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Administering employee leave ranks among the most vexing of challenges for employers, and for those operating in California the task is even more daunting. They must contend with a patchwork of employee-friendly statutes, both state and local, including laws mandating employer-paid leave for illness and other reasons. With federal law thrown into the mix and new measures continuing to percolate, complying with the myriad legal requirements is no small feat.
The statutory obligations can be divided into two related prongs. "On the one hand, there is the right to protected leave from work; on the other, there is the right to wage replacement while on protected leave from work," noted Charles L. Thompson, an attorney with Ogletree Deakins in San Francisco. "How do I get leave, and how do I get paid for it?"
Apply the Most Employee-Protective Law
The California Family Rights Act (CFRA) allows employees to take up to 12 weeks of leave due to their own or a family member's serious health condition, or for a child's birth, adoption or foster care placement. Employers must comply with both the CFRA and the Family and Medical Leave Act (FMLA), its federal equivalent. The eligibility rules are the same: Employees must have worked for the employer for at least 12 months (as of the date the leave starts), worked at least 1,250 hours in the previous 12 months and work at a location with 50 or more employees within a 75-mile radius.
Where the statutes differ, however, the more employee-protective of the two applies. In most situations, that's the CFRA. For example, the CFRA prohibits employers from asking health care providers to identify the employee's serious health condition, while the FMLA allows the request of such information. (This means that California employers should use the state's medical certification form instead of the more-intrusive federal Department of Labor form.)
Pregnancy Leave Is Separate
When an employee needs to take leave because she is disabled as a result of pregnancy, childbirth or a pregnancy-related condition, such as severe morning sickness or gestational diabetes, the California Pregnancy Disability Leave Law (PDLL) applies. The law grants employees up to four months of protected unpaid leave, which the state measures as 17.3 weeks for a full-time employee. Importantly, while PDLL leave runs concurrently—at the same time—with FMLA leave for 12 weeks, PDLL leave does not run concurrently with CFRA leave, making PDLL a separate leave entitlement.
After exhausting PDLL leave, an employee may take up to 12 weeks more under the CFRA for baby-bonding purposes. Employees must complete this bonding leave within one year after birth or adoption. Although the FMLA allows employers to mandate that employees take bonding leave all at one time, California employers can require bonding leave only in minimum two-week increments, and even then, employees can take bonding leave in less than two-week increments on any two occasions.
Leave May Be Reasonable Accommodation
What's the most common leave-related question that employers ask? Thompson painted this scenario: "My employee was out on CFRA leave for the full 12 weeks, and can't come back. He got a doctor's note saying he needed another three weeks; three weeks later he got another note, and another. The employer wants to know: Can I terminate him now? How much leave do I have to provide this employee? How much leave is too much?"
It's a frustrating situation for employers, no doubt. But California law is clear that if an employee cannot return to work after CFRA leave, he or she may be entitled to more unpaid time off under the California Fair Employment and Housing Act (FEHA), which protects employees from disability-based discrimination.
"When the employee first says he needs more leave after he's exhausted family medical leave, at that point you should be engaging in the interactive process to determine whether the employee has a disability, whether it is a reasonable accommodation to provide an extended leave of absence and whether reasonable accommodations other than a leave of absence are available," Thompson advised.
In fact, California disability regulations expressly state that an employer must engage in the interactive process if an employee who has exhausted his or her family medical leave indicates that he or she needs additional leave. (California law, unlike federal law, allows employees to bring claims for failure to engage in the interactive process in such instances.)
Quite simply, if a leave of absence is likely to make it so the employee can return to work, then it's a reasonable accommodation, Thompson explained. "But you can't keep saying 'three weeks' forever. At some point all the extensions add up to being an indefinite leave. And the law is clear: An employer does not have to provide indefinite leave." Moreover, an employer does not have to provide leave as a reasonable accommodation if doing so would be an undue hardship. The longer the leave and the greater the impact on an employer's operations, the more likely it is that an employer will be able to show undue hardship.
Finally, California and federal law are clear that an employer cannot implement a maximum leave policy that would allow for the termination of employees after they have been on leave for a certain period of time. Instead, employers must evaluate leave and undue hardship on a case-by-case basis.
Most Leave Rights Run Concurrently
Most employee leave rights run at the same time (with the exception of the PDLL and a few other statutory provisions). That includes leave under the Americans with Disabilities Act and the FMLA, paid sick leave, short-term disability leave, leave taken under workers' compensation law and leave provided to unionized employees under collective bargaining agreements.
"The general rule is that employers should make leave run concurrently as much as they possibly can," Thompson said, in order to minimize the extent and impact of the employee's absence. "If my employee has an occupational injury, I want to make sure that he's also using his family medical leave time for a serious health condition."
Getting Paid for Leave
It's a nationwide trend: Paid-sick-leave bills are proliferating across the country. At least five states now require employer-paid sick leave, and there are similar laws in 25 municipalities and counting. At the federal level, a long-shot measure introduced in Congress in 2015 would mandate that private employers provide seven days of paid leave each year. And it was California that led the way, as is so often the case. Nudged by San Francisco, which enacted the nation's first paid-sick-leave measure of its kind a decade ago, the state legislature passed the Healthy Workplaces, Healthy Families Act of 2014 (HWHFA), which applies to most employers within the state.
Under the HWHFA, employers must grant employees paid sick leave that they can use after 90 days of employment. Employers can give employees 24 hours or three days "upfront" each year for use throughout the year. These hours do not carry over from year to year. Alternatively, employers can provide paid sick leave on an accrual basis of one hour of paid sick leave for every 30 hours worked. If the employer uses the accrual method, the employer can cap leave accrual to 48 hours per year. The employee begins accruing again once the employee uses some paid sick leave and falls below the cap. In addition, employers that use the accrual method can limit an employee's use of paid sick leave to 24 hours within a 12-month period.
Employees can use paid sick leave for their own illness or to care for certain family members. They also may use the leave for "safe time" in the event of sexual assault or violence.
Important changes to the HWHFA were recently enacted: While the paid-leave benefits previously amounted to 55 percent of an employee's income, that level will rise to 60 or 70 percent of an employee's pay (depending on his or her income). Also, the current seven-day waiting period that applies before benefits kick in will be eliminated as of Jan. 1, 2018.
State Law Establishes Floor, Not Ceiling
The HWHFA establishes minimum requirements only and is careful to note that employers may, of course, provide additional paid-leave benefits above and beyond the statutory floor. Employers also must comply with any other applicable laws that offer more generous paid sick leave. In California, there are several.
For example, under the San Francisco Paid Sick Leave Ordinance, which preceded the state law, employees who work in the city and county of San Francisco accrue one hour of paid sick leave for every 30 hours worked within the jurisdiction. Employers with fewer than 10 employees may cap sick leave accrual at 40 hours; larger employers may restrict accrual to 72 hours. San Francisco's accrual provision is more favorable to employees than the state law.
Additionally, while the CFRA allows employees to use only half of their available sick leave to care for sick family members, San Francisco lets employees use all of their accrued leave to that end, if need be; it also defines "family" more broadly, and allows an employee who does not have a spouse to designate any other person for whom the employee may take leave to care for.
Complicating matters: The San Francisco ordinance is not more employee-friendly across the board, so its specific directives don't automatically apply. For one, the state's HWHFA's rehire provision, which mandates that unused paid sick leave gets reinstated if a separated employee returns to work for the employer, is more generous to San Francisco-based employees.
Several other California cities now have paid-sick-leave measures with benefits that exceed state-law requirements. A Los Angeles ordinance—just signed into law on June 2, 2016—will provide employees twice as much paid sick leave as state law requires. In Los Angeles and Santa Monica, hotel employees, specifically, get even more. Emeryville and Oakland have local paid-sick-leave laws, too. San Diego will soon join their ranks, through a voter-approved paid-sick-leave ordinance passed on June 7, 2016, which takes effect once the votes are certified. Berkeley enacted paid leave legislation, effective Oct. 31, 2017.
Employers operating in these localities must undertake clause-by-clause comparisons to ensure they provide their employees with the maximum benefits under all the applicable statutes.
Can Employers Bundle Paid Time Off?
Common now are paid-time-off (PTO) policies that bundle sick days, personal days and vacation into one pool. Does the emergence of paid sick leave require a revamping of PTO? It depends. Employers with PTO banks as generous as the paid-sick-leave laws require are likely in compliance; those that aren't as generous will have to provide additional sick days.
Further, employers must conform their PTO accrual rates to the paid-sick-leave accrual rates mandated by law. Note, too, that California law requires employers to pay out accrued and unused PTO to employees upon termination, but does not require the same with sick pay, so it may be wise to separate the two anyhow in order to reduce the accrued time that an employer must pay at termination.
Paid Parental Leave and "One-Offs"
Proving once again to be the bellwether, San Francisco on April 5, 2016, enacted the nation's first fully paid parental leave law. Currently, California's Paid Family Leave program provides partial wage replacement for employees who are on protected leave for certain qualifying reasons under other statutes, including baby-bonding. San Francisco's Paid Parental Leave Ordinance obligates employers to make up the difference between the employee's pay and the state's partial wage replacement. Employers with 50 or more employees must comply beginning Jan. 1, 2017.
California employers also must honor a host of other state law provisions that ensure employees will be able to take protected leave to perform military service, vote, serve jury duty, testify in court, attend parent-teacher conferences, donate organs or bone marrow, serve as volunteer firefighters or reserve peace officers, or to perform civil air patrol duties. For workers employed by the state, even more provisions apply. Some of these measures apply to all employers; some have minimum-employee thresholds. All run concurrently with additional forms of leave.
Putting the Pieces Together
Administratively, the overlapping obligations can be tough to navigate, particularly for employers operating in numerous California municipalities (or in other states, too). Consider, for example, a company that manages hotels across California and elsewhere. It must grapple with statewide obligations, incongruous local measures and additional sick-leave provisions unique to the industry.
If one of its landscapers "floats" between facilities in Oakland and San Francisco, she accrues paid sick leave under the San Francisco Paid Sick Leave Ordinance for the hours worked in San Francisco—which she cannot use in Oakland—while also accruing sick leave under Oakland's sick-leave ordinance for hours worked in Oakland, which she cannot use in San Francisco. However, all of her hours would count toward state paid sick leave. Meanwhile, her counterpart in Santa Monica gets still more sick leave, per local ordinance.
Perhaps outside of California, the company endows its various leave perks to full-time staff only. In the Golden State, though, part-time front-desk attendants, seasonal lifeguards, and other part-time seasonal and temporary workers are covered under the HWHFA, and so are entitled to paid-leave benefits, irrespective of the employer's standard benefits plan. While employers are allowed to be more generous to full-timers, other staff must be afforded at least their statutory entitlement of leave.
Meanwhile, the hotel employer may have different obligations toward its unionized employees, as many state and local laws include collective bargaining carve-outs. The rationale is that union-represented workers can negotiate even better deals, or trade away their statutory leave rights for a bigger plum. "This is not unusual," Thompson pointed out. "Paid sick leave is often used as a bargaining chip." Consequently, the company's nonunion workforce may have better leave benefits. On the other hand, some local ordinances don't include such exceptions, adding yet another layer of complexity.
Do federal employees stay at the hotels when traveling on government business? An executive order issued by President Barack Obama requires federal government contractors, beginning in 2017, to provide employees with one hour of paid sick leave for every 30 hours worked. If it survives a pending legal challenge, that measure will cover a broad swath of private employers in California—like the hotel operator here, perhaps—that hold federal contracts and subcontracts.
Rules Present Administrative Challenges
All the while, the company's payroll systems must struggle to keep up. One common pain point for employers, said Thompson, is the requirement that employees' available sick leave balance be reported on their wage statements each payday. "It has proven to be difficult administratively," he said, "particularly if the employer processes the payroll itself." Many employers simply aren't readily equipped to comply with the wage statement obligation.
Employers also struggle with aligning their company policies to the disparate mandates. Is it best to maintain one uniform leave policy that covers all the bases or implement several different policies customized by jurisdiction?
"Many California employers with operations in other states prefer a uniform approach to paid time off and leave, using the leave laws that are most generous to the employee so that the employer does not have to worry about different policies in different handbooks," Thompson replied. This strategy reduces administrative problems as well, and can avert morale issues that can arise due to perceived unfairness.
Stringent Notice and Record-Keeping Requirements
The bulk of these enactments—both the protected employee leave and wage replacement provisions—carry stringent notice-posting, record-keeping and related enforcement provisions, with consequences for employers that don't comply. The statutes typically feature anti-retaliation protections for employees, too.
From an operational standpoint, employers must carefully chart their staffing needs with the expectation that the availability of paid employee leave may well result in more employee leave. A failure to plan accordingly can result in short-staffing and the consequent overtime costs.
Finally, keep a watchful eye. New paid-sick-leave proposals are looming, in California and elsewhere, and those currently on the books are always subject to change.
Lisa Milam-Perez, J.D., is a legal editor/senior writer-consultant for Wolters Kluwer Legal and Regulatory U.S. in Riverwoods, Ill.
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