California Enacts (Retroactive) 2021 Emergency Supplemental Paid Sick Leave Law

Littler

On March 19, 2021, California Governor Gavin Newsom signed Senate Bill (SB) 95, which creates new Labor Code section 248.2 and mandates that employers provide employees with supplemental paid sick leave (SPSL) for various COVID-related absences in addition to paid time off benefits employees receive by law or policy, e.g., non-COVID statutory paid sick leave or vacation. Additionally, SB 95 creates new Labor Code section 248.3, which mandates that providers of in-home supportive and/or waiver personal care services receive SPSL. The new statutes will apply retroactively to January 1, 2021, and are effective through September 30, 2021, though technically they do not begin until March 29, 2021 – 10 days after the governor signed SB 95. 

To employers that had to comply with California’s 2020 food sector and non-food-sector SPSL laws, the statutes will look familiar; coverage, and leave entitlements, however, are broader.  As a result, employers will not be able to simply restart in 2021 policies and practices they had in place during 2020 to comply with the then-applicable statewide mandate, though it may be possible to offset this new SPSL obligation with paid leave already provided in 2021. Because the new statutes do not preempt local ordinances, employers may have compliance obligations under the state law and possibly up to 11 similar – but not identical – local ordinances in Long Beach, Los Angeles (City and County), Oakland, Sacramento (City and County), San Jose, San Francisco, San Mateo County, Santa Rosa, and Sonoma County.

Below, we focus on provisions of the 2021 law (Labor Code section 248.2) that apply to employers generally, and do not discuss provisions applicable to either firefighters (also covered by Labor Code section 248.2) or providers of in-home supportive and/or waiver personal care services (Labor Code section 248.3).

Covered Employers, Employees and Family Members: New Labor Code section 248.2 will apply to employers with 26 or more employees and to a number of public entities that were not covered under the 2020 version of the law.1 The result is that far more employers are covered than those covered by the 2020 COVID-19 supplemental paid sick leave law (Labor Code section 248.1), which was limited to employers and hiring entities with 500 or more U.S. employees. The 2021 law does not apply to employers with 25 or fewer employees.

Section 248.2 covers all employees. Additionally, it allows employees to use leave to care for family members – something the now-defunct 2020 law did not. Family member is defined to include a child, grandchild, grandparent, parent, sibling, or spouse.

Amount of Leave Employees Receive and Can Use: The process for determining the amount of leave employees receive under the 2021 law is the same as that for the 2020 law. The leave amount also represents how much leave employees can use through September 30, 2021. More specifically:

  • Full-Time Employees: Employees receive 80 hours if either their employer considers them to work full time or, on average, they worked or were scheduled to work at least 40 hours per week in the two weeks preceding the date they took leave.
  • Non-Full-Time Employees: Employees with a normal weekly schedule receive the total number of hours they are normally scheduled to work over two weeks. Employees who work a variable number of hours, whose tenure is six months or more, receive 14 times the average number of hours they worked each day in the six months preceding their leave date. If they worked only between 15 days and six months, use this same calculation but over their entire period of employment. Employees who worked 14 days or fewer receive leave hours equal to their total number of hours worked.

The Offset: As noted above, the amount of paid leave employees already received in 2021 before the law takes effect might qualify as an offset that wholly or partially satisfies an employer’s SPSL obligations. Under the law, if an employer pays an employee another benefit for leave taken on or after January 1, 2021 that is payable for the law’s covered reasons and compensates employees in an amount equal to or greater than the amount of pay the law requires (we discuss pay further below), an employer may count those hours towards the number of hours of SPSL it must provide an employee under the new law. Note, however, this must be a supplemental benefit, so employers cannot count paid sick leave employees used under California's Healthy Workplaces, Healthy Families Act, the pre-COVID paid sick and safe time law, or 2020 SPSL. But employers can use as an offset paid leave they provided per a federal or local law in effect, or that became effective on or after, January 1, 2021, if that leave was provided to an employee for any of the California law’s covered reasons.

What about qualifying supplemental benefits paid in 2021, but before the law took effect that were compensated at a pay rate lower than what the California law requires? An employer must true-up (i.e., increase retroactively) the pay to what California’s law would require (had it been in effect when the employee took leave in 2021), such that the leave qualifies for the offset. If a payment is made due to an employee’s oral or written true-up request, payment must be made on or before the payday for the next full pay period after the request.

Another unusual aspect is the law’s retroactivity provision. If an employee took leave for a covered reason between January 1, 2021 and the effective date of the statute, an employer could be required to apply the provisions of the law. This could, as discussed above, involve providing a payment for unpaid time off if an employee makes a request.

Reasons Employees Can Use, and Duration of, Leave: Employees who are unable to work or telework – another difference between the 2020 and 2021 laws – can use SPSL for the following reasons, which are more numerous than reasons employees could use California SPSL in 2020:

  • Employee is subject to a quarantine or isolation period related to COVID-19 as defined by federal, state, or local orders or guidelines.
  • Employee is advised by a health care provider to self-quarantine due to concerns related to COVID-19.
  • Employee is attending an appointment to receive a COVID-19 vaccine.
  • Employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework.
  • Employee is experiencing COVID-19 symptoms and seeking a medical diagnosis.
  • Employee is caring for a family member who is subject to a quarantine or isolation order or guideline or who has been advised to self-quarantine by a health care provider due to concerns related to COVID-19.
  • Employee is caring for a child whose school or place of care is closed or otherwise unavailable on the premises for reasons related to COVID-19.

The requirement to provide SPSL remains in effect through September 30, 2021. If an employee is using SPSL on September 30, however, and the absence would continue without interruption past September 30, the employee gets to continue using available SPSL for that absence.

Importantly, the 2021 law addresses how it interacts with Cal-OSHA requirements. Specifically, if Cal-OSHA COVID-19 Emergency Temporary Standards (ETS) or Cal-OSHA Aerosol Transmissible Diseases Standard (ATDS) require an employer to maintain an employee’s earnings when an employee is excluded from the workplace due to COVID-19 exposure, employers may require an employee to first exhaust SPSL.

Employee Obligations when Using Leave: Employees alone determine how many SPSL hours they need to use. Similarly, with the exception of the ETS or ATDS, employees get to choose whether they will use SPSL or some other paid or unpaid leave benefit their employer provides, or the law requires, to cover an absence.

Employees can use 2021 SPSL immediately when the law takes effect if they make an oral or written request to use leave. Like its 2020 predecessor, the 2021 SPSL law does not contain language allowing employers to ask employees to provide verification or documentation to substantiate their need for leave. Assuming the state labor department does not change its 2020 position, employers might only be able to ask for reasonable supporting verification or documentation if they have evidence that an employee is abusing their entitlement to leave.

Rate of Pay When Employees Use Leave: The 2021 SPSL pay rate calculation differs from the 2020 calculation, which required employers to pay SPSL at the employee’s regular rate for the last pay period, the state minimum wage, or the local minimum wage, whichever rate was highest. Under the 2021 law, for non-exempt employees, generally, there are two calculation formulas. Employers must pay the highest pay rate determined by either calculation. The first pay rate calculation uses the employee’s regular rate of pay, regardless of whether an employee works overtime in the workweek they use leave. The second calculation requires the employer to divide the employee’s total wages – excluding overtime premiums – by their total hours worked in the full pay periods of the prior 90 days of employment. But, if the applicable state or local minimum wage is a greater than what either calculation produces, employers use that amount for the SPSL rate.

This “highest of” approach differs from the state’s pre-COVID paid sick and safe time law, which, although it uses the same calculation formulas, uses an “either/or” approach and does not require the rate to be at least the applicable state or local minimum wage.

For exempt employers, employers calculate SPSL in the same manner they calculate wages for other forms of paid leave. Although the 2021 law does not define “exempt,” an “exempt” definition is included in the state’s pre-COVID paid sick and safe time law. Moreover, under that law, the state labor department, in an opinion letter, said employees are only “exempt” if they are executive, administrative, or professional employees.

Whether “exempt” or otherwise, like the 2020 law, employers need not pay more than $511 for each day an employee uses SPSL, or more than $5,110 overall. A provision unique to the 2021 law, however, allows employees who max out because of the pay caps to use other available paid leave they have (“top up”) so they are fully compensated during the absence.

Notice, Posting & Paystub Requirements: By March 26, 2021 (within seven days of the date of enactment), the state labor department must make a model poster publicly available, which employers must conspicuously display in their workplaces. If employees do not frequent a workplace, employers can distribute the poster electronically, e.g., by email.

Like it did in 2020, California requires information concerning SPSL be available on paystubs or other written notices employees receive on payday. Also, like 2020 standards, there is a provision that says the paystub requirement is not enforceable until the next full pay period following the date that the law takes effect (March 29, 2021).

The 2021 law incorporates into the statute guidance the state labor department issued concerning the 2020 paystub requirement. Specifically, the 2021 law expressly requires that SPSL and pre-COVID statutory paid sick leave be displayed separately. Additionally, for part-time, variable hour employees (part-time employees who don’t have a regularly set schedule), the 2021 law says employers may meet their paystub obligations by performing an initial calculation of SPSL available and indicating “(variable)” next to that calculation, which employers will need to update when employees request to use SPSL. A final SPSL-related paystub requirement concerns true-up payments for leave employees used before the law took effect; specifically, the retroactive payment must be on the paystub for the pay period during which payment is made.

Next Steps: The law does not take effect immediately like some COVID paid leave laws in California have.  With few days remaining before the law becomes fully operative, however, employers do not have a lot of time to examine their policies, practices, and payroll records to determine how they will comply, and to what extent they must. The tight deadline and mandatory pay obligations might accelerate discussions employers with 499 or fewer U.S. employees are having about whether they will voluntarily offer similar paid leave and claim federal tax credits contained in the American Rescue Plan Act of 2021. Whether or not tax credits are available, or will be claimed, employers should consult knowledgeable counsel to discuss the best way forward for their business.

 

Footnote

​1 The 2020 version of the law applied only to public entities to the extent they employed health care providers or emergency responders and had excluded those employees from coverage under the FFCRA. Under the 2021 version of the law, there is no exclusion for public entities and so all public entities who employ 26 or more employees are covered by the law.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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