New Parent Leave Act Impacts Small Employers

Senate Bill 63, California’s New Parent Leave Act, was signed into law on October 12, 2017. The new law, which goes into effect January 1, 2018, requires small business employers to provide employees with 12 weeks of unpaid, job-protected parental leave to bond with a new child. Previously, the requirement to provide bonding leave under the Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA) extended only to employers with 50 or more employees.

Specifics of the New Law

The new law applies to small business employers who employ, within a 75-mile radius of the worksite, 20 or more employees. An employee becomes eligible for this leave after working for an employer for over 12 months and putting in at least 1,250 hours or work during the previous 12-month period. Small business employees will now be entitled to 12 weeks of parental leave to bond with a new child within one year of the child’s birth, adoption, or foster care placement.

Notably, the law does not expressly define the manner of calculating an employee count to determine coverage. Yet, the parental leave law states that CFRA regulations, to the extent they are within an appropriate scope and are consistent with the parental leave and other laws, will govern the new parental leave law. As such, under CFRA, an employer is covered where the required employee count is reflected in the payroll during 20 or more calendar workweeks in the current or preceding calendar year. Thus, until further guidance is provided, it is prudent to conclude that a small business employer is covered when it employs 20 or more employees for at least 20 or more calendar workweeks in the current or preceding calendar year.

Leave under this law is job-protected; as such, the law requires the employer to restore the employee to a comparable position upon return. Employees have the right to use accrued vacation pay, paid sick time, or other paid or unpaid time off negotiated with the employer, during the parental leave. An employee is also entitled to continued health coverage under a group health plan for the duration of the leave, not to exceed 12 weeks over the course of a 12-month period.

Employers subject to the new law have a continuing obligation to provide Pregnancy Disability Leave (PDL) protections. Recall that under PDL, employers of five employees or more are required to provide up to four months of unpaid leave to an employee for pregnancy-related disability, without regard for the duration of employment or hours worked. PDL leave entitlements are provided in addition leave provided under the new parental leave law and therefore do not run concurrently. This results in a potential entitlement of up to seven months of unpaid leave time. The law makes clear, however, that employees subject to the CFRA or FMLA, which includes employers with 50 or more employees, are not subject to protections under the parental leave law.

The new law establishes a requirement that the Department of Fair Employment and Housing create a parental leave mediation pilot program under which an employer may, within 60 days of receipt of a right-to-sue notice, request all parties participate and complete the Department’s Mediation Division Program.

What this Means for Small Employers

Small business owners who are impacted by this new law are advised to craft policies and procedures to address parent leave requests. The process should adequately cover the employee request, notice of rights under parent leave law, certification process, and designation notice to inform the employee of qualification for leave. Leave-related liability arises most commonly from failure to communicate effectively to the employee and from lack of written documentation to substantiate the employer’s compliance with leave law obligations. As such, employers are advised to carefully and consistently document the leave process in writing.

Further, the law expressly states that it is unlawful for an employer to retaliate against an employee for exercising rights under the new law. It is an act of retaliation for an employer to refuse to hire, discharge, fine, suspend, or discriminate against an individual who exercises the right to parental leave or who provides information or testimony as to his or her parental leave or another employee’s parental leave. It is important to keep in mind that liability may arise even when there is a mistaken or false impression regarding the law’s protections. For this reason, employers should carefully consider the timing of any adverse employment actions in relation to an employee’s exercise of or attempt to exercise any rights under new or existing leave laws.