Answers to Employer Questions Regarding COVID-19 Paid Sick Leave and Extended FMLA Leave After California Senate Bill 95 and the American Rescue Plan Act

By Procopio Partner Marie Burke Kenny

As employers continued to grapple with employee absences caused by COVID-19, the state of California has imposed further pandemic-related obligations.

Governor Gavin Newsom signed into law a bill that requires employers with 25 or more employees to provide COVID-19 supplemental paid sick leave to employees who are unable to work or telework due to certain COVID-19 related reasons. That new law, Senate Bill 95, is now in effect.

An additional consideration for employers, the American Rescue Plan Act (“ARPA”), was signed into law on March 11, 2021. ARPA extended and expanded the availability of payroll tax credits for employers who elect to provide paid sick leave and extended FMLA leave consistent with the Families First Coronavirus Response Act (“FFCRA”) and ARPA.

Employers have many questions regarding the provision of paid sick leave and extended FMLA leave after the passage of these two new laws. Below are some answers (footnotes at end of Q&A):

When does SB 95 take effect? 

SB 95 became effective on March 29, 2021, 10 days after Governor Newsom signed the bill. The law created a new Labor Code section 248.2.

When does SB 95 expire?

The law will expire on September 30, 2021 (unless extended).

Is SB 95 retroactive?

Yes. SB 95 makes COVID-19 Supplemental Paid Sick Leave retroactive to January 1, 2021, meaning that employers must provide retroactive payment for qualifying leave taken since January 1, 2021, once the employee makes a verbal or written request for such payment. Employers must make this payment on or before the payday for the next full pay period after the employee makes the oral or written request.(1) This means that an employee can use COVID-19 Supplemental Paid Sick Leave for any absence since January 1, 2021, that falls within a covered reason (below).

Who are “covered employers” under SB 95?

A “covered employer” is any business “with more than 25 employees.” (This is significantly broader than the prior California COVID-PSL law which applied to any business with more than 500 employees).

Who are “covered employees” under SB 95?

Any employee who is unable to work or telework for a covered employer for one of the following reasons:

• The covered employee or provider “is subject to a quarantine or isolation period related to COVID-19” as defined by an order or guidelines of the California Department of Public Health, the U.S. Centers for Disease Control and Prevention, “or a local health officer who has jurisdiction over the workplace.”
• A health care provider has advised the covered employee or provider to self-quarantine because of COVID-19–related concerns.
• The covered employee or provider “is attending an appointment to receive” a COVID-19 vaccine.
• The covered employee or provider “is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework.”
• The covered employee or provider is experiencing COVID-19 symptoms and is seeking a medical diagnosis.
• “The covered employee is caring for a family member … who is subject to an order or guidelines described” in qualifying reason (1), or who a health care provider has advised to self-quarantine, as described in qualifying reason (2), SB 95 defines family members to include the employee’s spouse, registered domestic partner, parent (including parents-in-law), child (regardless of age or dependency), grandparent, grandchild, and sibling.
• The covered employee or provider “is caring for a child … whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19 on the premises.”

How much COVID-19 Supplemental  Paid Sick Leave is an employee entitled to under the new law?

Full time employees are entitled to 80 hours of COVID-19 Supplemental Paid Sick Leave, while part-time employees are entitled to an amount of COVID-19 Supplemental Paid Sick Leave that corresponds to the number of hours the employee regularly works over 2 weeks.(2)

Can an employer require an employee to use existing PSL?

No. The 80 hours of COVID-19 Supplemental PSL is in addition to the regular paid sick leave that an employer must provide under Labor Code Section 246.

When does an employer have to provide COVID-19 Supplemental Paid Sick Leave to an employee?

An employer must immediately provide COVID-19 Supplemental Paid Sick Leave when an employee makes a verbal or written request for such leave.

When does an employer have to provide a retroactive COVID-19 Supplemental Paid Sick Leave payment to an employee?

An employer is only required to provide a retroactive payment if a covered employee makes a verbal or written request to be paid for an absence that qualifies under the new law.

How long does an employer have to make a retroactive a retroactive COVID-19 Supplemental Paid Sick Leave payment to an employee?

An employer must issue a retroactive COVID-19 Supplemental Paid Sick Leave payment on the payday for the next full pay period after the employee makes the request.

Does the new law impose any wage statement requirements?

Yes. Employers must separately list the payment amount, available hours and rate of pay for the COVID-19 Supplemental Paid Sick Leave on each employee’s wage statement. The retroactive pay must be identified on the employee’s wage statement as a distinct line item. The employer must list available COVID-19 Supplemental Paid Sick Leave separately from any other available paid sick leave or paid time off. Any retroactive payments must comply with this wage statement requirement.

When does the new wage statement requirement take effect?

The wage statement requirement becomes effective the first full pay period after the statute’s effective date.

Does the SB 95 impose any notice or posting requirements?

Yes. Covered employers are required to post a notice of the COVID-19 Supplemental Paid Sick Leave requirements in a conspicuous place in the workplace.  The California Department of Industrial Relations has published a model notice.

An employer may disseminate the notice “through electronic means” such as e-mail if employees do not frequent the physical workplace.

Can an employer require a medical certification as a condition of providing COVID-19 Supplemental Paid Sick Leave to an employee?

No. An employee is entitled to COVID-19 Supplemental Paid Sick Leave immediately after making a verbal or written request. If, however, an employer has other information that the employee is not requesting COVID-19 Supplemental Paid Sick Leave for a valid purpose, it may be reasonable for an employer to ask for documentation before paying the sick leave.

Is there a limit on how much COVID-19 Supplemental Paid Sick Leave an employer must pay to an employee?

Yes. An employer is not required to pay more than $511 per day and $5,110 in the aggregate to a covered employee for COVID-19 Supplemental Paid Sick Leave taken by a covered employee. A covered employee may use other available paid leave in order to receive what they would normally earn if the cap is reached.

Can an employer be credited for any covered absences paid for since 1/1/21 under SB 95?

Yes. SB 95 authorizes an employer to credit other paid leave the employer provided to employees on or after January 1, 2021, for absences taken for the same COVID-19–related reasons as those contained in SB 95 as a “credit” towards COVID-19 Supplemental Paid Sick Leave. For example, if an employer already provided and the employee used 16 hours of paid leave taken under the FFCRA on or after January 1, 2021, a full-time employee would be entitled to 64, not 80, hours of COVID-19 Supplemental Paid Sick Leave. However, employers may not credit paid leave they provided employees for regular PSL or for COVID-19–related reasons in 2020.

Are there special provisions for in-home supportive service providers?

Yes. For home supportive service providers, the amount of COVID-19 Supplemental Paid Sick Leave provided “is in addition to any unused sick leave benefits put in place” by the FFCRA, which a provider may still use until March 31, 2021.

Are there special provisions for firefighters?

SB 95 includes special provisions for firefighters. “[A] covered employee who is a firefighter who was scheduled to work more than 80 hours for the employer in the two weeks preceding the date the covered employee took COVID-19 supplemental paid sick leave is entitled to an amount of COVID-19 supplemental paid sick leave equal to the total number of hours that the covered employee was scheduled to work for the employer in those two preceding weeks.”

How is the new COVID-19 Supplemental Paid Sick Leave calculated?

Employers must pay each hour of COVID-19 Supplemental Paid Sick Leave for non-exempt, hourly employees at the higher of:

• the employee’s “regular rate of pay for the workweek in which” COVID-19 Supplemental Paid Sick Leave was taken, regardless of whether the employee worked overtime in that workweek;
• “the covered employee’s total wages, not including overtime premium pay, [divided] by the employee’s total hours worked in the full pay periods of the prior 90 days of employment”;
• the California minimum wage; or
• the local minimum wage.

How does SB 95 affect the requirement that employers provide exclusion pay to employees who are excluded from the workplace for a COVID-19 exposure under Cal-OSHA’s Emergency Temporary Standard?

Employers may require employees who are excluded from the workplace due to COVID-19 exposure under the Cal-OSHA COVID-19 Emergency Temporary Standards to first exhaust COVID-19 Supplemental Paid Sick Leave before being required to provide exclusion pay to such employees.

How does ARPA apply to California employers?

For California employers who are not covered by SB 95 (i.e. have less than 25 employees), such employers may elect to provide up to 80 hours of COVID-related paid sick leave and up to 12 weeks of extended FMLA leave to their employees. Employers who elect to provide such paid sick leave or extended FMLA leave can qualify for certain payroll tax credits. Such employers are not required to provide such paid sick leave or extended FMLA leave.

What are the qualifying reasons for ARPA paid sick leave?

Employers, who are not covered by SB 95, may elect to provide paid sick leave for the previous six reasons under the FFCRA(3) in addition to the following two new reasons:

• the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis; and
• the employee is obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to such immunization’ after medical diagnosis.

What are the qualifying reasons for ARPA extended FMLA leave?

Employers may elect to provide paid extended FMLA leave for the same six reasons for paid sick leave under the FFCRA as well as the following two new reasons:

• the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis; and
• the employee is obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to such immunization’ after medical diagnosis.

If a California “covered employer” provides COVID-19 Supplemental Paid Sick Leave under SB 95, will that employer qualify for payroll tax credits under ARPA?

It is unclear. California employers may or may not qualify for payroll tax credits for providing up to 80 hours of required COVID-19 supplemental paid sick leave to an employee for reasons that also qualify under the FFCRA and ARPA. The IRS has not yet issued guidance regarding eligibility for tax credits under ARPA. Employers should consult tax counsel to evaluate eligibility for tax credits.

Can an employer qualify for tax credits for providing extended family leave under ARPA?

Yes. An employer may receive a tax credits for voluntarily providing up to 12 weeks of extended FMLA leave for qualifying reasons under the FFCRA and ARPA beyond any COVID-19 Supplemental Paid Sick Leave.

California “covered employers” should immediately distribute the model COVID-19 Supplemental Paid Sick Leave notice published by the state Department of Industrial Relations to their employees. Employers should also work with their payroll providers to separately list the payment amount, available hours and rate of pay for COVID-19 Supplemental Paid Sick Leave on all employee wage statements. Although the Internal Revenue Service has promised to publish guidance regarding employer eligibility for payroll tax credits for COVID-19 paid sick leave, it is unclear when such guidance will be available. In the meantime, we recommend that employers work closely with employment counsel to discuss options for complying with the new laws.

If you need further information, please contact me or any other member of our Labor and Employment team.

Footnotes:

(1) For example, if an employee took unpaid leave in February 2021 to care for a family member who was diagnosed with COVID-19 or quarantined, the employee can ask for, and the employer must pay, COVID-19 Supplemental Paid Sick Leave for any unpaid absences. Likewise, if an employee used accrued vacation in January 2021 because the employee was waiting for a medical diagnosis with COVID-19 symptoms, the employee could ask for and the employer would have to pay COVID-19 Supplemental Paid Sick Leave for those days and restore the vacation pay to the employee’s vacation accrual bank.

(2) “If the covered employee has a normal weekly schedule, the total number of hours the covered employee is normally scheduled to work for the employer over two weeks.”

“If the covered employee works a variable number of hours, 14 times the average number of hours the covered employee worked each day for the employer in the six months preceding the date the covered employee took COVID-19 supplemental paid sick leave. If the covered employee has worked for the employer over a period of fewer than six months but more than 14 days, this calculation shall instead be made over the entire period the covered employee has worked for the employer.”

“If the covered employee works a variable number of hours and has worked for the employer over a period of 14 days or fewer, the total number of hours the covered employee has worked for that employer.”

(3) In the previous six FFCRA reasons, the employee:

1. Is subject to a Federal, State, or local quarantine or isolation order related to COVID–19;
2. Has been advised by a health care provider to self-quarantine due to concerns related to COVID–19;
3. Is experiencing symptoms of COVID–19 and seeking a medical diagnosis;
4. 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);
5. Is caring for a child if the school or place of care of the child has been closed, or the child care provider of such child is unavailable, due to COVID–19 precautions; or
6. Is experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.