BILL ANALYSIS Ó SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS Senator Tony Mendoza, Chair 2015 - 2016 Regular Bill No: SB 1166 Hearing Date: April 13, 2016 ----------------------------------------------------------------- |Author: |Jackson | |-----------+-----------------------------------------------------| |Version: |February 18, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Alma Perez-Schwab | | | | ----------------------------------------------------------------- Subject: Unlawful employment practice: parental leave KEY ISSUES Should the Legislature establish a parental leave policy requirement for businesses of five or more employees that allows workers to take up to 12 weeks of unpaid leave to bond with a new child within one year of the child's birth, adoption or foster care placement? Should this parental leave policy include a guarantee of employment upon the employee's return? Should employers be required to pay for continued group health coverage during the duration of the employee's parental leave? ANALYSIS Existing law: 1. The California Family Rights Act (CFRA) and the federal Family and Medical Leave Act (FMLA), required to be taken concurrently, entitles eligible employees of covered employers (employers with 50 or more employees) to: SB 1166 (Jackson) Page 2 of ? a. Take up to 12 workweeks of unpaid, job-protected leave during a 12-month period for specified family and medical reasons, including that of bonding with a newborn, child adoption or foster care placement, among others. b. Guaranteed reinstatement to the same or comparable position upon the return of the employee from his/her leave. c. Continued group health coverage during the duration of the leave under the same terms and conditions as if the employee had not taken the leave. (Government Code §12945.2) 2. Establishes the State Disability Insurance (SDI) program as a partial wage-replacement plan funded through employee payroll deductions that is available (through the Disability Insurance and Paid Family Leave programs) to eligible individuals who are unable to work due to sickness or injury of the employee (including pregnancy), the sickness or injury of a family member, or the birth, adoption, or foster care placement of a new child. a. The Paid Family Leave program (PFL): § Provides eligible employees (those paying into SDI) with up to 6 weeks of wage replacement benefits to care for a seriously ill child, spouse or registered domestic partner, parent, siblings, grandparents, grandchildren, and parents-in-laws or to bond 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) § Provides wage replacement equal to one-seventh of the employee's weekly benefit amount for each full day during which he or she is unable to work (a wage replacement of approximately 55 percent of lost wages). § Employers may require that employees take up to two weeks of earned but unused vacation when using PFL. The law does not allow employers to require employees to use sick leave. SB 1166 (Jackson) Page 3 of ? b. SDI does not provide job protection or return to work rights. c. SDI does not require continued group health coverage during the leave. 1. Pregnancy Disability Leave (PDL), under the Fair Employment and Housing Act, requires private employers with five or more employees and public employers to provide up to four months of unpaid, job-protected leave for pregnancy, childbirth or related conditions. a. Employees may use accrued vacation and paid sick leave during PDL. b. Employees are entitled to reasonable accommodations and reinstatement to the job held before PDL began. c. Employers are required to continue the employee's health coverage during PDL. d. Prohibits employers from refusing to allow an eligible employee to take PDL leave and thereafter return to work. (Government Code §12945) This Bill would establish a new parental leave right of specified employees to bond with a new child either through birth, adoption or foster care placement. Specifically, the bill would: 1. Prohibit an employer of five or more employees from refusing to allow an employee, upon request, to take up to 12 weeks of parental leave to bond with a new child within one year of the child's birth, adoption, or foster care placement. 2. Require the employer to provide a guarantee of employment in the same or comparable position upon return, or otherwise be deemed to have refused to allow the leave. 3. Provide that the employee can utilize accrued vacation pay, paid sick time, other accrued paid time off, or other paid or unpaid time off negotiated with the employer, during the period of parental leave. SB 1166 (Jackson) Page 4 of ? 4. Require the employer to pay for continued group health coverage for an eligible employee who takes parental leave for the duration of the leave at the level and under the conditions that coverage would have been provided had the employee continued to work. 5. Specify that this parental leave shall run concurrently with CFRA and FMLA, except for leave taken for a disability on account of pregnancy, childbirth, or related medical condition (PDL), and the aggregate amount of leave - or combination of leaves - cannot exceed 12 work weeks in a 12 month period. 6. Specify that an employee is entitled to take Pregnancy Disability Leave, in addition to the leave provided in this bill, CFRA and FMLA, if he or she is otherwise qualified. COMMENTS 1. Background on California Medical Leaves: California has several medical leaves under which an employee may be able to take time off of work to care for his or her illness, that of specified family members or for the bonding with a new child through birth, adoption or foster care. However, each medical leave is unique and may or may not be available to all employees. Below is a brief summary of some of the leaves and their eligibility requirements. ------------------------------------------------------------------------- | | | | | | | | | | | CFRA/FMLA | | | | | (Job Protected) | | | | | PFL | | | | | (No Job Protection) | | | | | | | | | | PDL | | | | | (Job Protected) | | | | | | | | | | SB 1166 | | | | | (Job Protected) | | | | | | | | | | | | | | SB 1166 (Jackson) Page 5 of ? |Employers Covered | | | | | | | | | | 50 or more employees in 75 mile radius of worksite | | | | | | | | | | One or more (employee pays, employee gets) | | | | | | | | | | Five or more employees | | | | | | | | | | Five or more employees | | | | | | | | | | | | | | |Employee Eligibility | | | | | | | | | | Worked 1,250 hours in prior 12 months | | | | | | | | | | Once employee earns $300 in base period for fund contribution | | | | | | | | | | Immediate as necessary | | | | | | | | | | Immediate as necessary | | | | | | | | | | | | | | |Reason for Leave | | | | | | | | | | Employee serious health condition; seriously ill family member | | | | | care; bond with newborn or newly placed adopted or foster child | | | | | | | | | | Care for seriously ill family member; bond with a child within | | | | | 1year of birth, foster care or adoption placement | | | | | | | | | | Disability due to pregnancy, childbirth or related medical | | | | | condition | | | | | | | | | | Bond with a child w/in 1 year of birth, adoption or foster care | | | | | placement | | | | | | | | | | | | | | |Length of Leave | | | | | | | | | | 12 weeks in 12-month period | | | | | | | | | | 6 weeks in 12-month period | | | | | | | | | | Up to 4 months | | | | | | | | | SB 1166 (Jackson) Page 6 of ? | Up to 12 weeks | | | | | | | | | | | | | | |Paid or Unpaid | | | | | | | | | | Unpaid, may run concurrent with other paid leave | | | | | | | | | | Partial wage replacement | | | | | | | | | | Unpaid, may run concurrent with SDI for partial wage replacement | | | | | | | | | | Unpaid, employee can use vacation, paid sick time | | | | | | | | | | | | | | |Continued Health Coverage | | | | | | | | | | Yes | | | | | | | | | | No | | | | | | | | | | Yes | | | | | | | | | | Yes | | | | | | | | | | | | | | | | | | | ------------------------------------------------------------------------- 2. Need for this bill? As described above, California employees may be entitled to several medical leaves depending on the size of their employer and the reason for the leave. While CFRA and FMLA provide for up to 12 weeks per year of unpaid job protected leave for an employee who takes time for bonding or care, these protections are only available to employees of businesses with 50 or more workers. Employees of smaller businesses are entitled to take Paid Family Leave and receive a partial wage replacement; however, PFL does not offer any job protection which limits a worker's financial ability to take the leave. Studies have shown that paid family leave policies have positive impacts on infant and maternal health, as well being associated with greater labor force attachment and long-term SB 1166 (Jackson) Page 7 of ? productivity. A 2014 White House report by the Council of Economic Advisers, titled "The Economics of Paid and Unpaid Leave", reported the following: "Paid leave policies can help business recruit talented workers who plan to stay with a firm after having children. In a survey of two hundred human resource managers, two-thirds cited family-supportive policies, including flexible schedules, as the single most important factor in attracting and retaining employees. Paid leave has been shown to increase the probability that women continue in their job after having a child, rather than quitting permanently, saving employers the expense of recruiting and training additional employees. A review of 27 separate case studies found that the median cost of replacing an employee was 21 percent of that employee's annual salary - a substantial cost that can be reduced with family-friendly leave policies." Although California's Paid Family Leave program is available to all employees paying into the fund, the reality is that without a guarantee of a job upon their return, most employees do not take advantage of the program. A report from the Senate Office of Research entitled California's Paid Family Leave Program found that bonding leave claims ranged from no claims to 10.2 claims per 1,000 people by county since the program started. Additionally, since 2009, the proportions of bonding claims filed were as follows: 94.3% were to bond with a new biological child; bonding with adopted and foster children made up less than 1% each (.35 percent and .31 percent, respectively). Lastly, since 2004, the average bonding leave taken by women is 5.17 weeks, while the average taken by men has been 3.81 weeks. The author and proponents believe this bill is needed to ensure that no worker has to choose between the wellbeing of their new child and their family's financial security. This bill would establish a new parental leave right for employees to bond with a new child either through birth, adoption or foster care placement with the protection of a job upon his/her return and a guarantee of continued group health coverage during the duration of the leave. The existing PFL program provides leave for this purpose, but it is not job protected and does not require continued health coverage. The author believes that these protections are necessary to SB 1166 (Jackson) Page 8 of ? encourage people to take the time necessary to bond with their new family members. 3. Parental Leave Policies in Other States : The United States is currently the only developed country in the world that does not have any government sponsored paid maternity or paternity leave law under which employees could take time off to care for their loved ones. Availability of such a leave is left at the discretion of each state and its policies and employer practices. According to the U.S. Department of Labor, only 12 percent of private-sector workers have access to paid family leave through their employers. Additionally, access is particularly low among low-wage workers, Hispanics and African Americans. Many businesses have voluntarily adopted leave policies, a trend most recently seen in corporate America with companies like Microsoft offering up to 20 weeks of fully paid parental leave. The topic of paid family leave has also been a top priority for the Obama administration, most recently in 2015, the United States Secretary of Labor Tom Perez announced that the Department of Labor Women's Bureau was awarding $1.55 million in grants to research and analyze how paid family and medical leave programs can be developed and implemented across the country. According to Secretary Perez, "passage of a national paid family and medical leave law is not a question of if, but when. But as is so often the case on important public policy issues, we need states and localities to be the incubators of innovation. It's their efforts, which we're funding today, that will pave the way for national reform. These grants will get us closer to a future where working moms and dads can focus on what really matters: time with their families." Many States have taken action to address this need by enacting statewide leave policies. Below is a summary of efforts throughout the country. Paid Leaves Several states have mandated paid family leave programs including California, New Jersey, Rhode Island and most recently New York. When fully phased in, New York's paid family leave program will provide the highest number of paid time off between all states - 12 weeks - to help meet the employee's family needs. Benefits will be phased-in beginning SB 1166 (Jackson) Page 9 of ? in 2018 at 50 percent of an employee's average weekly wage, and fully implemented in 2021 at 67 percent of their average weekly wage. This program will be job protected and funded by employees who will be eligible to participate after having worked for their employer for six months. California and New Jersey both cover up to 6 weeks of leave time, while Rhode Island only covers 4 weeks. Unpaid Leaves In terms of unpaid family leave rights, the following chart outlines information gathered by the National Conference of State Legislatures and offers a good summary of how California compares to other states. -------------------------------------------------------------- |STATE |Employer Size |Length of Leave | |--------------------+--------------------+--------------------| |California (CFRA) |50 or more |12 weeks per year | | |employees | | |--------------------+--------------------+--------------------| |Maine |15+ state/private; |10 weeks in 2 years | | |25+local gov. | | |--------------------+--------------------+--------------------| |Minnesota |21 or more |6 weeks per year | |--------------------+--------------------+--------------------| |Oregon |25 or more |12 weeks per year | |--------------------+--------------------+--------------------| |Washington, D.C. |All public or |16 weeks per 2 | | |private employers |years | | | | | -------------------------------------------------------------- San Francisco - Parental Leave On April 5, 2016, the San Francisco Board of Supervisors voted unanimously to approve a measure (File# 160065) that would require employers to help provide fully paid family leave for new parents. In conjunction with California's existing Paid Family Leave program, granting a 55% wage replacement for up to six weeks, the SF ordinance would require businesses with more than 20 employees to plug that gap by paying the remaining 45% of their employees' wages. The law, when signed, will take effect January 1, 2017 with a gradual phase in for smaller businesses. Businesses with 35+ employees would be required to comply by July 1, 2017. Businesses with 20+ SB 1166 (Jackson) Page 10 of ? employees would have until January 2018. The measure requires another formal vote by the board as well as approval by the Mayor. 4. Double Referral : This bill has been double referred and, if approved by this committee, it will be sent to the Senate Judiciary Committee for a hearing. 5. Proponent Arguments : Proponents argue that while California is one of only four states to offer paid family leave for new parents, it remains impossibly out of reach for most low-wage earners and those who work for small employers. They believe that this bill would drastically improve access to parental leave for all workers by addressing one of its biggest barriers - job protection. According to the author, a field poll found that almost 2 out of 5 employees who were eligible to use PFL, but did not apply, chose not to because they feared losing their job or other negative consequences at work [Unfinished Business: Paid Family Leave in California and the Future of U.S. Work-Family Policy (Ruth Milkman, Eileen Appelbaum (2013)]. Proponents also note that studies have found that the ability to use parental leave is far greater for salaried employees (mainly managers and professionals) and high earners (those earning over $20 per hour plus employer health insurance) than for those in hourly and low-quality jobs. They argue that existing protections for workers who need to take parental leave are woefully inadequate, noting that CFRA and FMLA provide 12 weeks of unpaid leave and job protection, but these laws only cover employees who work for larger companies with 50 or more employees. This leaves over 40% of California's workforce ineligible for job protected leave because their employer is too small. Proponents argue that this unconscionable exclusion affects these workers, their families, as well as their employers, as many workers simply must quit their jobs and find new employment following the birth of their child. At a time when financial security and healthcare coverage are so important, the risk of losing one's job to take leave to SB 1166 (Jackson) Page 11 of ? care for a new child is simply a risk that many new parents cannot afford to take. This legislation ensures that California workers who have been paying into the Paid Family Leave insurance program are able to use this benefit for parental leave without risk of losing their job. The author argues that no one should have to choose between the wellbeing of their new child and their family's financial security. 6. Opponent Arguments : Opponents argue that this measure will overwhelm small businesses with as few as five employees by allowing an employee who has only worked for the employer one day to receive 12-weeks of protected parental leave, with the threat of costly litigation for violations. Opponents argue that while small employers must provide their employees with pregnancy disability leave, they are not subject to FMLA or CFRA because large employers are the ones likely capable of accommodating such an extensive amount of time off. Both CFRA and FMLA require an employee to work for one year and at least 1,250 hours before he or she can take a 12-week protected leave of absence. This bill does not impose this same requirement and such a mandate, they argue, is simply too significant to manage. Additionally, they argue that this lack of conformity creates an opportunity for an employee to obtain over 24 weeks of protected leave in one year. For example, an employee who has only worked 800 hours could take the 12 weeks of leave under this measure, return to work for another 450 hours, and then take another 12 weeks of leave under CFRA and FMLA. Last year, Governor Brown vetoed SB 406 (Jackson) based, in part, on the fact that the legislation would "in certain circumstances, require employers to provide employees up to 24 weeks of family leave in a 12 month period. I am open to legislation to allow workers to take leave for additional family members that does not create this anomaly." Opponents believe that this bill creates this anomaly. They note that while the bill tried to address this issue by stating that the total amount of leave an employee can receive under this bill, CFRA and FMLA is 12 weeks in a 12-month period, this does not fix the situation because California cannot preempt or limit the application of federal law under FMLA. Opponents also argue that this bill labels an employer's SB 1166 (Jackson) Page 12 of ? failure to provide the 12-week leave of absence as an "unfair employment practice," a label that exposes an employer to costly litigation under the Fair Employment and Housing Act (FEHA). An employee who believes the employer did not provide the 12-weeks of protected leave, failed to return the employee to the same or comparable position, or maintain benefits while out on the 12-weeks of leave, could pursue a claim against the employer seeking: compensatory damages, injunctive relief, declaratory relief, punitive damages, and attorney's fees. Opponents cite a 2015 study by insurance provider Hiscox regarding the cost of employee lawsuits in California, ranking our state as exposing employers to a 40% higher risk of a discrimination claim than other states given its state specific statute - FEHA. The study estimated that the cost for a small to mid-size employer to defend and settle a single plaintiff discrimination claim was approximately $125,000, an amount which reflects the financial risks for employers. Lastly, opponents argue that this bill is an unprecedented mandate as they are unable to identify any other state that imposes such an extensive leave of absence on employers with only 5 employees and for employees who have worked only one day for the employer. As set forth in a 2013 study for the National Conference of State Legislatures, over 40 other states impose only a 12-week leave of absence on employers with 50 or more employees with the same hours worked requirement as FMLA and CFRA. Of the remaining states that differ, all have an employee size threshold or hours worked requirement, or both, that is significantly higher than proposed under this bill. 7. Prior Legislation : AB 908(Gomez) of 2015/16: AB 908, among other things, would revise the formula for determining benefits available pursuant to the State Disability Insurance program and the Paid Family Leave program to increase benefits to workers, as specified. AB 908 was enrolled and is at the Governor's desk awaiting signature. SB 406(Jackson) of 2015: SB 406 would have expanded various provisions under the California Family Rights Act (CFRA) to, among others, include care for a child of a domestic partner, sibling, grandparent, grandchild, domestic partner, or parent-in-law. AB 406 was vetoed by Governor Brown. SB 1166 (Jackson) Page 13 of ? SB 770 (Jackson) Chapter 350, Statutes of 2013: broadened the definition of family within the Paid Family Leave (PFL) program to allow workers to receive the partial wage replacement benefits while taking care of seriously ill siblings, grandparents, grandchildren, and parents-in-law. SUPPORT California Employment Lawyers Association (Co-Sponsor) Equal Rights Advocates (Co-Sponsor) Legal Aid Society - Employment Law Center (Co-Sponsor) Alliance for Community Empowerment American Assn of University Women American Civil Liberties Union of California Breastfeed LA California Asset Building Coalition California Black Health Network California Child Care Resource & Referral Network California Domestic Workers Coalition California Edge Coalition California Hunger Action Coalition California Immigrant Policy Center California Labor Federation, AFL-CIO California Latinas for Reproductive Justice California Partnership California Rural Legal Assistance Foundation California Women's Law Center California Work and Family Coalition Career Ladders Project Center for Popular Democracy Center for WorkLife Law Child Care Law Center Children's Hospital Los Angeles Common Sense Kids Action Consumer Attorneys of California Employment Lawyers Association Equal Rights Advocates Healthy Communities, Inc. Mexican American Legal Defense and Education Fund Mujeres Unidas y Activas National Association of Social Workers, California Chapter National Council of Jewish Women California SB 1166 (Jackson) Page 14 of ? Parent Voices Raising California Together The Opportunity Institute Tradeswomen, Inc. Voices for Progress Western Center on Law and Poverty Women's Foundation of California 9 to 5 3-Individuals OPPOSITION Associated Builders and Contractors of California California Association of Joint Powers Authorities California Chamber of Commerce California Farm Bureau Federation California Hotel and Lodging Association California League of Food Processors California Manufacturers & Technology Association California Professional Association of Specialty Contractors California Restaurant Association California Retailers Association Civil Justice Association of California National Federation of Independent Business Western Carwash Association Western Growers Association -- END --