Paid Family Leave Creates New Benefits For Employees and Increased Legal Concerns for California Employers
April 1, 2004
On January 1, 2004, most California employees saw an increase of 8% in their state disability withholdings. This additional withholding is being used to fund California's new Paid Family Leave program, also known as Family Temporary Disability. Beginning on July 1, 2004, nearly every California employer may see an increase in the number of employees taking leave due to a "serious health condition" of a family member or because of the birth, adoption or foster placement of a child. The Paid Family Leave program includes employers who may not be affected by the Family Medical Leave Act or the California Family Rights Act.
In 2002, California became the first state to pass a law providing paid leave for employees to take time off to care for sick family members or to bond with a new baby. Employees can start utilizing this program beginning on July 1, 2004.
If employers do not fully understand this program, its implications and relationship with other leave laws, employers may find themselves looking at a new risks in the areas of retaliation, wrongful termination and invasion of privacy claims. The following provides a brief summary of the program and issues employers may need to note.
Benefits
The Paid Family Leave program is a component of the State Disability Fund and is 100% employee funded. The program is available to any employee who has earned at least $300.00 in the base period (the five to 17 months before the employee takes leave) and is unable to work due to a family member's serious health condition or to allow time to bond with a new baby. While on leave, employees will receive approximately 55% of their base income. This includes part and full-time employees. Each eligible employee may receive benefits for up to six weeks per calendar year. The weekly amount is capped at $728.00 per week in 2004 and $840.00 per week in 2005.
Application Procedure
To receive benefits the employee must complete an application with the Employment Development Department (EDD) which states there is no other family member available to provide care. This requirement, of course, would not apply to baby bonding. The employee then has a one week mandatory waiting period before receiving benefits. This has the potential of extending the leave time to seven weeks. The employee is also required to have a medical certificate completed by the ill family member's physician. The medical certificate must include the diagnosis, the International Classification of Disease Code, start date of the disability, probable duration and an estimated time care is needed. It must also state that the serious health condition warrants participation of the employee to provide care. When the employee is taking leave for purposes of bonding during the first year following the birth, adoption or foster care placement of a child, a separate certification is required.
Employees who are already receiving state disability, unemployment insurance or worker's compensation are not eligible for Paid Family Leave. However, if a woman has been on state disability due to pregnancy at the end of the disability period she is automatically eligible for six weeks of Paid Family Leave, without an additional one week waiting period. The EDD will send every woman on pregnancy disability notice of this new benefit.
Scope of Leave
Unlike other leave laws, Paid Family Leave is not restricted to employees of companies with over 50 employees. It also does not require that the employee have one year of service with the company, in fact an employee could theoretically start one day and take leave the very next day. Employers may require that the employee take up to two weeks accrued vacation, however employers cannot force employees to use sick leave. Paid Family Leave may be used all at once or intermittently.
Medical Privacy
The introduction of Paid Family Leave is accompanied by several legal concerns for California employers. One possible legal complication that may arise are accusations of violations of medical privacy. Employers will have access to a wealth of medical information about an employee or an employee's family member as a result of the application process. It is important for all employers to keep any medical information received about an employee or the employee's family member in files that are completely separate from an employee's personnel file. All medical files should be kept in locked/secure areas. Access to these medical files should be strictly limited to people within the organization with an absolute need to know. Medical information about the employee or his or her family members should not be disclosed to co-workers, including supervisors, without the employee's consent. Finally and perhaps most importantly, health information gained from leave applications should not be considered for decisions involving advancement, retention or termination.
Effect on Discipline/Termination
Another area in which to proceed with caution is in disciplining or terminating an employee who has used Paid Family Leave. Paid Family Leave is an income protection program but does not protect an employee's position. Employers should be aware that while Paid Family Leave does not protect an employee's job, employees may still be protected through the Family Medical Leave Act (FMLA), California Family Rights Act (CFRA) or California Pregnancy Disability Leave. Even if an employee is not protected by one of these acts, if an employee who is terminated or disciplined may still be able to advance a wrongful discharge or retaliation complaint beyond the pleading stage, raising the likelihood of an increase in litigation. Employers should ensure that any actions are consistent with leave laws and seek the assistance of counsel with any questions.
Relationship With Other Leave Laws
While Paid Family Leave does not protect an employee's job, it may operate concurrently with a variety of laws that provide job protection. The Family Medical Leave Act (29 USC �2601, et seq.) and California Family Rights Act (California Government Code �12945.2) provide employees with up to 12 weeks unpaid leave for the employee's own or a family member's serious health condition. Both FMLA and CFRA apply only to employers with 50 or more employees working within a 75 mile radius. Employers with fewer than 50 employees are exempt, unless they have voluntarily elected to comply with the laws through their own policies. Under both FMLA and CFRA the employee's right to return-to-work is protected and the employer must provide benefit continuation. If the employee is entitled to Paid Family Leave it must be taken concurrently with FMLA and/or CFRA.
California Pregnancy Disability Leave (California Government Code �12945(b)(2)) applies to any California employer with five or more employees. Under Pregnancy Disability Leave employees are permitted to take up to 4 months unpaid leave for pregnancy related disabilities. The employee's right to return-to-work is protected, however the employer is not required to continue benefits. However, if an employer provides more than four months of leave for other types of temporary disabilities or provides for the continuation of benefits, the same considerations must be made available to women who are disabled due to pregnancy, childbirth, or a related medical condition.
Pregnancy Disability Leave may be taken concurrently with an employee's FMLA 12- week entitlement, however under the CFRA pregnancy is not considered a "serious health condition." Therefore Pregnancy Disability Leave does not run concurrently with the CFRA. Once an employee is no longer disabled by a pregnancy related condition, she becomes eligible to take the 12-week entitlement under CFRA for baby bonding.
Pregnancy Disability Leave may be taken concurrently with an employee's FMLA 12- week entitlement, however under the CFRA pregnancy is not considered a "serious health condition." Therefore Pregnancy Disability Leave does not run concurrently with the CFRA. Once an employee is no longer disabled by a pregnancy related condition, she becomes eligible to take the 12-week entitlement under CFRA for baby bonding.
Conclusion
With the introduction of Family Temporary Disability, it is likely that many more employees will take advantage of their ability to use FMLA or CFRA. As the percentage of employees who take advantage of leave policies increases, employers should re-educate themselves on all leave acts, ensure all internal policies are consistent with these laws and update employee handbooks.
Cassondra L. Halpin is resident in the firm's San Diego office where she focuses her practice in the areas of general liability and employment law.
