• California Paid Family Leave Law Takes Effect January 1, 2004
  • November 7, 2003 | Author: Helene J. Wasserman
  • Law Firm: Ford & Harrison LLP - Los Angeles Office
  • As we mentioned in a previous alert, last year the California Legislature enacted SB 1661, which has been referred to as the Paid Family Leave law. It takes effect January 1, 2004. Below is a synopsis of the law and its requirements.

    As enacted, the law provides that any employee who is required to take time off of work due to the illness of a seriously ill child, spouse, parent or domestic partner, or to bond with a new child, is entitled to defray the otherwise unpaid nature of that time off by being paid through the State Disability Insurance (SDI) system. The new law differs from the FMLA and the California Family Rights Act (CFRA) in that neither the employee nor the employer need to meet any eligibility requirements. Any employee covered by SDI is covered by this new law. As is the case with SDI, there is a seven calendar day non-payable waiting period before the employee can receive any benefits.

    The law affords employers the right to require employees to use up to two weeks of earned but unused vacation leave prior to the employee receiving the new benefits, provided there are no collectively bargained obligations to the contrary.

    Similarly to unemployment benefits, eligibility for paid family leave is based on the employee's earnings shown in the base period. Wages earned approximately five to seventeen months before beginning the leave are included in the base period.

    The employee is eligible to have a maximum of six weeks of qualifying leave paid within a twelve-month period of time.

    The enactment of this law did not increase the maximum wage caps for SDI. The maximum taxable wage in 2004 is $68,829 and in 2005 will be $79,418. Wages paid in excess of these caps are exempt from both the SDI withholding and the new withholding.

    Because the law is funded by employee contributions (based on payroll deductions), there is an increase in the SDI contribution rate. For 2004 and 2005, there is a mandatory increase of 0.08 percent in the SDI contribution rate. From 2006 forward, it is anticipated that the cost of paid family leave will be incorporated into the base SDI contribution rate. These withholdings will begin on January 1, 2004.

    The Paid Family Leave law in no way expands employee rights under the FMLA or CFRA. It does not extend the length of time an employee can take to incorporate the six weeks of paid leave. It does not make employees that are not eligible for time off under the FMLA or CFRA suddenly eligible. All employees who are eligible under the FMLA and CFRA will be eligible for payment under this new law. Not all employees who are eligible for payment under the new law are automatically eligible for the other protections or length of time off provided under the FMLA or CFRA. All that the law does is defray the unpaid nature of the leave taken by the employee, regardless of FMLA/CFRA eligibility.

    If an employee is taking time off for their own serious health condition and receiving SDI, the employee is not eligible to receive paid family leave under the new law. Similarly, if the employee is receiving unemployment compensation or workers' compensation benefits, he or she is not eligible for payment under this new law.

    The first payments of benefits under this new law will result from leaves commencing on or after July 1, 2004. Benefits will not be paid for leave taken prior to July 1, 2004.