California Family Leave Law
Q. What is Paid Family Leave?
A. Paid Family Leave is unemployment compensation disability insurance paid to workers who suffer a wage loss when they take time off work to care for a seriously ill family member or bond with a new minor child.
Q. How long may a worker receive Paid Family Leave insurance benefits?
A. Workers may receive up to six (6) weeks of benefits that may be paid over a 12-month period.
Q. What is the relationship of Paid Family Leave Insurance to State Disability Insurance?
A. Paid Family Leave Insurance is a component of the State Disability Insurance (SDI) program. The SDI benefit portion compensates workers who suffer a wage loss when they can't work because of their own illness or injury. The Paid Family Leave benefit compensates workers who suffer a wage loss due to the need to provide care for a seriously ill family member or to bond with a new minor child.
Q. Are payroll deductions mandatory?
A. Yes, beginning January 1, 2004, employers are required to deduct the Paid Family Leave contributions from the wages of employees who are covered by the SDI program.
Q. Who pays?
A. The Paid Family Leave insurance program is fully funded by employees' contributions, similar to the SDI program.
Q. When do Paid Family Leave benefit payments begin?
A. Benefits are payable for Paid Family Leave insurance claims commencing on or after July 1, 2004.
In other words, benefits will not be paid for leave taken prior to July 1, 2004.
Employers should pay close attention to the following questions and answers:
Who does Paid Family Leave cover?
Employees covered by State Disability Insurance (SDI) are also covered by Paid Family Leave insurance. If a Voluntary Plan Insurer provides your company's disability insurance coverage, then it must also provide Paid Family Leave insurance coverage.
Are self-employed individuals covered by Paid Family Leave insurance?
Yes, but only if they participate in the SDI Elective Coverage Program.
Are my employees covered by Paid Family Leave insurance if I am a small family business owner?
Yes, if your employees pay into State Disability Insurance (SDI), they are covered by Paid Family Leave insurance, regardless of the number of employees in your business. Some employees may have their job protected under other laws, such as the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA), but these laws do not apply to everyone who is eligible for Paid Family Leave benefits.
Does an employee have to work a minimum number of hours or days before becoming eligible for Paid Family Leave insurance benefits?
No. The Paid Family Leave law does not require a minimum number of hours worked or days employed to qualify for benefits.
May employees receive Paid Family Leave insurance benefits if they work part time?
If your employees work part time and still suffer a wage loss due to a family care need, they may receive benefits provided they are otherwise eligible. Paid Family Leave insurance is a wage loss protection program, which means that individuals may be eligible for a portion of the Paid Family Leave insurance benefit if they are suffering a loss of wages and meet the other Paid Family Leave eligibility requirements.
Will there be a waiting period for Paid Family Leave insurance benefits?
Both SDI and Paid Family Leave require a seven (7) calendar day non-payable waiting period.
Does the seven (7) day waiting period for Paid Family Leave need to be seven consecutive days?
No. The required seven-day waiting period does not need to be taken seven days in a row. For example, if care were provided one day per week, the seven-day waiting period would be served over a seven-week period. Benefits are payable once the seven days have been served and all other eligibility criteria are met.
May I require my employees to take all of their Paid Family Leave insurance benefits at one time?
No. The law does not establish a minimum number of hours or days or weeks that an employee must take Paid Family Leave insurance benefits. It only established the maximum leave time of six (6) paid weeks within a 12-month period.
Are employees required by law to use their vacation leave when collecting Paid Family Leave insurance benefits?
The law gives an employer the discretion (option) to require an employee to take up to two weeks of earned but unused vacation leave. Employers should bear in mind, however, that this option does not relieve them of any collective-bargaining duties they may have with respect to vacation leave.
If our employees accrue Paid Time Off (PTO), rather than specific vacation or sick leave, may I require employees to use up to two weeks of PTO prior to the initial receipt of Paid Family Leave insurance benefits?
Yes. The law provides the option for employers to require up to two weeks of earned but unused vacation leave. Vacation leave, as defined in Title 22, California Code of Regulations, section 3302-1, includes paid time off if vested under Labor Code section 227.3.
May I require employees who have not accumulated two weeks of vacation leave to use their earned but unused sick leave instead?
No. The Paid Family Leave law does not authorize employers to require the use of sick leave in lieu of vacation.
What constitutes a serious health condition for the purposes of Paid Family Leave?
A serious health condition means an illness, injury, impairment, or physical or mental condition of a patient that involves inpatient care in a hospital, hospice, or residential medical care facility. This includes any period of incapacity (e.g., inability to work, attend school, or perform other regular daily activities) or any subsequent treatment in connection with such inpatient care; or continuing treatment by a physician or practitioner Unless complications arise, cosmetic treatments, the common cold, influenza, earaches, upset stomach, minor ulcers, and headaches other than migraine, are examples of conditions that do not meet the definition of a serious health condition for purposes of Paid Family Leave.
Is a claimant eligible for Paid Family Leave insurance benefits if he/she has to provide care for a sick parent that is out-of-state or out-of-the-country?
A claim may be submitted for Paid Family Leave benefits to care for a sick parent who is out of the state or out of the country. Benefits may be payable provided the medical certificate is properly completed, establishes a need for care, and a claimant is otherwise eligible.
Are mothers-in-law and fathers-in-law included as care recipients under Paid Family Leave?
Mothers-in-law and fathers-in-law are not included as care recipients under Paid Family Leave.
Can an employee opt out of the Paid Family Leave insurance program?
Paid Family Leave is a component of State Disability Insurance and contributions are mandatory under the California Unemployment Insurance Code.
COST
Do I have to pay for Paid Family Leave insurance? If not, who does?
No, employers do not pay for Paid Family Leave insurance. It is funded entirely by employee contributions.
Did Paid Family Leave insurance increase the maximum wage caps for SDI?
No. The maximum taxable wage in 2004 was $68,829 and in 2005 it is $79,418. Wages in excess of these caps are exempt from Paid Family Leave insurance and SDI withholding.
Will there be an increase in the SDI contribution rate because of Paid Family Leave insurance?
Yes. Beginning January 1, 2004, the law required an increase of 0.08 percent (.0008) in the SDI contribution rate for calendar years 2004 and 2005. The cost of Paid Family Leave insurance will be incorporated into the base SDI contribution rate for 2006 and beyond.
Is the 0.08 percent tax for Paid Family Leave insurance a separate reportable tax on the employer tax return?
No. The additional 0.08 percent is not separately reportable. It is not a separate tax. The statute authorizing the payment of Paid Family Leave benefits from the Disability Fund required the collection of 0.08 percent of taxable wages in addition to the SDI tax that would otherwise be collected. The SDI tax is computed pursuant to a statutory formula that considers past payments from, and the balance of, the Disability Fund. Since Paid Family Leave benefits constitute a significant new liability to the Disability Fund that will not be fully considered in the statutory formula until 2006, the law requires the additional 0.08 percent tax to help pay for the PFL benefits in 2004 and 2005.
What happens if the 0.08 percent tax is insufficient to pay for the Paid Family Leave benefits in 2004 and 2005?
Paid Family Leave benefits are not paid from a separate fund. These benefits, like SDI benefits, are paid from the Disability Fund. The additional 0.08 percent tax is projected to produce a little under $700 million during 2004 and 2005, and the 18 months of Paid Family Leave benefits during this period (commencing July 1, 2004) are projected to cost a little under $600 million. The year-end balance of the Disability Fund in 2004 is projected to be $1.25 billion, and in 2005 is projected to be $1.38 billion. This is a brand new type of benefit, which has not yet been implemented in any other jurisdiction, so the accuracy of the projected cost of Paid Family Leave benefits is somewhat uncertain. However, the cushion in the Disability Fund should ensure the ability to continue the payment of benefits even if the projections turn out to be significantly low.
RELATION OF THE PAID FAMILY LEAVE INSURANCE PROGRAM TO THE FAMILY MEDICAL LEAVE ACT (FMLA) AND THE CALIFORNIA FAMILY RIGHTS ACT (CFRA)
What is the difference between Paid Family Leave insurance and employee leave laws?
The FMLA and CFRA are federal and state leave laws, respectively, that allow workers to take up to 12 workweeks of unpaid leave from their jobs in a 12-month period to care for themselves or family members who are ill, or children who are unable to take care of themselves. Paid Family Leave insurance does not change either law in any way and is completely separate from them. It merely provides up to six (6) weeks of paid benefits to workers who suffer a wage loss when they take time off work to care for others.
For more information about FMLA, visit the Department of Labor's Web site at www.dol.gov. For more information about CFRA contact the California Department of Fair Employment and Housing at 1-800-884-1684 or visit them on the Web at www.dfeh.ca.gov.
As an employer, may I require employees to take leave under the federal FMLA and the CFRA at the same time they are receiving Paid Family Leave insurance benefits?
Yes, if your company is subject to the provisions of FMLA and CFRA. For additional information about the CFRA, visit the State Department of Fair Employment and Housing's Web site at www.dfeh.ca.gov.
Is a Paid Family Leave claimant's job protected?
The Paid Family Leave program does not protect anyone's job. It simply provides partial wage replacement when an employee cannot work due to the need to care for a child, parent, spouse, or registered domestic partner, or to bond with a new minor child. Some employees may have their job projected under other laws, such as the FMLA or the CFRA.
How soon will my employee receive her first check from Paid Family Leave after she mails her claim form?
Most claimants are sent Paid Family Leave checks within two weeks after a properly completed claim is received.
How will the state determine the weekly benefit amount for Paid Family Leave?
The state will calculate the weekly benefit amount based on the calendar quarter with the highest earnings in the claimants base period. The base period covers 12 months and is divided into four consecutive quarters of three months each. The wages the claimant was paid approximately 5 to 17 months before the claim begins are included in the base period (they must be subject to the SDI tax). The base period does not include wages paid at the time the claim begins.
NOTE-If the claimant received SDI pregnancy disability benefits and then filed a Paid Family Leave insurance claim to bond with a new child, the weekly benefit amount is the same as the SDI weekly benefit amount. There is no new calculation of the weekly benefit amount when the bonding claim follows the SDI pregnancy claim. This is true even if the bonding claim does not immediately follow the SDI pregnancy claim.
May an employee receive other benefits while also receiving Paid Family Leave insurance?
An employee may not receive Paid Family Leave insurance benefits if he or she is also eligible for or already receiving State Disability Insurance, Unemployment Compensation Insurance, or Workers' Compensation. Other benefits, such as employer paid benefits for baby bonding, may also affect payment of Paid Family Leave benefits.
How is the Paid Family Leave insurance benefit affected when an employee receives sick leave benefits and Paid Family Leave at the same time?
Consistent with the SDI program, sick leave wages are treated as wages. Paid Family Leave insurance benefits will be reduced by the amount of sick leave wages received, and may render the employee ineligible for benefits depending on the amount of sick leave wages received and the employee's weekly benefit amount.
If you integrate (coordinate) the sick leave (pay the employee sick leave wages in an amount which is the difference between the Paid Family Leave insurance benefit and the employee's full wage), the sick leave benefits received by the employee will not affect the Paid Family Leave benefit.
My company's policy is to coordinate (integrate) unused sick leave with SDI. May we do this with Paid Family Leave insurance too?
Yes.
How are Paid Family Leave insurance benefit payments treated for tax purposes?
The federal Internal Revenue Service (IRS) has informed the Department that Family Temporary Disability Insurance (FTDI) payments (also known as Paid Family Leave) are in the nature of unemployment compensation under Sections 61 and 85 of the Internal Revenue Code. The Department must report the FTDI payments to the IRS on a Form 1099G and, for federal tax purposes, FTDI payments must be included in a claimant's gross income.
For some, the fact that the Paid Family Leave program is employee-funded may reduce the amount of FTDI payments that must be included in the gross income of the claimant (IRS regulation 26 Code of Federal Regulations § 1.85-1(b)(1)(iii)). Claimants should contact the IRS or their tax advisor to obtain additional information.
For state tax purposes, FTDI payments are not taxable. The Department has received a decision from the state Franchise Tax Board (FTB) that FTDI payments are not taxable by California pursuant to Revenue and Taxation Code section 17083.
VOLUNTARY PLANS
As a voluntary plan employer, am I required to approve a request for family care leave?
Paid Family Leave benefits are not a leave program. The voluntary plan paid family leave insurance benefit program is separate from leave policies. For information on the relationship between Paid Family Leave and other federal or state leave programs, see Relation of the Paid Family Leave Insurance Program to the Family Medical Leave Act (FMLA) and the California Family Rights Act (CFRA).
In addition to the California Unemployment Insurance Code, is there guidance for voluntary plans on how to administer their voluntary plans?
Yes, the Office of Administrative Law approved regulations which became operative July 1, 2004. These approved regulations may be found at www.edd.ca.gov/prar2712-1.pdf.
