How the Federal Government Can Learn from the Evolution of CA's Family Leave Act

The advent of CA SB761 and the recent approval of CA SB770 signifies progress in the evolving quest to provide paid family leave for instances such as maternity leave. California has led the nation in this endeavor, and despite the challenges along the way, should serve as a model for the federal government as to how to embark on a comprehensive paid family leave program. In addition, pitfalls to avoid can be identified when analyzing the past decade of reform concerning California Paid Family Leave.

Although there is no national legislation directly concerning paid family leave, there has at least been some progress in terms of some type of job-protected leave. The Family and Medical Leave Act (FMLA) was passed in 1993; it provides up to 12 weeks of unpaid job-protected leave for women and men to attend to their own medical conditions or for family care. Unfortunately, FMLA only covers around half of all U.S. workers, and less than a fifth of all new mothers, (since it only applies to companies with more than 50 workers), the key issue is that the leave is unpaid. Thus even workers who are covered often cannot afford to take advantage of it.

The California Paid Family Leave Act (PFLA) was established in 2004, modeled after the California State Disability Insurance Program (SDI). It was the first legislation of any sort (state or federal) providing paid leave for family issues, and has been viewed as the next step in improving upon the FMLA. PFL provides up to six weeks of partial pay (55% of their usual weekly earnings) for employees who take leave from work to care for a child, parent, spouse, or registered domestic partner with a serious health condition or to bond with a minor child within one year of the child's birth or placement in connection with foster care or adoption.

Much like SDI, PFL is funded through a payroll tax paid entirely by employees and is administered by the same state agency ' the Employment Development Department (EDD). Therefore, there is should be no actual cost to employers. Like disability benefits, an employee who takes family leave can receive wage replacement of up to 55% of the individual's average weekly salary. All employees who pay into the State Disability Insurance Fund are covered by PFL. In addition, PFLA is available to biological mothers for six weeks in addition to the SDI benefits they may receive during pregnancy leave.

Besides the fact that FMLA is unpaid and PFL is paid, PFL covers almost all workers and does not exclude any employers on the basis of size. In addition, FMLA requires an employee to have worked for the company for at least 12 non-consecutive months and should have worked a minimum of 1,250 regular hours (not including overtime) for the company in the preceding 12 months, while PFL only requires that the employee must have paid into SDI during the base period (usually six to 18 months prior to the claim). Therefore, it was thought that the passage of PFLA would increase the numbers of workers taking advantage of job-protected partial paid leave.

Job Protection

However, it appears that this has not entirely been the case. A respected study found that nearly 37% of workers in a recent survey who needed leave and were aware of PFL nonetheless said they did not apply for benefits due to fear of employer retaliation. In addition to fear of termination, employee respondents reported that they chose not to apply for PFL because they feared doing so might anger their employers or limit their future opportunities for advancement. This is a fundamental point that future federal legislation must address at the start, protecting workers from potential job loss.

Most importantly, the program did not create the right to a leave of absence ' meaning that employers are not required to reinstate an employee after taking leave. As such, PFLA has not benefited workers to the extent it should have. Two other factors that were identified, which continue to hamper the program's widespread effectiveness, are the confusion caused by overlapping laws providing job protection for pregnancy disability and family and medical leave, and the limited definition of family member.

The lack of job protection is the overwhelming reason PFL has not been as successful as it could be. Not only is the employer not obliged to tell the employee her job is not protected when she takes leave, it is not obligated to provide notice of an impending termination due to this leave.

Coordinating PFL with FMLA

Coordinating PFL with FMLA can be complex and confusing to workers, especially how to transition from one kind of leave to another and whether multiple types of benefits can be used at the same time. It is true that combining can have a synergistic effect, such as using PFL with either CFRA (California Family Rights Act ' see below) or FMLA, because that enables the leave to be job-protected. That is because the statute requires employees covered by job-protected leave laws to take PFL concurrently with that leave. Also, women who take state SDI for pregnancy-related disability benefit from the transition to PFL for post-birth baby bonding, since women are automatically notified of their ability to take PFL after their pregnancy-related SDI leave runs out.

The definition of a family member is quite narrow. It includes a parent, child, spouse or registered domestic partner. It does not include grandparents, in-laws, siblings or extended family. This is a common issue because of the decrease in numbers of the traditional two-parent family structure. The 2010 U.S. census data showed that more than 1 million grandparents in California live with their grandchildren ' and that nearly 30% are responsible for the care of those grandchildren. Moreover, non-traditional families are even more common in low-income and minority communities, compounding the case that low income families are benefited less by PFL.

Amending the Bill: Pros and Cons

In response to these issues, Bill SB761 was proposed, which would amend PFLA, protecting workers who utilized PFL from potential loss of employment. This amendment makes an employer liable for actual damages and appropriate equitable relief, including employment or reinstatement, if an employer or agent of an employer discharges or discriminates against an individual because he or she has applied for, used, or indicated intent to apply for or use, family temporary disability insurance benefits. It would allow an employee or applicant to bring a civil action seeking these remedies and if successful, the court may award the employee or applicant reasonable attorneys' fees and costs. Consideration of this Bill has been extended for one year, though another Bill (SB 770), which expands the definition of “family” to include grandparents, grandchildren, siblings or parents-in-law, was signed into law on Sept. 24, 2013.

SB 761 has elicited strong opinions both for and against it. The strongest argument for the measure is the fact that PFL is so infrequently used, due to the reasons stated previously. SB 761 should enable more employees to utilize PFL without fear of termination or discrimination. Proponents also argue that the lack of protection for PFL users disproportionately impacts low-wage workers who pay into the system, but who are less likely to qualify for job protection under other state and federal laws due to the lack of job security.

Other arguments for PFL and SB 761 are that this type of legislation is actually good for business. Allowing employees to access benefits without fear of reprisal would benefit workers and their families, which contributes to a happier workplace and better job retention. Employers noted in the aforementioned survey that there was a positive or no noticeable effect on productivity (90%), profitability (91%) and most importantly, employee morale (99%).

Those opposing the measure feel that this is a way for employees to defraud employers by asking for time off without actually using it for the correct reasons. In addition, by allowing employees to pursue litigation for discrimination immediately, this bypasses the standards set in the California Family Rights Act (CRFA), which requires filing a complaint with the Department of Fair Employment and Housing. In addition, CRFA, which entitles eligible employees to take up to 12 work weeks of unpaid job-protected leave, only covers employees in companies with 50 or more employees who work within a 75-mile radius. CFRA can be viewed as California's version of FMLA. In contrast, SB 761 applies to companies of any size, and opponents warn that employees of an employer with fewer than 50 employees would now be able to request six weeks of leave regardless of hours worked (while larger companies would still be subject to CRFA). Thus, employers would be hurt by the loss of worker hours.

Federal Bills

Over the past few years, several federal bills, such as the Family Income to Response to Significant Transitions Act (FIRST), have been proposed, though none have made it through Congress, mainly due to the concern of cost of these programs in the midst of an economic crisis. It has become clear that the shortcomings of FMLA could be remedied by a federal PFL program, and these bills did use California's wage replacement provision as a model, but there is reluctance at this point to allocate federal funds for this.

In order to pass federal legislation, some things that would have to be done differently from California would include how to fund a national program and avoid the stigma of being a “welfare-type” program. California's PFL was built upon an existing temporary disability insurance program, which will not be possible with a federal program. It would be best to try to find an existing pool of funds to supply the federal program.

Other lessons to learn from family leave programs include studying the cases that were brought to court challenging the validity of those programs. The leading case challenging a FMLA regulation is the Supreme Court decision in Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81 (2002). The regulation at issue in Ragsdale provided that leave taken by an employee does not count against the employee's FMLA entitlement if the employer did not designate the leave as FMLA leave. The decision held the regulation invalid because it found it contrary to the FMLA's intent. The Court reasoned that the regulation fundamentally interfered with the FMLA because it essentially relieved an employee of the burden of proving a real impairment.

Significantly, the Court found that its invalidation of the regulation was consistent with upholding a key provision of the FMLA: that an employee is entitled only to twelve weeks of leave in a 12-month period, not more. The Court found that that the 12-week provision was a key contested provision during the passage of the FMLA, so it should not be altered by one of the implementing regulations. Several other lower courts also recognized the invalidity of this particular regulation.

A second challenged regulation was 29 C.F.R. ' 825.111, which defines the conditions necessary to find an employee eligible for FMLA leave. In Harbert v. Healthcare Services Group, Inc., 391 F.3d 1140 (2004), the Tenth Circuit looked at 29 C.F.R. ' 825.111(a)(3), the provision defining the “worksite” of jointly employed employees. The regulation defined a joint employee's “worksite” as the office of the primary employer “from which the employee is assigned or reports.”

The court found that the regulation's definition of “worksite” was “arbitrary, capricious, and manifestly contrary to the statute.” The court reasoned that the agency's interpretation of “worksite” was inconsistent with the purpose of the FMLA's 50/75 provision, which was to ensure an employer has other employees available as temporary replacements during periods of FMLA leave. Just as in the other decisions discussing contested FMLA regulations, this decision shows employers' attempts to limit the coverage of the FMLA by challenging the validity of its implementing regulations.

As for PFL, incorporation of the content of the recent Senate Bills 761 and 770 into any federal PFL would be prudent, providing more protection against job loss, as well as establishing a broad definition of what constitutes “family.”

Conclusion

Understanding the progression of FMLA and CFRA to a PFL in California will make it easier to pass future federal legislation to assist with workers who desire more work-life balance. The best aspects of California PFL should be scrutinized, including SB761 and SB770, with avoidance of the pitfalls of this type of legislation, in order to bring the United States into line with the rest of the modern world by providing paid family leave.

Evie Jeang, managing partner of Ideal Legal Group, Inc., is a litigator practicing family law for more than 10 years. She can be reached at [email protected] or 626-569-1882.

The “Quiet Revolution” was coined to identify the gradual change of attitude about women entering the labor force, starting in the 1970s. However, little has been done to assist women who choose to have children while employed. As recently as 2010, women comprised 49% of the total U.S. labor force, including 55% of all workers in high-paying management, professional, and related occupations. After Australia enacted new legislation in 2009, the United States remains as the only industrialized country without national paid maternity-leave laws, leaving itself in the company of countries such as Papua, New Guinea, and Liberia.

More broadly, U.S. employment law had done little to protect workers from job loss when circumstances demand family-necessitated time away from work. Even worse, only a few states, such as California, New Jersey, New York, Hawaii, Rhode Island and Hawaii, have enacted their own programs to try to address this issue. And the length, duration and amount of wage coverage vary widely among these proactive states. For instance, some states will cover up to $1,000 per week, while others only cover $170 per week.

Progress in California

The advent of CA SB761 and the recent approval of CA SB770 signifies progress in the evolving quest to provide paid family leave for instances such as maternity leave. California has led the nation in this endeavor, and despite the challenges along the way, should serve as a model for the federal government as to how to embark on a comprehensive paid family leave program. In addition, pitfalls to avoid can be identified when analyzing the past decade of reform concerning California Paid Family Leave.

Although there is no national legislation directly concerning paid family leave, there has at least been some progress in terms of some type of job-protected leave. The Family and Medical Leave Act (FMLA) was passed in 1993; it provides up to 12 weeks of unpaid job-protected leave for women and men to attend to their own medical conditions or for family care. Unfortunately, FMLA only covers around half of all U.S. workers, and less than a fifth of all new mothers, (since it only applies to companies with more than 50 workers), the key issue is that the leave is unpaid. Thus even workers who are covered often cannot afford to take advantage of it.

The California Paid Family Leave Act (PFLA) was established in 2004, modeled after the California State Disability Insurance Program (SDI). It was the first legislation of any sort (state or federal) providing paid leave for family issues, and has been viewed as the next step in improving upon the FMLA. PFL provides up to six weeks of partial pay (55% of their usual weekly earnings) for employees who take leave from work to care for a child, parent, spouse, or registered domestic partner with a serious health condition or to bond with a minor child within one year of the child's birth or placement in connection with foster care or adoption.

Much like SDI, PFL is funded through a payroll tax paid entirely by employees and is administered by the same state agency ' the Employment Development Department (EDD). Therefore, there is should be no actual cost to employers. Like disability benefits, an employee who takes family leave can receive wage replacement of up to 55% of the individual's average weekly salary. All employees who pay into the State Disability Insurance Fund are covered by PFL. In addition, PFLA is available to biological mothers for six weeks in addition to the SDI benefits they may receive during pregnancy leave.

Besides the fact that FMLA is unpaid and PFL is paid, PFL covers almost all workers and does not exclude any employers on the basis of size. In addition, FMLA requires an employee to have worked for the company for at least 12 non-consecutive months and should have worked a minimum of 1,250 regular hours (not including overtime) for the company in the preceding 12 months, while PFL only requires that the employee must have paid into SDI during the base period (usually six to 18 months prior to the claim). Therefore, it was thought that the passage of PFLA would increase the numbers of workers taking advantage of job-protected partial paid leave.

Job Protection

However, it appears that this has not entirely been the case. A respected study found that nearly 37% of workers in a recent survey who needed leave and were aware of PFL nonetheless said they did not apply for benefits due to fear of employer retaliation. In addition to fear of termination, employee respondents reported that they chose not to apply for PFL because they feared doing so might anger their employers or limit their future opportunities for advancement. This is a fundamental point that future federal legislation must address at the start, protecting workers from potential job loss.

Most importantly, the program did not create the right to a leave of absence ' meaning that employers are not required to reinstate an employee after taking leave. As such, PFLA has not benefited workers to the extent it should have. Two other factors that were identified, which continue to hamper the program's widespread effectiveness, are the confusion caused by overlapping laws providing job protection for pregnancy disability and family and medical leave, and the limited definition of family member.

The lack of job protection is the overwhelming reason PFL has not been as successful as it could be. Not only is the employer not obliged to tell the employee her job is not protected when she takes leave, it is not obligated to provide notice of an impending termination due to this leave.

Coordinating PFL with FMLA

Coordinating PFL with FMLA can be complex and confusing to workers, especially how to transition from one kind of leave to another and whether multiple types of benefits can be used at the same time. It is true that combining can have a synergistic effect, such as using PFL with either CFRA (California Family Rights Act ' see below) or FMLA, because that enables the leave to be job-protected. That is because the statute requires employees covered by job-protected leave laws to take PFL concurrently with that leave. Also, women who take state SDI for pregnancy-related disability benefit from the transition to PFL for post-birth baby bonding, since women are automatically notified of their ability to take PFL after their pregnancy-related SDI leave runs out.

The definition of a family member is quite narrow. It includes a parent, child, spouse or registered domestic partner. It does not include grandparents, in-laws, siblings or extended family. This is a common issue because of the decrease in numbers of the traditional two-parent family structure. The 2010 U.S. census data showed that more than 1 million grandparents in California live with their grandchildren ' and that nearly 30% are responsible for the care of those grandchildren. Moreover, non-traditional families are even more common in low-income and minority communities, compounding the case that low income families are benefited less by PFL.

Amending the Bill: Pros and Cons

In response to these issues, Bill SB761 was proposed, which would amend PFLA, protecting workers who utilized PFL from potential loss of employment. This amendment makes an employer liable for actual damages and appropriate equitable relief, including employment or reinstatement, if an employer or agent of an employer discharges or discriminates against an individual because he or she has applied for, used, or indicated intent to apply for or use, family temporary disability insurance benefits. It would allow an employee or applicant to bring a civil action seeking these remedies and if successful, the court may award the employee or applicant reasonable attorneys' fees and costs. Consideration of this Bill has been extended for one year, though another Bill (SB 770), which expands the definition of “family” to include grandparents, grandchildren, siblings or parents-in-law, was signed into law on Sept. 24, 2013.

SB 761 has elicited strong opinions both for and against it. The strongest argument for the measure is the fact that PFL is so infrequently used, due to the reasons stated previously. SB 761 should enable more employees to utilize PFL without fear of termination or discrimination. Proponents also argue that the lack of protection for PFL users disproportionately impacts low-wage workers who pay into the system, but who are less likely to qualify for job protection under other state and federal laws due to the lack of job security.

Other arguments for PFL and SB 761 are that this type of legislation is actually good for business. Allowing employees to access benefits without fear of reprisal would benefit workers and their families, which contributes to a happier workplace and better job retention. Employers noted in the aforementioned survey that there was a positive or no noticeable effect on productivity (90%), profitability (91%) and most importantly, employee morale (99%).

Those opposing the measure feel that this is a way for employees to defraud employers by asking for time off without actually using it for the correct reasons. In addition, by allowing employees to pursue litigation for discrimination immediately, this bypasses the standards set in the California Family Rights Act (CRFA), which requires filing a complaint with the Department of Fair Employment and Housing. In addition, CRFA, which entitles eligible employees to take up to 12 work weeks of unpaid job-protected leave, only covers employees in companies with 50 or more employees who work within a 75-mile radius. CFRA can be viewed as California's version of FMLA. In contrast, SB 761 applies to companies of any size, and opponents warn that employees of an employer with fewer than 50 employees would now be able to request six weeks of leave regardless of hours worked (while larger companies would still be subject to CRFA). Thus, employers would be hurt by the loss of worker hours.

Federal Bills

Over the past few years, several federal bills, such as the Family Income to Response to Significant Transitions Act (FIRST), have been proposed, though none have made it through Congress, mainly due to the concern of cost of these programs in the midst of an economic crisis. It has become clear that the shortcomings of FMLA could be remedied by a federal PFL program, and these bills did use California's wage replacement provision as a model, but there is reluctance at this point to allocate federal funds for this.

In order to pass federal legislation, some things that would have to be done differently from California would include how to fund a national program and avoid the stigma of being a “welfare-type” program. California's PFL was built upon an existing temporary disability insurance program, which will not be possible with a federal program. It would be best to try to find an existing pool of funds to supply the federal program.

Other lessons to learn from family leave programs include studying the cases that were brought to court challenging the validity of those programs. The leading case challenging a FMLA regulation is the Supreme Court decision in Ragsdale v. Wolverine World Wide, Inc., 535 U.S. 81 (2002). The regulation at issue in Ragsdale provided that leave taken by an employee does not count against the employee's FMLA entitlement if the employer did not designate the leave as FMLA leave. The decision held the regulation invalid because it found it contrary to the FMLA's intent. The Court reasoned that the regulation fundamentally interfered with the FMLA because it essentially relieved an employee of the burden of proving a real impairment.

Significantly, the Court found that its invalidation of the regulation was consistent with upholding a key provision of the FMLA: that an employee is entitled only to twelve weeks of leave in a 12-month period, not more. The Court found that that the 12-week provision was a key contested provision during the passage of the FMLA, so it should not be altered by one of the implementing regulations. Several other lower courts also recognized the invalidity of this particular regulation.

A second challenged regulation was 29 C.F.R. ' 825.111, which defines the conditions necessary to find an employee eligible for FMLA leave. In Harbert v. Healthcare Services Group, Inc., 391 F.3d 1140 (2004), the Tenth Circuit looked at 29 C.F.R. ' 825.111(a)(3), the provision defining the “worksite” of jointly employed employees. The regulation defined a joint employee's “worksite” as the office of the primary employer “from which the employee is assigned or reports.”

The court found that the regulation's definition of “worksite” was “arbitrary, capricious, and manifestly contrary to the statute.” The court reasoned that the agency's interpretation of “worksite” was inconsistent with the purpose of the FMLA's 50/75 provision, which was to ensure an employer has other employees available as temporary replacements during periods of FMLA leave. Just as in the other decisions discussing contested FMLA regulations, this decision shows employers' attempts to limit the coverage of the FMLA by challenging the validity of its implementing regulations.

As for PFL, incorporation of the content of the recent Senate Bills 761 and 770 into any federal PFL would be prudent, providing more protection against job loss, as well as establishing a broad definition of what constitutes “family.”

Conclusion

Understanding the progression of FMLA and CFRA to a PFL in California will make it easier to pass future federal legislation to assist with workers who desire more work-life balance. The best aspects of California PFL should be scrutinized, including SB761 and SB770, with avoidance of the pitfalls of this type of legislation, in order to bring the United States into line with the rest of the modern world by providing paid family leave.

Evie Jeang, managing partner of Ideal Legal Group, Inc., is a litigator practicing family law for more than 10 years. She can be reached at [email protected] or 626-569-1882.