Episode 114: New Supplemental Leave in Effect Now

Welcome to the Workplace, a podcast by Cal Chamber. I'm Erica Frank, Cal Chambers general counsel and executive vice president. And joining me on the podcast today are some familiar guests. First, we have Ashley Hoffman, who handles labor and employment issues on Cal Chambers advocacy team, and Ben Ibik, also a labor and employment law expert and a partner with the Fisher Phillips law firm in Sacramento. Welcome, both of you.

Thank you, Erica. Nice to be here.

Happy to be here.

It is such a pleasure to have you both here today to talk about what is on the top of mind for most employers in California. Governor Newsom recently signed into law a new mandate for employers that involves providing sick leave for COVID 19 related issues, a matter that is on the top of the minds of most employers as that new requirement takes effect on March 29. So by the time this is posted, it will be in effect. So, Ashley, Ben, maybe we can provide some clarification and some new information to our business community about this new law. So, Ashley and Ben, what does the new law require?

So, Erica, happy to go over the basics. I would say it seems like every three or four weeks we're back with another immediate mandate of something employers have to do. So unfortunately, this is another one that was jammed through and goes into effect right away. The good news here, it's a supplemental paid sick leave mandate. I think for the most part, many employers are already familiar with complying with some of these requirements, either the Federal FFCRA or AB 1867 from last year or local ordinances. So I think most employers are not starting at ground zero when it comes to this new requirement. But it is a new requirement, a new mandate with its own specific provisions. And as you said, it goes into effect March 29. So not a lot of time to come into compliance. Just an overview of the basics and there's a lot more detail for all of these. But generally, this new requirement applies to all public and private employers that have more than 25 employees. So that's quite different from AB 1867 last year, which only applied to employers with 500 or more employees. It's up to 80 hours of supplemental paid sick leave. As you know, most of these paid sick leave ordinances or laws, it does have an expanded list of qualifying reasons. So it has many of the same reasons as AB 1867, including caring for yourself when you're quarantined. But it has some new qualifying reasons specifically related to vaccines, when an employee is taking time to obtain a vaccine, or if they are suffering complications from the vaccine. So there's an Expanded list of about seven different qualifying reasons why employees can take this leave. What's really unique is it has this retroactive provision going back to January 1st, and it says if an employee took time in January, February or March that was either unpaid or paid at a lower rate for the same qualifying reasons as this new law requires that that employee can come and ask you as the employer to retroactively either pay them for that time or true up that time so that it was paid at the appropriate rate required by this new law. So that's a real tricky element that I think is going to create some logistical challenge for many employers. This expires at the end of September. So this is on the books now. Retroactive to January 1st goes through the end of September. Although my caveat there is the legislature could extend it. We've seen that occur many times. There is a required notice, just like the normal paid sick leave. Employers are required to post a notice or provide it electronically if employees are not frequently frequenting the workplace. And that poster is available on dir's website. And then there's some new pay stub requirements reflecting this time on the pay stub. And there are some specific things that they have clarified in this new legislation which I think will be helpful to employers in complying with those. So there's a lot of detail on each of those elements, but that's sort of an overview of the basic provisions of this law.

Yep, you did an excellent job then really summarizing that quickly. So you mentioned, Ben, that this is different from the priority legislation, which was AB 1867 that applied to employers with 500 or more employees. This, of course, applies to employers with 25 or more. How did we get to this point? You know, at the end of December, we all kind of took a deep breath and sigh of relief that there wasn't another California supplement leave. How did we get here and why is it now that we're here in March talking about this?

Yeah, Erica, so as you, as you mentioned, you know, AB 1867 expired at the end of December. That expiration date was tied to the federal FFCRA mandate for smaller employers with less than 500 employees, which also expired at the end of the year. And there was kind of a rush around Christmas when Congress was considering a new package related to COVID 19. Would they extend it? Would they not? Ultimately, what the federal government did was made it follow so employers could voluntarily continue to provide the leave and obtain tax credits if they did so. But it was not mandatory, which meant that AB 1867 also expired. And so, you know, not a lot of clarity, I think why it took until March, you know, to get some interest in the legislature. But you know, it was a push for an early budget action item on this, even though, you know, you did have the Cal OSHA right. Come in at the end of November. And Mandy, paid leave, full paid leave for anyone with COVID or who has maybe been exposed at the workplace. But you know, that really the expiration of the other two leaves is why there was a push for this. So the original version of SB95 was quite a bit broader. For example, you could take time to care for anyone. It didn't have to just be a family member. It applied to businesses of all sizes, not just 25 or more employees and you know, a couple other Items. And so us and a group of about 110 or more organizations, you know, issued our letter of concerns, especially for how it would impact small businesses that are having to contend with the Cal OSHA regulation, have now have to contend with CFR starting this year and other obligations. So we were able to thankfully work with the members of legislature to be able to kind of come together with some amendments as well, especially that exemption for small businesses.

Oh, that's fantastic. Ashley, you mentioned the emergency temporary standard that Cal OSHA issued last year that went into effect on November 30th of 2019. Are there any provisions in the new sick leave bill that correlate to the exclusion pay requirement under the Cal OSHA emergency temporary standards?

Yeah. So one of our big concerns with this new bill was how does this leave kind of, you know, stack on top of others? Right. That's a concern a lot of especially small employers have is, you know, can some of these leaves run concurrently? Right. How much time could I end up maybe having to give it off to an employee? And what does that look like cost wise for finding a replacement? And so something, you know, that was agreed to was to have a provision in there saying that if an employee would be entitled to exclusion pay under the ets, the employer could mandate that they first exhaust this leave. This leave has a cap of $511 a day, $5111 in aggregate, whereas ETS is full paid benefits, no cap. And so for some employers that have been really struggling to be able to afford that ETS leave, this could provide a little bit of relief. Having to have the employee first exhaust this before they would be entitled to that UTS leave.

That's fantastic. So Ben, you had mentioned that the law now Takes effect actually going back in time from January 1st through the end of September. What should employers be doing to prepare for this mandate that does go into effect officially on March 29, especially with regards to the retroactivity provision?

Yeah, there are a few things I would immediately implement. Number one is providing the notice or the poster to employees. So just like regular paid sick leave, there's a posting requirement. DIR has a copy available on their website that has to be posted in the workplace.

SB95 does say if employees are not frequenting the workplace, such as they're working remotely, you can send them it to them electronically. So that would be the first, you know, step I would say is get that notice done and complete. I do think, you know, most of our clients are preparing a formal policy, a written policy around this new paid sick leave requirement as part of their employment manual and other policies. So I would say get started on working on that, implementing that. Really, this is going to go into effect and you could have employees taking leave right away. So you really want to work closely with your payroll folks, whether that be internal or an outside payroll company, to make sure they're prepared, that they're able to reflect this on the pay stubs and everything else. And then with respect to that retroactive payment, those requests could start coming in as soon as Monday, so the 29th. So I really think employers need to have some policy or procedure in place to document those requests coming in. They can be oral or written requests, but there should be some procedure to document those requests. There should be one person those requests are made to, and then there needs to be a procedure. And this was where it kind of gets complicated. You know, an employee who took leave for some reason that was unpaid the previous three months now may be able to ask for paid sick time for that pay. But some employers may not have done a good job of tracking the reasons if it wasn't paid time, if an employee was just out. So there may be some difficulty in going back, trying to reconstruct and find out why exactly the employee was previously out and whether that meets a qualifying reason under this new law for the retroactive payment. So I think employers need to spend some time coming up with a real process or procedure on how they're going to evaluate and respond to these retroactive payment requests. When a request comes in, the retroactive payment has to be made by the payday for the next full payroll period. So there's a little bit of time to figure this out, but it's not a lot of time. You have to move quickly. So I think coming up with a process or a plan in place in advance of how you're going to respond to these retroactive requests would be very helpful.

Thank you. That's an excellent starting point, a great, great list of points that employers can take away and start implementing today. Ashley, I know that you work with many Cal Chamber members who have been asking lots of questions about how the COVID 19 supplemental sick leave really works or plays out in reality. What are some of the common questions that you've been receiving?

Sure. So one of them involves, like the federal tax credits, the American rescue plan that Congress recently pass. Some confusion in there, you know, about how those tax credits would work and could they be used for the leave. Under this new California law, those tax credits are capped for certain qualifying reasons for the leave at about $200 a day, whereas California requires 500 a day. Also, they are resetting the clock that, the 80 hour bucket of leave. So if an employee took leave in 2020, got tax credits for that, you can again get tax credits for that same employee as long as the leave they take under the California law occurs after April 1. So it won't cover, you know, any retroactive payments. So we've had a lot of questions on that. There was a lot of kind of confusion even inside the legislature about, you know, how, how that process would unfold and what that would mean for this law. Some other questions, you know, are, can a former employee come back now and request retroactive payments? The law is not clear on that. What do you do if maybe the employee took some unpaid leave but, you know, got payment through state disability or unemployment, you know, what do you owe them now for that? Or if they took paid sick leave. Right. And versus normal paid sick leave. Do you have to credit something back? It's, you know, really not clear in the law how you would address a lot of those kind of complicated questions, especially surrounding retroactivity.

And Ashley, for a more detailed discussion about the nuances of this new sick leave law, as well as answers to most frequently asked questions, is there any place that employers can go to today to take a peek at some more guidance on how to implement this new law.

Yeah. The labor commissioner did a few days ago issue a set of FAQs that will help address some of the most common questions. Some of the questions I mentioned aren't addressed in there. Definitely recommend seeking legal counsel on some of the trickier questions that are maybe not as clear in the FAQs or in the law itself.

Great. Thank you. Well, Ashley and Ben, thank you so much for being here on the podcast to talk about a very recent and relevant development as it relates to COVID 19 and the workplace. So we really appreciate you being here today on the podcast to talk about the supplemental Covid sick Leave law in California and getting the business community prepared in complying with the new requirements. So thank you.

Thank you for having me.

Thank you, and thank you for joining us on the Workplace. Please comment, share and subscribe to Cal Chambers podcast by visiting calchamber.com.