California’s Paid Family Leave Program
California’s Paid Family Leave program (PFL) provides wage replacement benefits to workers who need to take time off from work to bond with a new child or to care for a seriously ill family member.
This document is intended to answer any questions small employers might have about California’s PFL program and its effects on small business owners and their workers.
What is California’s Paid Family Leave Program?
- In 2002, legislation (Senate Bill 1661) extended disability compensation to individuals who take time off work to care for a seriously ill child, spouse, parent or domestic partner, or to bond with a new child or a child in connection with adoption or foster care placement.
- PFL is administered by the State Disability Insurance (SDI) program. For California workers covered by SDI, Paid Family Leave insurance provides up to eight weeks of benefits for individuals who must take time off to care for a seriously ill family member or to bond with a new child (including newly fostered or adopted children).
Which employers are covered by the law?
- The PFL program applies to all California employers, regardless of size.
Will employers have to pay employees’ salaries while they’re on leave?
- No. The PFL program is 100% funded entirely through worker contributions to the State Disability Insurance program. Employers do not have to pay employees’ salaries while they are on leave. Many small businesses that cannot afford to offer paid leave to their employees can offer the benefit through the PFL program. This helps small businesses compete for the best employees, and gives employers peace of mind that they are doing what’s best for their workers.
What are an employer’s obligations under the PFL program?
- The PFL program imposes very few obligations on employers. Unlike the federal Family and Medical Leave Act (FMLA), the California Family Rights Act (CFRA) and California’s Pregnancy Disability Leave (PDL) regulations, the Paid Family Leave program does not provide job protection. However, leave through the Paid Family Leave program can be taken at the same time as family leave under the FMLA or CFRA laws. Therefore, employees who receive Paid Family Leave benefits concurrently with FMLA/CFRA leave are guaranteed their jobs back when they return to work, depending on the size of the business. There are differences in job protections available through Pregnancy Disability Leave (employers with 5 or more) and the California Family Rights Act and New Parent Leave Act (employers with 20 or more | 50 or more for caregiving claims).
- An employer may require an employee to take up to two weeks of earned but unused vacation leave before beginning to receive benefits. An employer, however, cannot require an employee to use sick leave before receiving benefits.
- The Paid Family Leave program also does not require an employer to provide health benefits while an employee is receiving PFL benefits; however, the FMLA and CFRA do require employers to continue providing health benefits to employees who are on leave, therefore employers will need to continue providing health benefits to employees using PFL leave. Pregnancy Disability Leave also requires employers with five or more workers to continue health benefits for pregnant workers while on leave (typically for four weeks before birth and six to eight weeks after giving birth).
- Employers must deduct PFL contributions from employees’ wages in the same way they now do for the State Disability Insurance program.
- Employers are required to provide the Paid Family Leave brochure only to new employees and persons who request leave to care for a seriously ill family member or bond with a new child. Notices can be found here.
How does PFL work?
- PFL is a component of the State Disability Insurance program and workers covered by SDI are also covered for this benefit. The wage replacement benefits under PFLA are paid for by employee contributions to the SDI program. The employee contribution appears as a withheld tax on the employee’s paycheck. Employees are paid 60-70% of their wages through a claim they submit to EDD. Employees are paid 60-70% of their wages through a claim they submit to EDD.
- No more than eight weeks of PFL benefits may be paid within any 12-month period.
What effect does PFL have on businesses?
- Based on the experience of businesses in California and other states that have implemented paid leave programs, PFL has proven it does not have a significant effect on businesses. The program is entirely funded by employees; employers do not have to pay employees’ salaries while they are on leave.
- A poll conducted for Small Business Majority in 2017 found a majority of small businesses have some type of policy—formal or informal—in place when it comes to family medical leave—time an employee would take to care for a family member with a serious illness or caregiving need. More than 7 in 10 (72%) small business owners have either a formal written policy, a consistent but not written policy or informal policy provided on a case-by-case basis to provide family medical leave. Of the small business owners who do offer family medical leave, 61% offer full or partial pay and 22% offer pay depending on the employee.
- A recent economic study commissioned by the Bay Area Economic Institute included an evaluation of California’s Paid Leave (PFL) Program from 2004-2018. It found that PFL has increased employment among new mothers, it results in reductions in labor costs for small firms when workers use PFL, and does not appear to have an increase in firm exit rates. Businesses with less than 25 employees experience, on average, a 14% decrease per worker labor costs when employees utilize Paid Family Leave.
What are the eligibility requirements for the PFL program?
- An employee may file a claim for PFL benefits through the Employment Development Department (www.edd.ca.gov) to care for a seriously ill family member, or to bond with a newborn child, or a newly-adopted or foster child. A medical certificate is required when a PFL claim is filed to provide care for a seriously ill family member.
- All private-sector employees contribute wages towards the PFL program. A small percentage of wages are deducted from the employee’s paycheck and deposited into the SDI fund.
- An employee’s weekly benefit amount is about 60 to 70% (depending on income) of wages earned 5 to 18 months before your claim start-date up to the maximum weekly benefit amount ($1,300).
- The daily benefit amount is calculated by dividing your weekly benefit amount by seven. The maximum benefit amount is calculated by multiplying your weekly benefit amount by 8 or adding the total wages subject to SDI tax paid in your base period.
- An employee who is entitled to leave under the federal Family Medical Leave Act and the California Family Rights Act must take PFL concurrent with leave taken under those acts.
- For more information regarding benefit amounts and employee obligations, visit the Employment Development Department’s website.
Where can I get additional information about PFL?
- Additional information about PFL may be found on the California Employment Development Department website: http://www.edd.ca.gov/disability/paid_family_leave.htm; or for more general information on paid family leave visit www.paidfamilyleave.org.