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California Paid Family Leave: Understanding the Basics

In 2002, the state legislature created a "paid family leave" ("PFL") program to be administered by the California Employment Development Department. Because the program imposes certain obligations on employers effective January 1, 2004, and eligible employees may begin receiving benefits on July 1, 2004, California employers cannot wait any longer to familiarize themselves with the program's requirements.  

Employers first should understand the difference between laws granting employees with the right to reinstatement after time off, and a law providing for payment during time off. The federal Family Medical Leave Act ("FMLA") and the California Family Rights Act ("CFRA") generally require employers with 50 or more employees to provide eligible workers unpaid time off to attend the medical needs of themselves or certain family members. These laws guarantee reinstatement to employees except when limited exceptions apply.

In contrast, the paid family leave program applies to all California employers, regardless of the size of their workforce. In addition, as discussed more fully below, PFL does not provide an independent job restoration or reinstatement right for an employee who leaves work for a reason that qualifies under the PFL program, unless the employee is entitled to job protection under the employer's policy or another law.

Under the PFL program, every worker who qualifies for state disability insurance ("SDI") will be eligible to receive up to 55 percent of weekly wages when they take time off work to care for a family member or to bond with a new child. The good news for employers is that, at least for now, PFL benefits will be directly financed by employees. Beginning January 1, 2004, SDI taxes deducted from employee paychecks will be increased to fund the program.

Key aspects of the PFL program are summarized below in question and answer form.

Q:  For what purposes may an employee file a claim for PFL?  

A:  When an employee takes time off to: (1) care for a seriously ill child, spouse, parent or domestic partner; (2) bond with a new child; or (3) bond with a minor child in connection with the adoption or foster care placement of that child.

Q:  How long may an employee receive PFL benefits?

A.  Employees may receive up to six weeks of benefits in a 12-month period.

Q: Can an employee receive PFL benefits for the employee's own illness or injury?

A:  No. However, SDI benefits remain available to eligible employees for their own illnesses or injuries.

Q:  Are self-employed individuals covered by PFL?

A:  Yes, but only if they participate in the SDI Elective Coverage Program.

Q:  Are employees of a small family-owned business covered by PFL?

A:  Yes, if the employees pay into SDI.

Q:  Are government employees eligible for PFL?

A:  Some government employees, including school employees, may be eligible for PFL benefits if they contribute to SDI. In addition, a government employee who earns wages from a secondary private employer may be eligible for PFL benefits.

Q:  Is a medical certificate required?

A:  Yes, whenever an employee files a claim for PFL benefits, the employee must provide a medical certificate that includes the following information: (1) a diagnosis and International Classification of Diseases code; (2) the date of the condition; (3) the probable duration of the condition; (4) the estimated time for which care will be needed; and (5) a statement that the condition warrants care.

Q:  Does the law require employees use their vacation or sick time when collecting PFL benefits?  

A:  Employers have the option of requiring employees to take up to two weeks of earned but unused vacation when on a leave of absence for which they are eligible to receive PFL benefits. The law does not allow employers to require employees to use sick leave. Employers who wish to require their employees to use their accrued vacation time must provide notice to their employees, preferably in an employee handbook or similar document.

Q:  Is there a waiting period for PFL benefits?

A:  Yes, employees must wait seven days before benefits will be paid.

Q:  Can part-time workers receive PFL benefits?

A:  Yes, provided they are otherwise eligible.

Q:  Did PFL increase the maximum wage caps for SDI?

A:  No. The cap remains at $68,829 for 2004, and will be $79,418 in 2005. However, the annual SDI contribution will increase by $55.06 in 2004 and $63.53 in 2005 to fund the PFL program.

Q:  Are PFL benefits reduced when an employee receives sick leave pay from an employer?

A:  Yes. Consistent with the SDI program, sick leave wages are treated as wages and PFL benefits will be reduced dollar-for-dollar. In fact, sick leave pay, and other employer-financed salary continuation programs, may be sufficiently substantial to render the employee ineligible for PFL benefits.

Q:  What is the range of PFL benefits available to eligible employees?

A:  In 2004, weekly benefits range from $50 to $728 (up to 55% of the employee's earnings up to the weekly maximum). To qualify for the minimum weekly amount ($50), an individual must have earned at least $300 in a calendar quarter during the "base period" (approximately 15 to 17 months preceding the filing of a claim for PFL benefits). To qualify for the maximum weekly benefit ($728), the employee must have earned at least $17,183.65 in a calendar quarter during the "base period." In 2005, the maximum weekly benefit will increase to $840 for employees who earn at least $19,830.92 in a calendar quarter of the "base period."

Q:  How can an employee file a claim?

A.  Employees may obtain claim forms from the EDD beginning approximately April 2004. However, benefits will not be available until July 1, 2004. The forms must be mailed and completed no earlier than nine days and no later than 49 days after the first day of leave. Employers are not required to provide the forms to workers.

Q.  What obligations do employers have under the PFL program?

A. Effective January 1, 2004, employers must provide all new employees with an informational brochure on PFL. The brochure is available from the EDD and may be downloaded from the EDD's website at www.edd.ca.gov. In addition, employers must provide the informational brochure to all employees who leave work on or after July 1, 2004, for a PFL-eligible reason. Finally, employers must post a new poster describing the PFL program, which also is available on the EDD's website or from private organizations such as the California Chamber of Commerce.

Q.  Are employers required to provide employees with time off if the employees are eligible for PFL benefits?

A.  No. Unlike the FMLA and the CFRA, the PFL program does not require any employer to provide time off to employees eligible for PFL benefits. It merely provides for wage replacement benefits for employees off work for reasons covered by the PFL program. Of course, an employee may be eligible for a leave of absence under other laws, such as FMLA and CFRA, or the employer's policies regarding sick leave or paid time off, for example.

Q.  Are employees who take time off for reasons covered by the PFL program guaranteed a job when they return to work?

A.  No. The PFL program does not require employers to reinstate employees at the end of any PFL-eligible leave, unless the employees are entitled to reinstatement because of another law. Therefore, employers should be cautious when considering reinstatement issues. First, the PFL program does not eliminate the reinstatement requirements mandated by the FMLA and the CFRA (and California's Pregnancy Disability Leave law) for employers subject to those laws. In addition, some commentators have suggested employers who refuse to reinstate employees returning from a PFL leave may face a wrongful termination and/or retaliation claim. For these reasons, it is essential to consult with competent employment counsel about return-to-work issues before terminating, transferring or otherwise changing the status of an employee who is receiving PFL benefits.

Because the EDD's implementing regulations regarding PFL currently are on hold pursuant to the Governor's November 17, 2003, Executive Order freezing all regulatory action for 180 days, it may be several months before we are provided with any additional information regarding the PFL program. In the meantime, employers should carefully review information regarding PFL available on the EDD's website and consult with counsel if they have any questions or concerns regarding the program.  

Note: This article appears in the February 4, 2004 edition of the Daily Recorder.

Related Links
California Employment Development Department