With the economy slowly reopening after a year of COVID-19-related shutdowns, federal and state laws were recently enacted which extend paid sick leave benefits to California workers. On March 19, 2021, Governor Gavin Newsom signed a bill that extends additional paid sick leave for reasons relating to COVID-19 to California workers. The legislation, SB 95, applies to employers with more than 25 employees anywhere in the United States. The law requires that employers provide up to 80 hours of COVID-19 Supplemental Paid Sick Leave (“COVID-19 SPSL”) to eligible employees for qualifying COVID-related absences. This obligation took effect on March 29, 2021, and applies retroactively to January 1, 2021. The law is scheduled to expire on September 30, 2021.
Eight days earlier, President Joe Biden signed the American Rescue Plan Act (“ARPA”), which gives employers the option to continue to receive tax credits for providing emergency paid sick leave (“Emergency Sick Leave”) and emergency family and medical leave (“Emergency FMLA”), initially granted pursuant to the federal Families First Coronavirus Response Act (“FFCRA”). Under the ARPA, employers that give eligible employees a new allotment of 80 hours of Emergency Sick Leave to use between April 1 and September 30, 2021, are entitled to a tax credit for doing so.
Third, Cal-OSHA’s COVID-19 Prevention Emergency Temporary Standards remain in effect, requiring (among other things) that employers provide paid leave to employees whom they exclude from the workplace due to “COVID-19 cases” or “COVID-19 exposure.”
This Alert reviews all three of these forms of paid pandemic-related leave.
Mandatory COVID-19 Supplemental Paid Sick Leave for California Employers with More Than 25 Employees
The following are the key requirements of SB 95, California’s COVID-19 SPSL law.
Use of Leave
Eligible employees may take COVID-19 SPSL if the employee is unable to work (or telework) due to a need for leave because:
(1) The employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidelines of the State Department of Public Health, the federal Centers for Disease Control and Prevention, or a local health officer who has jurisdiction over the workplace.
(2) The employee is advised by a health care provider to self-quarantine due to concerns related to COVID-19.
(3) The employee is attending an appointment to receive a COVID-19 vaccine.
(4) The employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework.
(5) The employee is experiencing COVID-19 symptoms and seeking a medical diagnosis.
(6) The employee is caring for a family member who is subject to a quarantine or isolation order or guideline or who has been advised to self-quarantine by a health care provider due to concerns related to COVID-19.
(7) The employee is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19.
A family member under this policy includes a spouse, registered domestic partner, parent (including parent of a spouse or domestic partner), grandparent, child (regardless of age or dependency), grandchild, and sibling.
Amount of Available Leave
A full-time employee is entitled to 80 hours of COVID-19 SPSL if: 1) the employee is designated by the employer as a full-time employee, or 2) if the employee was scheduled to work, on average, at least 40 hours per week in the two weeks preceding the date the employee took leave. For other employees, two weeks of COVID-19 SPSL is calculated on a pro rata basis (e.g., if the employee works a normal weekly schedule, the employee is entitled to the total number of hours they are normally scheduled to work for the Company over two weeks). An employee who starts leave on or before September 30, 2021, is entitled to take the full amount of COVID-19 SPSL that would otherwise have been provided.
Pay During Leave
The rate of pay for each hour of SPSL for non-exempt employees must be set at the highest of the following:
(1) The employee’s regular rate of pay, regardless of whether the employee works overtime, in the workweek the employee uses leave;
(2) The result of dividing the employee’s total wages – excluding overtime premiums – by the employee’s total hours worked in the full pay periods of the prior 90 days of employment; or
(3) The applicable state or local minimum wage.
Payment for leave for exempt employees is calculated in the same manner as the employer calculates wages for other forms of paid leave.
For COVID-19 SPSL, employers aren’t required to pay more than $511 per day and $5,110 in the aggregate to an employee. An employee who exceeds the pay caps may choose to use other available paid leave so that the employee is fully compensated during an absence.
If an employee took leave for a covered reason between January 1, 2021 and March 29, 2021, and was not paid an amount equal to or greater than the amount of COVID-19 SPSL, or was required to use other paid time off benefits, an employer must retroactively apply COVID-19 SPSL benefits upon the employee’s oral or written request. Retroactive payments must be paid on or before the payday for the next full pay period after the request and must be reflected on the written notice for the corresponding pay period.
Wage Statements and Required Posting
Effective on the first full pay period after March 29, 2021, COVID-19 SPSL must be itemized separately from the state paid sick leave allowance on employee wage statements. For part-time, variable hour employees, employers may perform an initial calculation of COVID-19 SPSL available and indicate “(variable)” next to that calculation. The employer will then need to update the available balance when an employee requests to use COVID-19 SPSL.
Employers must post the Labor Commissioner’s model notice. Employees who don’t frequent a workplace may receive the notice through electronic means, such as e-mail.
Interaction with Other Leaves
COVID-19 SPSL that is available after January 1, 2021, for the same reasons and paid at the same rate shall count as hours toward other supplemental paid sick leave obligations. For example, leave provided under federal or local ordinances for reasons overlapping with California’s COVID-19 SPSL runs concurrently. COVID-19 SPSL is in addition to, and does not run concurrently with, paid sick leave under the California paid sick leave law.
Employees are not required to use other forms of paid leave (e.g., PTO, vacation, or other available sick leave) before using COVID-19 SPSL for a qualifying reason. However, an employer may require that an employee exhaust the employee’s COVID-19 SPSL prior to taking COVID-19 leave associated with being excluded from the workplace under Cal-OSHA’s Emergency Temporary Standard (discussed below).
The Labor Commissioner has published 2021 COVID-19 Supplemental Sick Pay FAQs to assist with employer compliance.
Optional Federal FFCRA Leaves (With Extension of Federal Tax Credits Under the ARPA)
Original Law and Extensions
The FFCRA required employers with fewer than 500 employees to provide both Emergency Sick Leave and Emergency FMLA from April 1 through December 31, 2020. The law was then extended on January 1, 2021. This extension, which expired on March 31, 2021, made an employer’s continued offer of Emergency Sick Leave benefits voluntary. The law did not replenish the amount of leave available to employees. The second extension, through the ARPA, took effect on April 1, 2021 and expires on September 30, 2021. The current law makes this leave optional for employers, not mandatory. However, it requires that employers wishing to take tax credits must offer a new 80-hour/2-week allotment of Emergency Sick Leave in order to receive federal tax credits.
Under the ARPA, employers may elect to extend just Emergency Sick Leave benefits, just Emergency Family Leave benefits, or both.
Amount of Leave Available
The ARPA resets the 80-hour/2-week limits for Emergency Sick Leave starting April 1, 2021. This means that if employees previously exhausted their entitlement to Emergency Sick Leave under the FFCRA, they now have up to another 80 hours/2 weeks to use. However, any paid sick leave not used before April 1, 2021 does not roll over. While the ARPA requires a new allotment of Emergency Sick Leave to employees, the law does not create a new bank of Emergency FMLA. The cap remains at 12 weeks. Therefore, effective April 1, 2021, Emergency FMLA leave will reset per individual employer FMLA benefit year clocks.
Changes to Emergency Sick Leave
The ARPA adds reasons (4) – (6) relating to vaccination and testing to the list of qualifying reasons for Emergency Sick Leave. Eligible employees may now take Emergency Sick Leave if the employee is unable to work (or telework) due to a need for leave because:
(1) The employee is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.
(2) The employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
(3) The employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
(4) The employee is obtaining a COVID-19 vaccination.
(5) The employee is recovering from any injury, disability, illness, or condition related to the COVID-19 vaccination.
(6) The employee is seeking or awaiting the results of a diagnostic test, or a medical diagnosis, due to exposure to COVID-19 or because the employer has requested the employee obtain the test or diagnosis.
(7) The employee is caring for an individual who is subject to an order as described in subparagraph (1) or has been advised as described in paragraph (2). “Individual” means the employee’s immediate family member, a person who regularly resides in the employee’s home, or a similar person with whom the employee has a relationship that creates an expectation that the employee would care for the person if he or she were quarantined or self-quarantined. Individual does not include persons with whom the employee has no personal relationship.
(8) The employee is caring for a son or daughter of such employee if the school or place of care of the son or daughter has been closed, or the child care provider of such son or daughter is unavailable, due to COVID-19 precautions.
(9) The employee is experiencing any other substantially similar condition specified by the United States Secretary of Health and Human Services in consultation with the U.S. Secretary of the Treasury and the U.S. Secretary of Labor.
Changes to Emergency FMLA
The APRA increases the number of paid weeks available to employees from 10 weeks to 12 weeks by removing the initial 2-week unpaid period. This means that if an employee qualifies for Emergency FMLA, the employee is eligible for 12 weeks of paid leave, assuming the employee has not previously used any Emergency FMLA leave.
The qualifying reasons to use Emergency FMLA have significantly expanded: Starting on April 1, 2021, qualifying reasons for Emergency FMLA also include any of the Emergency Sick Leave qualifying reasons. Therefore, if an employee qualifies for Emergency Sick Leave and needs leave beyond the 80-hour/2-week entitlement for Emergency Sick Leave, the employee could take up to an additional 12 weeks of Family Leave. Therefore, after April 1, 2021, an employee could potentially take up to a total of 14 weeks of paid leave.
Available Federal Tax Credits
The amount of the federal payroll tax credit for Emergency Sick Leave is based on the employee’s regular rate of pay, up to $511 per day ($5,110 in aggregate), when the time off is a qualifying reason due to the employee’s immunization or testing, or employee’s own symptoms, quarantine or isolation. For qualifying reasons relating to the employee’s care of someone else, the Emergency Sick Leave tax credit is limited to 2/3 of the employee’s regular rate of pay up to $200 per day ($12,000 in aggregate).
The tax credit for Emergency FMLA leave is limited to 2/3 the employee’s regular rate of pay up to a maximum of $200 per day for all qualifying Emergency FMLA reasons, up to a cumulative cap of $12,000. The first two weeks of Emergency FMLA is no longer unpaid.
The ARPA requires that if either Emergency Sick Leave or Emergency FMLA leave is offered, it must be offered to all employees and it must not be restricted to highly compensated employees, full-time employees or tenured employees.
Paid Leave Under Cal-OSHA’S COVID-19 Prevention Emergency Temporary Standards
Cal-OSHA’s Emergency Temporary Standards require (among other things) that when an employer excludes an employee from the workplace due to “COVID-19 cases” or “COVID-19 exposure,” the employer must continue and maintain the employee’s earnings, seniority, and all other employee rights and benefits, including the employee’s right to their former job status, as if the employee had not been removed from their job. The employer may use employer-provided employee sick leave benefits for this purpose and consider benefit payments from public sources in determining how to maintain earnings, rights and benefits, where permitted by law and when not covered by workers’ compensation.
The pay continuation requirements do not apply to:
(a) employees working from home;
(b) situations where the Company demonstrates that the COVID-19 exposure is not work related;
(c) any period of time during which the employee is unable to work for reasons other than protecting persons at the workplace from possible COVID-19 transmission;
(d) places of employment with one employee who does not have contact with other persons;
(e) employees covered by California’s Aerosol Transmissible Diseases regulations. (Title 8 California Code of Regulations Section 5199.) We recommend that employers publish temporary, stand alone (i.e., separate from the employee handbook) policies to inform employees of their rights and responsibilities with respect to paid leaves under these laws. Employers should work with legal counsel to ensure that their policies capture legal requirements in all localities and states where employees work (including remotely) as requirements can vary from location to location.