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California paid family leave: {beginning July 1, employees are allowed six weeks off--with partial pay--to care for a newborn or other family member. Here's how employees & employers can prepare}.

Bob has worked full time for his employer for a little more than five years. It's Aug. 1, 2004 and his wife calls and tells him the bad news--their son has cancer. The doctors are confident they can treat the disease, but treatment must begin immediately--and someone will have to care for their son and administer the medications during the ongoing treatment. Since Bob's wife makes more money than he does, they decide he will take time off from work. The problem is that without his salary, there is no way for them to afford the rent. He wonders how they will manage, but remembers a posting he saw in the break room at his office about something called paid family leave.

In 2002, Gov. Davis signed SB 1661--which created the nation's first state governed the paid family leave entitlement. At its core, the Paid Family Leave Act gives eligible employees up to six weeks (within a 12-month period) of partial wage replacement when taking a leave for one of the following:

* To care for a seriously ill child, spouse, parent or domestic partner. (Note, however, that paid family leave is not available for an employee's own serious health condition);

* To bond with a newborn child; or

* To bond with a minor child in connection with the adoption or foster-care placement of that child.

For an employee like Bob to qualify for paid family leave because of a family member's serious illness, the family member must have a certified illness, injury, impairment or physical or mental condition that involves inpatient care in a hospital, hospice, residential health care facility, or continuing treatment or continuing supervision by a health care provider.

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HOW IT WORKS

Paid family leave is administered by the state Employment Development Department's Disability Insurance branch. Employees taking leave for one of the above specified reasons can apply for the program by completing an EDD claim form. The forms were scheduled to be available April 2004.

In this example, since Bob's leave is to care for a seriously ill family member, he also must have his son's health care provider complete a certification form--signed by the provider and the employee--which includes information about the illness' severity and the expected duration of the family member's need for physical or emotional support from the employee.

Besides physicians, the state also allows the following health care providers to certify paid family leave: licensed medical or osteopathic surgeons; authorized medical officers of a U.S. government facility; chiropractors; podiatrists; optometrists; dentists; psychologists; and religious practitioners.

If Bob's leave was for bonding with a newborn, adopted or foster care-placed child, no certification form is necessary, but employees will have to submit the claim form.

After the required forms are received, the EDD is estimating a one- to two-week delay before it can process an employee's forms and declare an employee eligible for paid family leave.

Besides this administrative wait, employees have a seven-day period before they will receive benefits. Thus, employees who obtain the full six weeks of wage replacement will begin to receive their benefits in the second week of leave and be paid through their seventh week of leave.

Employees must be off work at least eight calendar days to receive paid family leave benefits.

Employees may use all six weeks of paid family leave at once, or break it up over a 12-month period. For example, if employees need to take a short leave to care for a spouse, they can use only part of their paid family leave allotment. The unused portion still will be available, if needed, but must be taken with the 12-month period.

At the start of the next 12-month period, employees again have six weeks of paid family leave available.

Employees are ineligible for paid family leave if they receive State Disability Insurance, Unemployment Compensation Insurance or Workers' Compensation; are not working or looking for work at the time they begin their family leave; are not suffering a loss of wages; are in custody due to a criminal conviction; or the need for care is not supported by the certificate of a treating physician or practitioner.

WHERE DOES THE MONEY COME FROM?

Bob and every other California employee pays for paid family leave through a payroll deduction. This year, the EDD increased the employee contributions for State Disability Insurance by 0.28 percent from last year's employee contribution. Consequently, California employees now contribute 1.18 percent of their paycheck to pay for SDI, inclusive of the .08 percent used to fund California's paid family leave program. The SDI taxable wage limit also has increased to $68,829 per employee, which means the maximum withheld is $812.18.

Employees obtain wage replacement based on past quarterly earnings, with the range of the benefit spanning from $50 per week at the lowest, up to $728 per week for employees earning $68,734.56 or more. The maximum weekly amount will increase to $840 for claims starting in 2005.

WHAT EMPLOYERS NEED TO DO

Employers must obtain from the EDD the necessary notices and publications to provide their employees. The easiest way to do this is through the EDD's website at www.edd.ca.gov.

All employers first should obtain copies of DE 2511, a two-page brochure that provides an overview of the Paid Family Leave program. This brochure must be provided to all new employees hired on or after Jan. 1, 2004, and all employees taking leave to care for an ill family member or bond with a child after July 1, 2004.

Employers also should obtain the workplace posting notice--either DE 1858 or DE 1857A. DE 1858 should be used by employers covered only by SDI; DE 1857A should be used by employers covered by both SDI and Unemployment Insurance. If employers do not know if they also are covered by Unemployment Insurance, they should contact their payroll company or employment law counsel. Employers should post the DE 1858 or DE 1857A notice with their other employee postings.

Employers can require employees taking paid family leave to use a maximum of two weeks of accrued, unused vacation time prior to being eligible for paid family leave benefits. Where paid family leave is taken concurrently with a FMLA/CFRA leave, the employer may require employees to exhaust their accrued, unused vacation.

Employers who desire to require employees to use vacation on their paid family leave should amend their vacation policy to detail how much vacation, up to the two weeks maximum, employees must take prior to receiving paid family leave benefits.

For example, if an employer requires employees to use the maximum of two weeks vacation, the first week employees use vacation will count as the employee's waiting period. The second week employees receive vacation pay they will not receive any paid family leave wage replacement. In the third week, absent any administrative delay by the state, employees will begin receiving their paid family leave partial wage replacement benefits, which will continue for five more weeks.

Consequently, if Bob's employer requires him to take one week of vacation prior to receiving paid family leave benefits, Bob will begin receiving those benefits in his second week of leave. Assuming he requires leave for eight weeks, Bob will receive a partial wage for all six weeks following the week his employer required him to take vacation, leaving one week without vacation pay or wage replacement.

EFFECT OF OTHER LEAVE ACTS

If an employer has 50 or more employees, the Federal Family and Medical Leave Act and California Family Rights Act provide a leave of up to 12 weeks per year for reasons similar to paid family leave. Although sharing some eligibility requirements, there are important differences between the various acts.

* FMLA/CFRA are in effect. Thus, employees eligible for FMLA/CFRA may take those leaves. Employees must wait until July 1, 2004 before taking paid family leave because the partial wage replacement does not begin until July 1. If Bob needed to take his leave on Jan. 1, 2004, as opposed to Aug. 1, 2004, he could only obtain a FMLA/CFRA leave--not paid family leave.

* Employees on FMLA/CFRA leave need not receive any wages. Employers may pay employees a salary while employees take their FMLA/CFRA leaves, but it is not required by law. Also, the state does not provide employees taking FMLA/CFRA leaves with any wage replacement. Employers, however, must continue an employee's health benefits at the same level and under the same conditions that coverage would have been provided if the employee had been continuously employed during the FMLA/CFRA leave's duration.

Under paid family leave, the state provides up to six weeks of partial wage replacement without requiring employers to continue benefits.

* FMLA/CFRA require employees to accumulate at least 1,250 hours of service during the previous year prior to being eligible for leave. Paid family leave becomes active the instant an employee begins service with the employer. Since Bob has worked for his employer full time for more than five years, he likely accumulated 1,250 hours of service in the past year and would be eligible for FMLA/CFRA.

* Employees entitled to FMLA/CFRA leave must take paid family leave concurrently with leaves taken under those acts. Employees, however, do not need to take FMLA/CFRA leave concurrently with paid family leave. Thus, paid family leave does not shorten or lengthen an employee's FMLA/CFRA leaves. So, if Bob's employer has more than 50 employees and Bob is otherwise eligible for FMLA/CFRA, he must take paid family leave at the same time he takes FMLA/CFRA.

* Paid family leave only can be used to care for someone else's serious health conditions or for child bonding, not for an employee's own serious health conditions. However, employees may use FMLA/CFRA for their own serious health conditions.

* FMLA/CFRA generally require employers to reinstate employees who have been on the leaves to their original or equivalent positions with no loss in seniority or benefits. Employees taking paid family leave have no right to reinstatement. Thus, unless Bob takes his paid family leave concurrently with an FMLA/CFRA leave or other leave requiring reinstatement, the factory does not need to reinstate Bob upon his return.

RELATED ARTICLE: Want to know more?

The California Employment Development Department:

www.edd.ca.gov/direp/de8714cf.pdf--Quick facts about the Paid Family Leave Program

www.edd.ca.gov/direp/pflind.asp--Frequently asked questions, forms and other information

www.edd.ca.gov/direp/pflfaq1.asp--Information geared for the employee

BY DAVID A. WIMMER, ESQ. & JEFFREY W. MAYES, ESQ.

David A. Wimmer, Esq. is a shareholder & Jeffrey W. Mayes, Esq. is an associate with Swerdlow Florence Sanchez Swerdlow & Wimmer in Beverly Hills, where they specialize in management-side labor and employment law. You can reach them at (310) 288-3980, or at dwimmer@swerdlowlaw.com and jmayes@swerdlowlaw.com.
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Author:Mayes, Jeffrey W.
Publication:California CPA
Geographic Code:1U9CA
Date:May 1, 2004
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