California Enacts Law Providing New Bank of Supplemental Paid Sick Leave

03.23.2021

On March 19, 2021, the State of California took action to ensure that employees statewide have access to a new bank of COVID-19 supplemental paid sick leave (“SPSL”), due to the lingering effects of the COVID-19 pandemic.  Governor Newsom signed Senate Bill 95 (“SB 95”) into law on March 19^th, which requires employers with more than 25 employees to provide up to 80 hours of SPSL to employees.  This requirement applies to certain public entity employers, including cities, counties, school districts, county offices of education, community college districts, housing authorities, transit agencies, water districts, and other special districts (“public employers”).  SB 95 takes effect 10 days following its enactment into law, on March 29, 2021, and will expire on September 30, 2021.

Background on Law

California extended pandemic-related paid sick leave to employees in 2020.  On September 9, 2020, the California Legislature passed legislation (Assembly Bill 1867) to provide 80 hours of SPSL benefits to employees of private sector employers with 500 or more employees.  AB 1867 also required public employers to offer SPSL benefits to health care providers and emergency responders, if those public employers excluded those employees from receiving paid sick leave under the federal Families First Coronavirus Response Act (“FFCRA”).  AB 1867 expired at the end of the 2020 calendar year.

Given the ongoing public health crisis posed by the COVID-19 pandemic, California’s Legislature determined that employees’ need for additional paid sick leave benefits remained.  SB 95 is the result of the Legislature’s expedited assistance on that issue.

Reasons for Using Leave

SB 95 has notable differences from AB 1867 and the FFCRA with respect to the reasons for which employees can use this new bank of 80 hours of SPSL.  Under AB 1867, employees could use SPSL if they were unable to leave home to perform work, and met one of the qualifying reasons listed below.  SB 95 expands upon AB 1867, as employees may use this new bank of SPSL if they are (i) unable to work or (ii) unable to telework, and meet one of the reasons listed below.  SB 95 also expands the number of reasons for which employees may use SPSL.  Consistent with SB 95, employees who are unable to work or telework may use SPSL if any of the following applies:

• The employee is subject to a federal, state, or local quarantine or isolation period related to COVID-19, as defined by an order or guidelines of the State Department of Public Health, the federal CDC, or a local health officer who has jurisdiction over the workplace.
• The employee is advised by a health care provider to self-quarantine due to concerns related to COVID-19.
• The employee is attending an appointment to receive a vaccine for protection against contracting COVID-19.
• The employee is experiencing symptoms related to a COVID-19 vaccine that prevent them from working or teleworking.
• The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
• The employee is caring for a family member who is subject to a federal, state, or local quarantine or isolation order or guidelines related to COVID-19, or who has been advised by a health care provider to self-quarantine or self-isolate due to concerns related to COVID-19.
• The employee is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19 on the premises..

As with other COVID-related paid leave, public employers may not require employees to use other leave (paid or unpaid) before using SPSL.

Interaction between SB 95 and Cal/OSHA’s ETS

The Legislature chose to remove one of the qualifying reasons contained in AB 1867, namely when an employee was prohibited from working by the employer due to health concerns related to the potential transmission of COVID-19.  Legislative history for fast-tracked SB 95 suggests that this rationale was removed due to the perception that it was unnecessary in light of Cal/OSHA’s Emergency Temporary Standards (“ETS”).  Among other workplace regulations, Cal/OSHA’s ETS require public employers to “continue earnings” and benefits for employees who must be excluded from work due to exposure to COVID-19 in the workplace. The Legislature did clarify that public employers may require employees to first exhaust their bank of SPSL under SB 95 before receiving “exclusion pay.”  This clarification provides useful assistance to public employers grappling with excluded essential workers.

Amount of Leave and Pay

SB 95 provides an entirely new bank of SPSL.  If employees were eligible to receive SPSL under AB 1867 or emergency paid sick leave under FFCRA and exhausted this paid leave, they will still receive a new bank of SPSL under SB 95.    Full-time workers will be entitled to 80 hours of SPSL.  Part-time workers will be entitled to a prorated amount of SPSL depending on the circumstances.  Further, a different bank rule applies to “active firefighters.”  If they work more than 80 hours for a public employer in the two weeks preceding the use of COVID-19 SPSL, “active firefighters” will be entitled to an amount of leave equal to the total number of hours that the employee was scheduled to work in those preceding two weeks. 

SB 95 diverges from AB 1867 and FFCRA in the amount of pay due for SPSL.  For non-exempt employees, each hour of SPSL shall be compensated at the highest of the following rates:

• The employee’s regular rate of pay for the workweek in which the employee uses the SPSL, regardless of whether the employee actually works overtime in that workweek.
• The employee’s total non-overtime wages divided by the employee’s total hours worked in the full pay periods occurring during the prior 90 days of employment;
• The state minimum wage; or
• The local minimum wage to which the employee is entitled.

For all employees, SB 95 caps SPSL benefits at the same amount as prior COVID-19-related legislation (i.e. the FFCRA and AB 1867) — $511 per day and $5,110 in the aggregate.

Offset

SB 95 also provides a limited off-set for public employers, in which they may credit qualifying paid leave against the bank of SPSL required by the law.  If an employee received COVID-19-related paid sick leave after January 1, 2021, could use this paid leave for the same reasons outlined above, and earned compensation at the same rates outlined above, the public employer may deduct this prior paid sick leave from the bank of SPSL otherwise owed to that employee.  This offset would not apply to otherwise-qualifying paid leave used in 2020.

Notice and Paystub Requirements

As with AB 1867, public employers must provide notice to employees of their rights to use the new bank of SPSL.  SB 95 directs the Labor Commissioner to draft a model notice template within seven days of the effective date of the bill, i.e. April 5, 2021.  Public employers may provide this notice to employees electronically, such as via email.

Public employers must also include this bank of SPSL on employees’ itemized wage statements.  SB 95 includes additional requirements that differ from AB 1867, including:

• Public employers must identify this bank of SPSL on wage statements as a discrete bank of paid leave separate from regular paid sick leave.
• For part-time employees, public employers must calculate employees’ initial entitlement to their bank of SPSL, using the calculation outlined above, and update that calculation on subsequent wage statements as the employee uses leave.

The wage statement requirement goes into effect at the start of the next full pay period after the effective date of SB 95 (i.e. March 29, 2021).

Retroactivity

Of principal concern to employers, the Legislature drafted SB 95 to apply “retroactively to January 1, 2021.” The bill explains that it applies retroactively “in order to protect the economic well-being of covered employees who took leave” after the expiration of AB 1867 and the FFCRA.

SB 95 identifies how public employers can process retroactive payments, as follows:

• A public employer must provide an employee with a retroactive payment for the period of leave if:
  • (1) the employee took leave on or after January 1, 2021 which would otherwise have qualified as COVID-related SPSL under SB 95, and
  • (2) the public employer did not provide paid leave (including paying at the rates identified above) to the employee upon oral or written request.
• For retroactive leave payments, the number of hours of leave corresponding to the amount of the retroactive payment may be deducted from the total bank of SPSL hours that the employee would otherwise receive under SB 95.
• Public employers must provide retroactive payments to employees on or before the next full pay period after an employee requests such payment (orally or in writing), and must reflect this payment on the corresponding wage statement.

This process presents several daunting challenges for public employers.  First, the overall mandate to provide retroactive payments poses enormous practical and/or administrative issues for public employer staff, particularly when staff did not document the reasons or other details pertaining to prior leave requests.  In that event, it is unclear how public employers can accurately review and confirm whether an employee’s prior leave use is eligible for a retroactive payment.  For example, unclear or missing documentation may make it difficult for public employers to determine whether the leave was sought for a reason that would have met one of the qualifying bases outlined above for SB 95’s SPSL.  Second, the retroactive payment requirement will necessarily involve substantial monetary payments, which may be difficult for agencies experiencing budgetary and/or fiscal shortfalls due to the ongoing pandemic. 

Third, the mandate may involve liability exposure for unpaid wages.  If an employee believes that they are owed wages for leave taken between January 1, 2021 and March 28, 2021 based on SB 95’s retroactive requirement, it is unclear whether this mandate would also trigger statutory penalties imposed by state wage and hour statutory law — even if public employers provide retroactive compensation for unpaid leave previously taken.  SB 95 also does not specify whether public employers can restore other forms of paid leave previously used to cover an absence that would have otherwise been eligible for the new bank of SPSL, or whether the new law requires that this retroactive payment be provided as cash compensation.  Absent subsequent clarification from the Legislature in a clean-up bill, this issue may require litigation to resolve.

SB 95 imposes complex and urgent provisions, requiring public employers to update their policies on pandemic and/or state paid sick leave and to develop protocols to begin administering this new bank of leave in short order.  Public employers may contact the authors of this Alert or their usual AALRR counsel if they have questions, or would like assistance in preparing their agency to follow the requirements of SB 95.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process. 

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