BILL ANALYSIS Ó Senate Committee on Labor and Industrial Relations Ted W. Lieu, Chair Date of Hearing: April 10, 2013 2013-2014 Regular Session Consultant: Deanna D. Ping Fiscal:No Urgency: No Bill No: SB 761 Author: DeSaulnier As Introduced/Amended: February 22, 2013 SUBJECT Family temporary disability insurance KEY ISSUE Should the legislature include retaliation protections for employees that have applied for, used, or indicated intent to apply for or use, family temporary disability insurance benefits? ANALYSIS Existing law established a family temporary disability insurance program, Paid Family Leave (PFL), that provides up to six weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, or domestic partner, or to bond with a minor child in connection with foster care or adoption. (Unemployment Insurance Code §3301) Existing law states that an individual is eligible to receive temporary disability insurance benefits equal to one-seventh of his or her weekly benefit amount for each full day during which he or she is unable to work due to caring for a seriously ill or injured family member or bonding with a minor child within one year of the birth or placement of the child in connection with foster care or adoption. (Unemployment Insurance Code §3301) Existing law states that no more than six weeks of family temporary disability insurance benefits shall be paid within a 12-month period and requires employees to use up to two weeks of accrued vacation leave before they begin receiving benefits. (Unemployment Insurance Code §3301) Existing law, under the California Family Rights Act (CFRA), entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. Eligible employees are entitled to: Twelve workweeks of leave in a 12-month period for: o Bonding with a newborn or adopted child o Caring for a family member with a serious health condition (includes parent, spouse, child, registered domestic partner and same sex spouse) o The employee's own serious health condition (excluding pregnancy). Eligible employees must meet the following conditions: o worked more than 12 months of service with the employer, and who has at least 1,250 hours of service with the employer during the previous 12 month period o worked at a location in which the employer has at least 50 employees within 75 miles of the employee's worksite. (Gov Code §12945.2) Existing federal law, under the Family and Medical Leave Act (FMLA ), also entitles eligible employees to take unpaid, job-protected leave for up to 12 weeks . This leave, granted under both the state CFRA and the federal FMLA must be taken concurrently. (§105 of the FMLA and §825.220 of FMLA regulations) Existing law states that upon granting an employee family leave under CFRA or FMLA, the employer must guarantee reinstatement to the same or comparable position and provide the guarantee in writing upon the request of the employee. (Gov Code §12945.2) Existing law states than an employer shall not refuse to hire, and shall not discharge, suspend, expel, or discriminate against, any individual's exercise of the right to family care leave as underlined in CFRA. (Gov Code §19702.3) Hearing Date: April 10, 2013 SB 761 Consultant: Deanna D. Ping Page 2 Senate Committee on Labor and Industrial Relations Existing federal law under the FMLA prohibits an employer from discriminating or retaliating against an employee or prospective employee for having exercised or attempted to exercise any FMLA right. (§105 of the FMLA and §825.220 of FMLA regulations) This Bill would provide that it is unlawful for an employer or agent of an employer to discharge or in any other manner discriminate against an individual because he or she has applied for, used, or indicated an intent to apply for or use, family temporary disability insurance benefits. Specifically, this bill : 1) makes an employer liable for actual damages and appropriate equitable relief, including employment or reinstatement, if an employer or agent of an employer discharges or discriminates against an individual because he or she has applied for, used, or indicated an intent to apply for or use, family temporary disability insurance benefits. 2) would allow an employee or applicant to bring a civil action seeking these remedies and if successful, the court may award the employee or applicant reasonable attorney's fees and costs. COMMENTS 1. Background on Paid Family Leave Benefits Program The California Paid Family Leave Act (PFLA), the first such paid family leave program in the nation, was established in 2004. According to the Labor Project for Working Families and UC Berkeley's report, A Guide to Implementing Paid Family Leave: Lessons From California, the program was modeled after the California State Disability Insurance Program (SDI). PFL provides up to six weeks of partial pay for employees who take leave from work to care for a child, parent, spouse, or Hearing Date: April 10, 2013 SB 761 Consultant: Deanna D. Ping Page 3 Senate Committee on Labor and Industrial Relations registered domestic partner with a serious health condition or to bond with a newborn baby or new adopted or foster child. Much like SDI, it is funded through a payroll tax paid entirely by employees and is administered by the same state agency - the Employment Development Department (EDD). Like disability benefits, an employee that takes family leave can receive a wage replacement of up to 55 percent of the individual's average weekly salary. All employees who pay into the State Disability Insurance Fund are covered by Paid Family Leave. There are no minimum work hours or time of service requirements, but individuals must have earned at least $300 in wages during the previous 12 months. 2. The Interaction Between FMLA/CFRA and Paid Family Leave There are various federal and state laws pertaining to family leave - making it important to understand the differences between the statutes as well as how they interact with one another. The Family and Medical Leave Act (FMLA) is a federal law that is administered by the U.S. Department of Labor while the California Family Rights Act (CFRA) is a state law administered by the Department of Fair Employment and Housing. The state law changed in 1993 to generally conform to the provisions of the FMLA. Both the FMLA and CFRA allow an eligible employee to take up to a total of twelve job-protected workweeks of leave with employer-paid health, dental, and vision benefits during a "rolling" twelve month period. The twelve weeks of leave must run concurrently for all purposes aside from: Leave to care for a domestic partner (CFRA only) Disabilities due to pregnancy or pregnancy-related condition (FMLA only) Leave for a qualifying exigency related to a family member's military service (FMLA only) Leave to care for an ill or injured service member (FMLA only) If an eligible FMLA/CFRA employee also elects to receive wage replacement benefits from the Paid Family Leave program then the PFL must be taken concurrently as well. Hearing Date: April 10, 2013 SB 761 Consultant: Deanna D. Ping Page 4 Senate Committee on Labor and Industrial Relations In addition to sharing similar leave provisions and eligibility requirements, both the FMLA and CFRA have anti-retaliation and discrimination provisions. 3. Need for the bill? PFL is a state-sponsored insurance program that covers employers of any size. PFL provides partial wage replacement for up to six weeks in any 12-month period, allowing an employee to care for a seriously ill or injured family member or bonding with a minor child within one year of the child's birth or placement in connection with foster care or adoption. While many employees are eligible for PFL leave, the program does not create the right to a leave of absence - meaning that employers are not required to reinstate an employee after they take their paid family leave. This bill would bar an employer from retaliating against an employee for exercising their right to participate in the PFL program. 4. Proponent Arguments : According to proponents, although nearly the entire private workforce in California contributes a portion of every paycheck to participate in the Paid Family Leave program, many workers who would otherwise qualify for PFL benefits are unable to access the program because of a fear that their employer will retaliate against them. Proponents contend that some guarantee of not being fired for taking family leave benefits is necessary for the program to reach all the families that need financial support in caring for a new child or seriously ill family member. Proponents point to a recent study that showed nearly 37 percent of workers who were aware of PFL and needed leave did not apply for PFL due to a fear of being fired, angering their employers, or facing limitations on their future opportunities for advancement. Proponents also argue that the lack of protection for PFL users disproportionately impacts low-wage workers who pay into the system but are less likely to qualify for job protection under other state and federal laws due to the lack of job security. Hearing Date: April 10, 2013 SB 761 Consultant: Deanna D. Ping Page 5 Senate Committee on Labor and Industrial Relations Further, proponents contend that PFL is good for business. Proponents argue that by allowing employees to access these benefits without fear of employer reprisal would benefit workers and their families as well as their employer. Proponents point back to the above survey, citing that the vast majority of employers reported that the availability of PFL benefits had either a positive or no noticeable effect on business productivity (90%), profitability (91%), and employee morale (99%). They also cited that 93% of the surveyed employers reported a positive or no noticeable impact on employee turnover, with 9% reported seeing cost savings due to the decreased turnover and the reduction of benefit costs when employees used PFL instead of (or in combination with) employer-provided paid vacation, sick leave, or disability benefits. 5. Opponent Arguments : Opponents argue that SB 761 would dramatically alter PFL and transform it into an additional protective leave. Opponents maintain that by allowing an employee to sue for alleged discrimination on the basis that an employee applies for, used, or expressed an intent to use PFL, the bill forces an employer to provide an employee with six weeks of leave while receiving PFL or face costly litigation. Opponents bring attention to the requirements for CFRA leave, (50 or more employees, 1250 working hours within 12 months), and argue that under SB 761 the employee of an employer with fewer than 50 employees would now be able to request 6 weeks of leave regardless of hours worked. Opponents argue that given the multiple protected leaves of absence already in California, any expansion of such leaves further impedes California employers' growth and their ability to manage their businesses. Lastly, opponents argue that SB 761 allows an employee to pursue civil litigation for discrimination, without first exhausting an administrative remedy such as filing a complaint with the Department of Fair Employment and Housing - the process under CFRA. Opponents maintain SB 761 sidesteps the administrative requirement and eases the process for potentially frivolous litigation. Hearing Date: April 10, 2013 SB 761 Consultant: Deanna D. Ping Page 6 Senate Committee on Labor and Industrial Relations 6. Double Referral: SB 761 has been doubled referred to Senate Judiciary Committee. 7. Prior Legislation : SB 193 (Marks), Chapter 580, Statutes of 1993 - created the California Family Rights Act (CFRA), also known as the Moore-Brown-Roberti Family Rights Act. SB 1661 (Kuehl), Chapter 901, Statutes of 2002 - created within the state disability insurance program, a family temporary disability insurance program to provide up to six weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or bond with a new child. SB 727 (Kuehl), Chapter 797, Statutes of 2003 - made conforming and clarifying changes to Paid Family Leave program that clarified the role of the Employment Development Department in maintaining the program, as well as ensuring the accumulation of enough funds to pay for the program. SUPPORT Legal Aid Society - Employment Law Center (Sponsor) A Better Balance American Association of University Women California Association of California caregiver Resource Centers Breastfeed LA California Communities United Institute California Labor Federation, AFL-CIO California Rural Legal Assistance Foundation Cancer Legal Resource Center Communication Workers of America District 9 Congress of California Seniors Equal Rights Advocates Excellence Learning Corporation Hearing Date: April 10, 2013 SB 761 Consultant: Deanna D. Ping Page 7 Senate Committee on Labor and Industrial Relations Labor Project for Working Families Legal Aid Society of San Mateo Los Angeles Alliance for a New Economy UC Hastings College of Law US Women's Chamber of Commerce Women's Employment Rights Clinic of Golden Gate University School of Law Women's Rights Clinic of Golden Gate University School of Law 9to5 California, National Association of Working Women OPPOSITION Air Conditioning Trade Association Associated Builders and Contractors of California California Bankers Association California Chamber of Commerce California Farm Bureau Federation California Framing Contractors Association California Grocers Association California Independent Grocers Association California Manufacturers and Technology Association California Retailers Association Civil Justice Association of California National Federation of Independent Business Plumbing-Heating-Cooling Contractors Association of California Western Electrical Contractors Association Hearing Date: April 10, 2013 SB 761 Consultant: Deanna D. Ping Page 8 Senate Committee on Labor and Industrial Relations