Even in the face of the coronavirus pandemic and a historic economic shock, the Legislature is considering legislation to increase the cost on employers of maintaining workers on the payroll. That is why these bills have been tagged as Job Killers.
AB 3216 (Kalra) proposes to expand several existing leaves, including leave under the California Family Rights Act (CFRA), pregnancy disability leave, and sick leave, and create paid emergency leave. AB 2999 (Low) proposes to create a new 10-day leave of absence for bereavement leave. Supporters claim that the leaves of absence are generally “unpaid” (except for sick leave and the new emergency leave) and therefore should not be a burden on employers. Just because a leave is “unpaid,” does not mean there is not a cost. Usually left out of the discussion is the method of enforcement, which is one of the biggest cost factors. And, these proposed leaves cannot be viewed in isolation, but must be considered as a part of the existing leaves California already offers.
If the Leave is Unpaid There is No Cost to the Employer – Right?
Wrong. An unpaid leave of absence has a significant burden and cost on an employer. Each leave is “protected,” meaning an employer must return the employee to the same position the employee had before going out on leave. Under AB 3216, this means holding a position open for three months or more. While an employer can temporarily fill the position with a new employee, that replacement usually comes at a premium. A replacement employee knows it is short term, and therefore, requires a premium wage, is less dedicated to the position, and often leaves for a better opportunity at a moment’s notice. Also, many jobs require extensive amount of time and money to train a new employee, adding another cost. Some employers shift the work to other existing employees, which often leads to overtime pay. And, most of the leave of absences require employers to maintain health benefits while the employee is out.
Each of the leaves of absence also comes with a threat of costly litigation if there is any dispute regarding the leave. For example, AB 2999 includes two separate options for litigation: (1) an individual private right of action with costs and attorneys only for the employee; or a (2) a representative action under Labor Code Private Attorney General Act (PAGA) with statutory penalties, damages, and attorney’s fees; or (3) Labor Commissioner enforcement. AB 3216 also includes a private right of action with lost wages, punitive damages, and attorney’s fees for any alleged violation. A 2015 study by insurance provider Hiscox found that the cost to defend a single plaintiff employment lawsuit was $125,000. A representative action would be significantly higher – likely in the millions. When the inclusion of these provisions has been challenged, sponsors and supporters often respond that if an employer just provides the leave as required, there is no lawsuit. Wrong again.
Any statute that provides a private right of action also provides the opportunity for an employee to leverage a lawsuit. Most trial attorneys know that any lawsuit has a “nuisance value” meaning the value an employer will pay just to make the lawsuit go away, regardless of whether the lawsuit has merit. Also, it is not that easy just to provide the leave and avoid a lawsuit. The case Richey v. Autonation, 60 Cal.4th 909 (2015) proves this point. In Richey, the employer provided an employee with 12 weeks of leave due to the employee’s own medical condition, as required. However, the employer discovered that while on “leave” the employee had opened up his own restaurant and was working there instead of returning to work for the employer. The employer terminated the employee and the employee sued, alleging the employer retaliated against him for taking leave. The case was litigated for six years.
How Hard Can It Be to Administer a Leave of Absence?
Hard. And for a small employer that does not have a dedicated human resource person or in-house counsel, the burden is significant. Take CFRA for example, an employee can take the 12-weeks of leave in as small an increment as two hours. An employer must track and document the leave as “CFRA” or it does not count against the 12 weeks. So, an employee can take 2 hours of leave on Monday, another two hours on Thursday, for essentially an entire year. The employer must document the time, document the reason for the leave, adjust work schedules to cover the time off in a moment’s notice, and still run a business. While it may not be as challenging for a larger employer, for small employers with limited staff and resources, it is challenging.
But its Only Ten Days of Bereavement Leave – What’s the Big Deal?
It’s a huge deal – especially on small employers. If AB 2999 were the only leave of absence currently in law or currently proposed in the Legislature this year, it might be manageable. But it is one of many, many existing or proposed leaves – plus it also includes a private right of action.
Currently, there are four bills pending that will expand or create a new leave of absence on employers with at least a single employee:
AB 3216 (Kalra) – 12 weeks of leave under CFRA a year, 4 months of pregnancy disability leave, 80 hours of emergency leave/year, and at least 3 days of paid sick leave/year
AB 2999 (Low) – 10 days of bereavement leave per year
SB 1383 (Jackson) – unlimited time off from work for a school closure or day care closure
AB 2992 (Weber) – protected time off for an employee who is a victim of a crime or a family member who is a victim of a crime
Budget Trailer Bill – 12 weeks of leave under CFRA each year
These proposed leaves of absence are in addition to the existing leaves of absence California already has in place:
Pregnancy Disability Leave: Applies to employers with 5 or more employees, 4 months of protected leave;
Military Spouse Leave: Applies to employers with 25 or more employees and allows an employee to take up to 10 days to spend time with a military spouse who has been deployed in military conflict;
Organ Donation Leave: Applies to employers with 15 or more employees and provides eligible employees with up to 60 days of protected leave in a year to donate an organ;
Bone Marrow Leave: Applies to employers with 15 or more employees and provides eligible employees with up to one week of paid protected leave in a year to donate bone marrow;
Paid Sick Leave/Kin Care: Applies to employers with one or more employees and requires 1 hour of paid sick leave for every 30 hours worked. Half of all accrued sick leave must be used to care for a sick family member;
School Activities Leave: Applies to employers with 25 or more employees and provides eligible employees with up to 40 hours of leave per year to participate in school activities with their children;
School Appearance Leave: Applies to any employer with one or more employees and requires them to provide employees with time off in order to appear at school on a child’s behalf with regard to school suspension;
Domestic Abuse/Sexual Assault/Stalking Leave: Applies to any employer with 25 employees or more and requires an employer to provide an indefinite leave of absence to an employee who is seeking services or medical attention as a result of domestic violence, sexual assault, or stalking;
New Parent Leave Act: Applies to employers with 20 or more employees and requires a 12-week protected leave of absence for bonding with a new child.
Adding new leaves, new burdens, and new costs to employers right now who are suffering as a result of this pandemic, is a Job Killer, even though the leave itself may not be “paid.”