Oct. 9, 2020 California Significantly Expands Its Family and Medical Leave Law: Small Employers Are Now Covered & All Employers Have New Obligations

California employers are facing another sizable round of new laws out of Sacramento this year, some of which will require concerted preparation before January 1st. One such new law, SB 1383, expands the California Family Rights Act (CFRA) in a number of significant ways. Beginning January 1, 2021, all California employers with five or more employees will be covered by the CFRA and thus obligated to provide up to 12 weeks of unpaid, job-protected leave to eligible employees for new child bonding, their own serious health condition, and caring for a family member with a serious health condition. Currently, only California employers with 20 or more employees are required to provide leave for new child bonding; and only employers with 50 or more employees must provide leave for both new child bonding as well as an employee’s own or their family member’s serious health condition.

SB1383 also substantially expands the circumstances under which all covered employers (large and small) must provide job protected leave with continued medical benefits to their employees. These new leave rights are described below in greater detail.

Key Changes to the CFRA Include:

1. Small employers are now covered and must provide protected leave with benefit continuation.

Under SB 1383, the expanded CFRA applies to employers who directly employ five or more employees. This expansion of coverage to small employers is expected to impact thousands of California entities and provide new leave rights to millions of employees. Employees both inside and outside the state are counted toward this coverage minimum. However, workers engaged through a third-party agency or staffing firm are not counted as employees toward the CFRA coverage threshold because they are not directly employed by the employer. 

Independent contractors are also not counted toward the new 5-employee minimum for CFRA coverage; however, given California’s strict rules for legally classifying workers as independent contractors and the potential liability for failure to provide CFRA benefits, prudent employers will ensure they have correctly evaluated their worker classifications before denying family and medical leave requests to these workers.

By expanding complete CFRA coverage to employers with 5 or more employees, SB 1383 eliminates the California New Parent Leave Act, which currently requires employers with 20-49 employees to provide new child bonding leave to eligible employees.     

2. Large employers with small sites (i.e., less than 50 employees within 75 miles) now have increased leave obligations.   

Under current law, even when employed by a large entity, an employee must work at a location with 50 or more employees within 75 miles to have CFRA leave rights. SB 1383 does away with this requirement altogether. Any employee of an employer of five or more employees, regardless of the number of employees at their worksite, may now be eligible for up to 12 weeks of job protected leave. The other eligibility requirements remain the same: (a) the employee must have worked for the employer for at least 12 months; and (b) they must have worked at least 1,250 hours in the 12 months preceding their requested leave. 

3. CFRA leave may now be taken to care for certain extended family members.

Under existing law, an employee may take protected CFRA leave to care for a parent, spouse, or child under age 18 (or an adult dependent child) with a serious health condition. SB 1383 significantly broadens this list of family members to also include the employee’s child of any age (whether dependent or not), grandparent, grandchild, domestic partner or sibling. Moreover, “sibling” is newly defined to include any person “related to another person by blood, adoption, or affinity through common legal or biological parent.”    

The new law does not change the existing definition of “parent,” which is already quite expansive and incudes a foster, adoptive or step parent, legal guardian, or other person who stood in loco parentis (i.e., in the place of a parent) to the employee when they were a child.

This expansion of covered family members will provide job protected CFRA leave to employees in many more circumstances than previously available. This change also brings the CFRA more in line with California’s Paid Family Leave (PFL) insurance program for employees caring for seriously ill family members. Existing PFL provisions provide up to 8 weeks of partial wage replacement benefits to employees out of work while caring for a seriously ill parent, parent-in-law, spouse, grandparent, grandchild, sibling, domestic partner, or child of any age.       

4. CFRA leave may now be taken for “military exigencies.” 

Under the newly expanded CFRA, in addition to the traditional reasons for leave (employee’s own or a family member’s serious health condition, and new child bonding), employees will now also be able to take up to 12 weeks of unpaid job-protected leave when they have a “qualifying exigency” related to the active duty, or call to active duty, of their spouse, domestic partner, child or parent in the U.S. Armed Forces. Although the term “qualifying exigency” is not defined in the new law, existing CFRA regulations incorporate by reference defined terms within the FMLA and its implementing regulations to the extent they are not inconsistent with the provisions of the CFRA. This means the FMLA’s definition of a “qualifying exigency” will almost certainly apply. 

Under the FMLA, a “qualifying exigency” includes certain short-notice deployments, military events and related activities, taking care of childcare and school needs, making financial and legal arrangements, attending family counseling, for rest and recuperation, post-deployment activities, and other activities arising out of the military members active duty or call to active duty.    

5. Parents working for the same employer are now both entitled to 12 weeks of new child bonding leave.

Existing CFRA and NPLA rules limit the total amount of new child bonding leave for parents employed by the same employer to 12 weeks. SB 1383 eliminates this restriction and thus both parents would be entitled to a full 12 weeks of job protected leave to bond with a new child within one year of its birth, adoption or foster placement.

Notably, under the FMLA, “spouses” are limited to 12 weeks of new child bonding leave when they work for the same employer, however, unmarried parents would both still be entitled to the full 12 weeks of leave.   

6. Employers must now guarantee reinstatement to highly paid “key employees” regardless of the impact to their operations.

Existing provisions under both the CFRA and FMLA allow an employer to deny reinstatement to employees among the 10% highest paid at a worksite if holding their job open during leave would result in “substantial and grievous economic injury” to the employer’s operations. The employer is required to give advance notice to the employee and allow them to take 12 weeks of leave with benefit continuation, but the exception allows the employer to fill the key position and deny reinstatement if the same or a comparable position is not available at the conclusion of the leave.

SB 1383 eliminates this narrow “key employee” exception all together. Thus, employees in critical roles such as general managers and chief executives must be provided up to 12 weeks of CFRA leave when eligible, and the employer is prohibited from filling their position with a permanent replacement regardless of the negative repercussions to business operations of their extended absence, or an inability to find a temporary replacement to adequately perform the responsibilities of the role.

7. The expansion of covered family members will now allow employees to “stack” leave entitlements under the CFRA and FMLA to take 24 weeks in the same year. 

Employers covered by both the CFRA and the FMLA (i.e., those with 50 or more employees) will now face multiple circumstances where employees may be able to “stack” both leave rights to take up to 24 weeks of job protected leave in the same year. Prior to SB 1383, the vast majority of leaves under the CFRA were also covered by the FMLA, and in such cases the leave time ran concurrently (i.e. at the same time) under both statutes, preventing the “stacking” of leave. Now, however, because employees may take CFRA leave to care for extended family members not covered under the FMLA, there are multiple circumstances where CFRA leave is not common to or covered by the FMLA. In those circumstances, according to existing law, the statutes will not run concurrently, which preserves an employee’s right to 12 weeks of leave under the FMLA for another purpose.

For example, if an employee were to take 12 weeks of family leave under the CFRA to care for a seriously ill grandparent, grandchild, non-dependent adult child or sibling (a reason not common to the FMLA), the same employee would remain eligible to take an additional 12 weeks of leave to care for themselves or a parent, minor child or spouse later in the same leave year. 

Complicating matters even more, if the sequence of these two leaves is reversed, the employee’s rights change as well. Specifically, if the same employee were to first take 12 weeks of leave due to their own serious health condition or that of a parent, spouse or minor child (a reason common to both the CFRA and FMLA), such leave would run concurrently under both laws and thus preclude them from taking any further leave in the same year to care for a seriously ill sibling, non-dependent adult child, grandparent, or grandchild. It seems unlikely that the lawmakers in Sacramento intended this inequity, however, unless and until the CFRA regulations are amended to address this circumstance, employers will have to pay close attention to the administration of leave to avoid compliance issues and potential legal claims. 

Key Aspects of the CFRA That Remain Unchanged:

As described above, SB 1383 does not alter the CFRA’s basic requirements for employees to be eligible to take leave: they must still have more than 12 months of service with the employer (within the prior 7 years) and work at least 1,250 hours during the 12 months immediately preceding the start of leave. There were also no changes to the definition of a “serious health condition,” for which an employee may take leave. Existing rules regarding required medical certifications, taking leave on an intermittent basis, and the use of accrued paid time during leave were also not revised. And, notably, employers remain obligated to guarantee reinstatement to any employee taking CFRA leave, and to maintain (and continue to pay for) the employee’s group health plan coverage throughout their leave.

What This Means

SB 1383 affects every California employer with 5 or more employees. The extent of the impact and the amount of work necessary for employers to prepare for the expanded CFRA will likely depend on their size and the maturity of their existing compliance structure for employee leaves of absence.

Small employers with fewer than 20 employees who have never before had to provide any form of family or medical leave other than for pregnancy disability (and workers’ compensation leave), or navigate the CFRA’s complex administration requirements will have their hands full between now and January 1st preparing for this new obligation. These employers will need to draft and implement a new CFRA policy that, among other things, designates their chosen method for calculating the 12 month leave year among the four methods available. They will also want to obtain forms and prepare processes to timely and appropriately respond to employee leave requests, track the use of protected CFRA leaves, coordinate the use of employees’ accrued paid sick time and/or vacation, and maintain employees’ existing medical coverage during leave. To mitigate the risks of legal claims under the CFRA, small employers may also wish to educate the manager or administrator in charge of employee leaves, as well as all people managers, on the law’s basic provisions as well as some practical guidance on complying with the strict prohibition on retaliation against employees for requesting or taking protected CFRA leave. More often than not, this is where claims arise.   

Employers with 20-49 employees who, up to now, have only been required to provide new child bonding leave under the state’s relatively recent New Parent Leave Act (NPLA), will want to replace their existing NPLA policy with a more expansive CFRA policy. They will also want to obtain the additional forms necessary to administer the other types of family and medical leave now available to their employees, and supplement their processes for administering all such leave types. Given the expanded availability of protected leave, as described above, these employers may also wish to educate their people managers on the law’s basic provisions and practical guidance for complying with its strict anti-retaliation obligations.

Larger employers with 50 or more employees will need to revise their existing family and medical leave policies to account for the CFRA’s expanded coverage to employees at all worksites regardless of size, as well as the new circumstances under which protected leaves are available. For those entities with combined FMLA and CFRA policies, this revision may prove challenging given the number of differences SB 1383 creates between the two statutes. This is especially the case for multi-state employers who have up to now opted for the efficiency of a single, consistent family and medical leave policy for all of their U.S. employees. SB 1383’s changes and the complications they create may now warrant having a separate policy for California.

Whatever category your entity falls into, now is the time to begin making changes as 2021 is fast approaching. If you would like further assistance in preparing for the expanded CFRA, please contact your PPSC attorney or any one of our employment law specialists via our website.

Denise Brucker