Employer’s Alert: New Supplemental Paid Sick Leave Requirements on the State and Federal Front
As more Americans are transitioning from their remote offices back to the workplace, both the United States Congress and the California legislature have passed new laws to provide additional paid time off should employees need to be absent from work for COVID-19 related reasons. The American Rescue Plan Act (“ARPA”), signed by President Biden on March 11, 2021, extended the period during which employers may continue to receive tax credits for providing emergency paid sick leave (“EPSL”) and emergency family and medical leave (“EFML”), initially granted pursuant to the Families First Coronavirus Response Act (“FFCRA”), to include the period from April 1, 2021 to September 30, 2021. Under ARPA, the obligation to provide EPSL and EFML remains optional. However, employers may give eligible employees a new allotment of 80 hours of EPSL and 12 weeks of EFML to use between April 1 and September 30 and take a tax credit for doing so. For more details about this law, see The American Rescue Plan Act Extends Tax Credits For EPSL and EFML, below.
On the state law front, California Governor Newsom signed Senate Bill 95 on March 19, 2021, codified in California Labor Code section 248.2, which requires employers with more than 25 employees to provide up to 80 hours of supplemental paid sick leave to eligible employees for various COVID-related absences. This obligation takes effect on March 29, 2021, at which time it applies retroactively to January 1, 2021. For more details about this law, see California Supplemental Paid Sick Leave Is Renewed, Expanded, and Retroactive, below.
Both laws expand the reasons for which supplemental paid sick leave may be used to include time spent by an employee to obtain a COVID-19 vaccine and when the employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework.
The American Rescue Plan Act Extends Tax Credits For EPSL and EFML
As employers should be aware, last year the FFCRA was enacted and required employers with fewer than 500 employees to provide employees who were unable to work or telework due to certain COVID-19-related reasons with EPSL and EFML. (See our prior e-alert at: Families First Coronavirus Response Act: What Employers Need to Know – March 20, 2020 – Ricketts Case LLP (rcllp.com)) Employers were able to claim federal tax credits for providing these mandated paid leave benefits. The FFCRA expired on December 31, 2021, but the Consolidated Appropriations Act extended the tax credit to employers who voluntarily offered to let employees use any remaining EPSL and EFML from the original FFCRA allotment through March 30, 2021. In the ARPA, the period for claiming the federal tax credit was again extended through September 30, 2021, and the reasons for which ESPL and EFML may be used was expanded.
The FFCRA provided two weeks (up to 80 hours) of EPSL when an eligible employee was unable to work or telework because the employee was quarantined or experiencing symptoms of coronavirus and seeking a medical diagnosis, or because the employee was needed to care for an individual subject to quarantine or care for a child whose school or child care was closed or unavailable for reasons related to COVID-19. The FFCRA also provided up to an additional 10 weeks of paid EFML when an employee was unable to work or telework due to the need to care for a child whose school or child care was closed or unavailable for reasons related to COVID-19. The ARPA expands the qualifying reasons for which EPSL and/or EFML may be used to now include: (1) time off work to obtain the COVID-19 vaccine and/or recovering from vaccine side effects, and (2) time during which an employee is waiting for the results of a COVID-19 test or diagnosis after having close contact with a person with COVID-19, or when the employer has requested such test or diagnosis. The ARPA also expands the purposes for which EFML may be used to include all of the same reasons for which EPSL can be used. For example, under FFCRA, EFML was limited in use to caring for children whose school or child care provider was closed or unavailable, but now it may also be used for instances where the employee is ill due to COVID-19 or subject to a quarantine or isolation order.
The ARPA requirements are not mandatory but employers who choose to offer EPSL or EFML, may receive tax credits for up to 10 new days of EPSL and 12 new weeks of EFML per employee paid between April 1 and September 30, 2021. The amount of the tax credit for EPSL is based on the employee’s regular rate of pay, up to $511 per day, when the time off is a qualifying reason due to employee’s immunization or testing, or employee’s own symptoms, quarantine or isolation. For all other qualifying reasons (related to the employee’s care of someone else) the tax credit for EPSL is limited to 2/3 of the employee’s regular rate of pay up to $200 per day. The tax credit for EFML is limited to 2/3 the employee’s regular rate of pay up to a maximum of $200 per day for all qualifying EFML reasons, up to a cumulative cap of $12,000. The first two weeks of EFML is no longer unpaid. The ARPA is a federal law that applies nationwide.
California Supplemental Paid Sick Leave Is Renewed, Expanded, and Retroactive
Senate Bill 95 (“SB95”) applies to all California employers with more than 25 employees anywhere in the United States. The law requires such employers to provide California employees supplemental paid sick leave for various COVID-related absences (“COVID-19 SPSL”). This COVID-19 SPSL is in addition to the paid time off benefits employees receive by law or policy, e.g., the Healthy Workplaces Healthy Families Act paid sick leave or vacation.
As employers know, previous COVID-19-related supplemental paid sick leave laws, the FFCRA (that applied to employers with fewer than 500 employees) and California Assembly Bill 1867 (that applied to employers with 500 or more employees), expired on December 31, 2020. SB 95’s requirement to provide COVID-19 SPSL is broader than the predecessor laws and once it takes effect on March 29, 2021, its provisions apply retroactively to January 1, 2021. This bill expires on September 30, 2021.
SB 95 covers all employees who are unable to work or telework for any of the following reasons:
- Employee is subject to a quarantine or isolation period related to COVID-19 as defined by federal, state, or local orders or guidelines.
- Employee is advised by a health care provider to self-quarantine due to concerns related to COVID-19.
- Employee is attending an appointment to receive a COVID-19 vaccine.
- Employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework.
- Employee is experiencing COVID-19 symptoms and seeking a medical diagnosis.
- 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.
- Employee is caring for a child whose school or place of care is closed or otherwise unavailable for reasons related to COVID-19.
The law allows employees to use leave to care for family members, defined to include a child, grandchild, grandparent, parent, sibling, or spouse.
Full-time employees are entitled to 80 hours of COVID-19 SPSL if either their employer considers them to work full time or they were scheduled to work, on average, at least 40 hours per week in the two weeks preceding the date they took leave. For employees who do not work full time, COVID-19 SPSL is determined by the employee’s schedule and length of employment. For example, employees with a regular schedule are entitled to the total number of hours they are normally scheduled to work over two weeks.
With the exception of the Exclusion Pay required by the Emergency Temporary Standards (“ETS”) or Cal-OSHA Aerosol Transmissible Diseases Standard (“ATDS”), employees may choose whether they will use COVID-19 SPSL or some other paid or unpaid leave benefit their employer provides, or the law requires, to cover an absence. When an employee is entitled to Exclusion Pay under the ETS or ATDS, the employer may require the employee to first exhaust all available COVID-19 SPSL. See our prior e-alert regarding the ETS at: COVID-19 Emergency Temporary Standards: What Do Employers Need to Know? – Ricketts Case LLP (rcllp.com)
The rate of pay for non-exempt employees shall be calculated by the highest of the following:
- The employee’s regular rate of pay, regardless of whether an employee works overtime, in the workweek they use leave.
- A calculation of dividing the employee’s total wages – excluding overtime premiums – by their total hours worked in the full pay periods of the prior 90 days of employment.
- Applicable state or local minimum wage
Employers must ensure that the calculation of the SB 95 rate of pay approach is accurate. Prior law calculations provided an “either/or” approach, while SB 95 requires the highest calculation.
For exempt employees, employers calculate COVID-19 SPSL in the same manner they calculate wages for other forms of paid leave.
Whether “exempt” or “non-exempt,” employers need not pay more than $511 for each day an employee uses COVID-19 SPSL, or more than $5,110 overall. Employees who max out because of the pay caps may “top up” their leave with other available paid leave they have so they are fully compensated during an absence.
If employees already received supplemental paid sick leave in 2021 before the law took effect, for covered reasons and in an amount equal to or greater than the amount of pay SB 95 requires, the employer may count those hours as an offset against the SB 95 required COVID-19 SPSL. But employers cannot count paid sick leave under California’s Healthy Workplaces, Healthy Families Act, the pre-COVID paid sick and safe time law, or 2020 SPSL.
If an employee took leave for a covered reason between January 1, 2021 and March 29, 2021, and was not paid or required to use other paid time off benefits, an employer may be required to retroactively apply the COVID-19 SPSL benefits of the new law, upon the employee’s request.
The state Labor Commissioner is required to make a model poster publicly available, which can be found here, which employers must conspicuously display in their workplaces. The notice includes covered leave reasons and the amount of time to which eligible employees are entitled. If employees do not frequent a workplace, employers can distribute the poster electronically, e.g., by email.
Information concerning COVID-19 SPSL must be made available on paystubs or other written notices employees receive on payday. This notice requirement does not become enforceable until the next full pay period following March 29, 2021. COVID-19 SPSL and pre-COVID statutory paid sick leave must be displayed separately. For part-time, variable hour employees, employers may meet paystub obligations by performing an initial calculation of COVID-19 SPSL available and indicating “(variable)” next to that calculation, which employers will need to update when employees request to use COVID-19 SPSL. When retroactive COVID-19 SPSL payments are made, the information must be listed on the paystub for the pay period during which payment is made.
New COVID-Related Hazard Pay Ordinance for San Francisco Employers
San Francisco also passed a COVID-related Hazard Pay Ordinance which became operative on March 22, 2021. This ordinance requires grocery and drug stores with 500 or more employees worldwide, including at least 20 employees in San Francisco, and janitorial and security contractors at these stores, to pay employees an additional five dollars per hour (up to $35 per hour) during the public health emergency related to COVID-19. Covered employers must provide the COVID-Related Hazard Pay Ordinance Official Notice, available here, to employees in a way that will reach all employees.
- Employers must decide whether to take advantage of the federal tax credit provided by the ARPA for the period April 1 through September 30, 2021 and if so, update their policies and procedures to reflect the expanded purposes and timeframes.
- Employers must also review and update their Supplemental Paid Sick Leave policy to comply with SB 95.
- Because the new statutes do not preempt local ordinances, companies with employees in Long Beach, Los Angeles (City and County), Oakland, Sacramento (City and County), San Jose, San Francisco, San Mateo County, Santa Rosa, and Sonoma County should review their compliance obligations under both state and local law.
- Due to the retroactive effect of SB95, employers need to consider whether retroactive payments are due to anyone who took leave for SB 95 covered purposes since January 1, 2021.
- Employers must post the Labor Commissioner Poster regarding SB 95 – issued March 22, 2021 – in a conspicuous place by March 29, 2021. If employees do not frequent a workplace, employers can distribute the poster electronically including by email.
- Employers must also ensure that employee wage statements reflect available COVID-19 SPSL.
For further information about these new laws, please contact your Ricketts Case employment attorney.