 employees it polled reaped many benefits from the law. For instance, the Paid Family Leave program substantially boosted the level of wage replacement for people in “low-quality jobs” who took leave, according to the researchers. Of the respondents who held these types of jobs, 84 percent who used the program received at least half of their usual pay during their leave, compared with 31 percent of those who didn’t rely on the program.

Despite the many benefits, the research did uncover areas of concern. For instance, many respondents worried that taking family leave would have “negative consequences” for them at work.

Looking Ahead

Keyes said it’s only a matter of time before the California Family Rights Act is expanded to include the categories covered in S.B. 770.

She noted that a measure introduced in 2012, Assembly Bill 2039, would have broadened the California law to cover those categories, but it wasn’t passed. The California Chamber of Commerce opposed A.B. 2039, contending that it would have placed another huge burden on employers.

However, Keyes expects that the passage of S.B. 770 will spur efforts to expand the California law. And Terman strongly supports that idea.

“Broadening the definition of family within the California Family Rights Act is a critical next step to ensuring that workers in California can care for their families without jeopardizing their long-term economic well-being,” Terman said. “No one should have to choose between keeping their job and tending to a sister who is dying of cancer. It hurts our economy and the stability of our communities if workers can be fired for taking time to care for their loved ones.”

Toni Vranjes is a freelance business writer in San Pedro, Calif.

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