California's COVID-19 Paid-Sick-Leave Mandate Brings Logistical Difficulties

California lawmakers recently extended and expanded paid-sick-leave benefits for employees in the state who need to take leave for certain COVID-19-related reasons—and some provisions of the new law may create administrative headaches for employers.  

Here's what employers need to know about what the law covers, how to apply the leave retroactively, and how leave taken under the statewide law may overlap with COVID-19-related leave taken under federal law and local ordinances.

Expanded Leave

SB 95 took effect on March 29 and offers eligible workers up to 80 hours of supplemental paid sick leave through Sept. 30. Employers should note that the legislation is retroactive to Jan. 1.

A prior COVID-19 supplemental paid-sick-leave law, AB 1867, expired in December 2020, and SB 95 expanded the leave to cover more employers, more employees and more situations, noted Daryl Landy, an attorney with Morgan Lewis in Costa Mesa, Calif., and Palo Alto, Calif.

The new legislation applies to businesses with more than 25 employees and covers employees who are "unable to work or telework." SB 95 covers leave for the following reasons:

• The employee must quarantine or isolate under an order or guidelines from certain state or local authorities or the U.S. Centers for Disease Control and Prevention (CDC).
• The employee has been advised by a health care provider to self-quarantine.
• The employee has an appointment to receive a COVID-19 vaccine.
• The employee is ill after receiving a COVID-19 vaccine and cannot work or telework.
• The employee has COVID-19 symptoms and is seeking a medical diagnosis.
• The employee is caring for a covered family member who needs to quarantine or isolate.
• The employee is caring for a child whose school or child care facility is closed or otherwise unavailable for reasons related to COVID-19 on the premises.

When an employee seeks time off under SB 95, the company can't require medical documentation unless there's reason to believe the employee isn't being truthful, said Jeremy Mittman, an attorney with Mitchell Silberberg in Los Angeles.

Also, employers generally can't require an employee to use other paid or unpaid leave—such as accrued vacation time or sick time—before using SB 95 leave.

Retroactive Payments

SB 95 applies retroactively to Jan. 1 to fill in the coverage gap between AB 1867's expiration and when the new law was signed.

For absences that occurred between Jan. 1 and March 28, companies only need to make a retroactive payment if employees request SB 95 leave, Mittman explained.

Employees are eligible for retroactive leave if the absence was for a covered reason, and if they didn't receive the payment amount mandated by the state law. The company must issue the payment by the next full pay period.

As one example, what if someone took vacation time in January 2021 to seek a medical diagnosis for COVID-19 symptoms? In that situation, the employee could ask to get the vacation time back, and instead have the company pay for the time off under SB 95, according to Charles Thompson, an attorney with Ogletree Deakins in San Francisco.

SB 95 Compliance Check Here are some key provisions of SB 95 that employers should review:
​	​Wage statement reporting: The SB 95 paid-sick-leave balance must be reported on employees’ pay stubs—separately from the balance for regular paid sick leave. An alternative option is to provide the SB 95 balance in a separate document.
​	​ Calculating the amount of leave: There are different ways to calculate the number of hours available under SB 95, depending on whether the employee works full time or part time. Review FAQ 13 to 15 from California regulators to determine the correct calculation.
​	Calculating the rate of pay: ​The formula for calculating sick-leave payments differs for exempt and nonexempt employees. Leave for exempt employees must be calculated the same way as wages are calculated for other forms of paid leave, such as vacation time. Review FAQ 16 to determine the correct calculation for nonexempt employees.
​	​ Sending required notices: Covered employers must display a poster at the worksite that provides details about SB 95. Notice can be sent electronically to employees who work remotely.

Interaction with Local Ordinances

Many localities in California also have their own COVID-19-related paid-sick-leave laws, including Long Beach, the city and county of Los Angeles, Oakland, the city and county of Sacramento, San Francisco, San Jose, San Mateo County, Santa Rosa, and Sonoma County.

If local leave is taken for a reason also covered by SB 95, and the required payment rates are the same under each law, the employer can count the hours provided under the local ordinance toward its SB 95 requirements, according to FAQs from the California Department of Industrial Relations.

However, a local ordinance might have a different payment rate than SB 95. In those circumstances, the business must pay the higher of the two rates.

If an employee takes local leave for a reason not covered by SB 95, the payment required by the local ordinance can't be applied to the company's SB 95 obligations, Thompson noted.

Additionally, employers should note that the California Division of Occupational Safety and Health (known as Cal/OSHA) issued an emergency temporary standard requiring employers to pay workers who are excluded from the workplace because of a potential COVID-19 outbreak or exposure. Employers may require covered workers to exhaust their COVID-19 supplemental paid sick leave before providing additional paid leave.

Interaction with the FFCRA

Employers should understand the interplay between SB 95 and the Families First Coronavirus Response Act (FFCRA). Under the FFCRA, companies with fewer than 500 employees initially were required to provide time off for COVID-19-related reasons, but offering such leave is now voluntary. The program now offers federal tax credits for employers that provide leave through Sept. 30.

Businesses that voluntarily comply with the FFCRA can claim the tax credit and also fulfill their obligations under the California law, according to Michelle Barrett Falconer, an attorney with Littler in San Francisco.

But they must follow the correct procedures, and the reason for taking leave must overlap under SB 95 and the FFCRA. Interaction with FFCRA leave is a complicated area, said Hannah Sweiss, an attorney with Fisher Phillips in Los Angeles. Businesses must comply with the California law by paying what's required, while also seeking a tax credit based on the correct dollar amount, she said.

Under the FFCRA, the payment amount can vary. An employee who takes leave for certain reasons receives up to $511 per day, while leaves for other reasons generate up to $200 per day. For an employee absent from work for covered reasons under SB 95, the maximum payment is $511 each day.

If an employee takes time off for a reason covered by SB 95, and that reason overlaps with a reason covered by the FFCRA, the company should do some calculations, Falconer said.

If the payment required by SB 95 is the same as the amount mandated by the FFCRA, the employer would pay that amount to the employee, and the business could seek a federal tax credit for the full amount.

By contrast, if the payment required by SB 95 is more than the amount specified by the FFCRA, the employer would pay the amount required by California law, and the company could only seek a tax credit for the amount offered under the federal program.

For example, if an employee took leave for a school-closure reason under SB 95, the employer would pay a maximum daily amount of $511. Under the FFCRA, the payment cap for that reason is $200 per day.

In this example, the company would pay the worker $511 per day, but the employer could only seek a federal tax credit for the $200 amount.

"There's a lot of math that goes into compliance with SB 95 and trying to also claim the tax credit," Falconer observed.

Toni Vranjes is a freelance business writer in San Pedro, Calif.