Mediation is one of the aspects of litigation that can be confusing for parties in a lawsuit, but there are few rules to understand about the process that can make it a lot less daunting.  Mediation is a non-binding meeting where the parties in a lawsuit hire an independent mediator (a retired judge or lawyer) to try to reach a settlement.  Here are five rules a party should understand before attending a mediation:

1. The mediator will make you feel uncomfortable about your case.

As I wrote in a prior post, a mediator’s only role is to get the case settled.  He or she is not there to be your friend, not to tell you what they feel the case is worth, or to protect your opponent’s position.  Their job is to get a settlement.  Put yourself in the mediator’s position: you have two adversarial parties who hate each other and believe they will win if their case goes to trial.  How, as a mediator, do you get the parties to move off their respective beliefs?  You must attack both sides’ theory of the case by pointing out the weaknesses of each position.

So don’t take the attacks personally, or think that the mediator is only attacking your position.  If the mediator is persuasive about how weak your case is, she is equally persuasive to other side.  Understand that the attacks are not personal, are not necessarily how the mediator perceives the value of your case, but are a tool to get the case resolved.

2. Before the mediation, set a bottom walk-away number, but also a number that represents a goal.

It is important to know what your last best and final number is prior to going into the mediation.  Steve Pearl, a mediator, explains:

Experienced negotiators will set not only the walkaway numbers beyond which they will not move, but also goals that are better than those walkaway numbers. Parties who set “shoot for” numbers as their reference points typically do better than those who only formulate walkaway numbers.

However, just like almost every negotiation “rule” there are drawbacks in setting a walk-away numbers.  Pearl explains that sometimes parties may have to shift their reference points to resolve the case.  So, parties should have clear numbers set going into the mediation, but must also have a mechanism to reevaluate these goals if the case will not settle within these predetermined numbers.

3. Understand when being cooperative will help you get a better deal.

A party involved in a mediation must understand that there are two parts to a mediation: (1) the process and (2) the content.  The process is how you interact with the other party: are you cordial or you make small talk?  The content is the subject being negotiated, such as the dollar amounts.  A party that is cooperative about the process and competitive about the content will do better overall in a mediation than compared to a party that is competitive on both the process and content.

Think about how you interact with someone that is simply being a jerk to you on ever single issue, even issues that do not impact the subject being negotiated.  When dealing with the hyper-competitive negotiator, your guard goes up and the negotiation turns more personal.  This is a bad combination for attempting to reach a reasonable settlement.

4. Understand what you should and will say during the mediation.

As a party, you need to understand from your attorney how the process will work.  Will there be a joint session with the other counsel and party in the same room?  Or will all parties remain in separate rooms?  During COVID-19 how will the Zoom meeting take place?

Generally speaking, what is said during a mediation is confidential.  However, if a party makes an admission or statement during the mediation, if the case does not settle, the opposing party can then seek discovery to obtain that same information through other means in order to use in the case.

Work out with your attorney when you should speak and what you should say.  Also important is to be careful on how you react to the mediator when he or she presents counteroffers.  The mediator is likely watching your reaction to gauge where you as the decision maker ultimately stand.

5. If you make a “last, best and final offer,” make it your last best and final offer.

Parties’ statements made during a mediation must have credibility.  If you make a “last, best and final offer” during a mediation, and the other side rejects the offer, but you continue to negotiate, you have lost credibility with the other party and the mediator.  As a result, even if you continue to negotiate and truly reach your last, best and final offer, the other side (and the mediator) will not believe that is your final number and will continue to push you beyond this number.  There are occasions to make a last, best and final offer, but if you qualify your offer as such, be ready to walk out of the mediation if the offer is rejected.

Being named as a defendant in an employment class action or Private Attorneys General Act (PAGA) representative lawsuit can be overwhelming, especially for a growing company.  However, a company can minimize the impact of litigation on its existing operations and put forth the best defense with some planning and good strategic advice.  Here are five initial steps a company can take upon being notified of a pending class action or PAGA lawsuit.

1. Contact employment counsel.

A lawyer who has experience in employment law and class actions should be contacted as soon as possible. There are certain deadlines that begin to run when a lawsuit is filed, and any delay could adversely affect the company’s defense. Wage and hour litigation, especially in California, is very unique, and it is recommended that the company utilize a lawyer that has experience in this area.

Word usually starts to spread quickly among the employees about the existence of the lawsuit. The company, with advice from counsel, should determine whether it wants to be proactive about communicating with the employees about the lawsuit, as well as what can and cannot be said to employees.  At the minimum, a person within the company should be designated to handle any questions about the lawsuit.  This will ensure a consistent message is used.

2. Obtain arbitration agreement signed by plaintiff, plaintiff’s personnel file, and time records.

If the company has implemented an arbitration agreement, it will be important to determine if the plaintiff has signed it, and if it bars the plaintiff from bringing a class and representative action. If there is a binding arbitration agreement in place, a motion to compel arbitration will likely be one of the first motions filed with the court.

In addition, the personnel file for the named plaintiff will need to be produced at some point in the case, and it should be provided to counsel as soon as possible.  Also, the information in the personnel file will document any performance issues or other possible defenses the company has against the plaintiff’s allegations.

3. Review allegations with counsel to see if the safe harbor provision of the Private Attorney General Act could apply.

With the advice of counsel, there should be a review of both the allegations in the complaint, and if the plaintiff is seeking damages under PAGA, also the PAGA notice sent to the Labor Workforce & Development Agency (“LWDA”). PAGA provides the employer a short window of time to “cure” some alleged violations. Whether or not any items can be cured or need to be cured, and the process for utilizing this safe harbor, should be reviewed closely with counsel.

4. Begin constructing a list of all employees who have worked in similar positions as the plaintiff during the last four years.

In California, the statute of limitations for most wage and hour class actions is four years from the date the complaint is filed. The statute of limitations for PAGA claims is one year. Therefore, the employees who have worked in the same or similar positions as the plaintiff will likely be the group of employees the plaintiff is seeking to represent in the class action and PAGA representative claim.  It is important to know how many of these employees are potentially included in the case.

5. Gather employee handbooks and policies that were in effect during the last four years.

The litigation will likely revolve around what policies the company had in place, and whether the policies were legally compliant. The company’s counsel will have to review these policies and handbooks.

Late last week, California enacted SB 93, requiring specific hospitality employers to offer employees laid-off due to COVID-19 preference for new positions between now and December 31, 2024. The new law is similar to a bill the governor vetoed last year, AB 3216.

Hospitality employers should read below to determine whether this new law applies, and, if so, the requirements to implement a compliant preference system.

What Employers are Covered by SB 93?

SB 93 applies to the following “enterprises”:

  • Hotels containing 50 or more guest rooms.
  • Any contracted, leased, or sublet premises connected to or operated in conjunction with a hotel or providing services at the hotel. This might include, for example, a restaurant that leases space at a hotel.
  • Private clubs that have 50 or more guest rooms offered as overnight lodging to members.
  • Event centers of more than 50,000 square feet or 1,000 seats, including concert halls, stadiums, sports arenas, racetracks, coliseums, and convention centers.
  • Any contracted, leased, or sublet premises connect to or operated in conjunction with an event center, including food preparation facilities, concessions, retail stores, restaurants, bars, and parking structures.
  • Airport hospitality operations which prepare, deliver, inspect, or provide any other service in connection with the preparation of food or beverage for aircraft crew or passengers at an airport, or that provide food and beverage, retail, or other consumer goods or services to the public at an airport.
  • Airport service providers which contract with a passenger air carrier, airport facility management, or airport authority, to perform functions at the airport directly related to the air transportation of persons, property, or mail. This includes loading and unloading of property, security, ticketing, aircraft cleaning and sanitization functions, and waste removal.
  • Providers of building service (janitorial, building maintenance, or security services) to office, retail, or other commercial buildings.

The airport-related enterprises do not include air carriers certified by the FAA, and do not apply to military bases or federally operated facilities.

SB 93 applies even to successor employers, including in circumstances where there has been a change in ownership, sale of the business, or relocation of operations. The law applies to all qualifying employers, regardless of size.

What Employees are Eligible?

For a laid-off employee to qualify, the following conditions must be met:

  1. The employee was employed by the employer for 6 months or more in 2019, working at least 2 hours a week during that time.
  2. The employee’s most recent separation from active service was due to a reason related to the COVID-19 pandemic, including:
    1. Public health directive;
    2. Government shutdown order;
    3. Lack of business;
    4. Reduction in force; or
    5. Other economic, nondisciplinary reason due to the COVID-19 pandemic.
  3. The employee must be qualified for the position. An employee is qualified if the employee held the same or similar position at the time of layoff.

How Does the Process Work?

Within 5 business days of establishing a job position, an employer must off all job positions that become available to qualified laid-off employees. The offer must be in writing, either by hand or to the last known physical address, and by email and text message if the employer has that contact information. The laid off employee must be given at least five business days from receipt to accept or decline the offer.

If more than one laid-off employee is qualified for a position, preference goes to the individual with the greatest length of service. An employer can make simultaneous, conditional offers of employment to multiple laid-off employees; if more than one accepts, the one with the greatest length of service prevails.

If an employer declines to recall a laid-off employee and instead hires a non-qualifying individual, the employer must provide written notice to the laid-off employee within 30 days containing (1) the length of service of the individual hired; and (2) all reasons for the decision.

How is SB 93 Enforced?

The Division of Labor Standards Enforcement (DLSE) has exclusive enforcement jurisdiction. If a laid off employee files a complaint that an employer refused to employ, terminated, reduced the compensation of, or otherwise took any adverse action against an employee for asserting rights under SB 93, the DLSE can award relief including reinstatement, front and back pay, and compensation for benefits lost. The DLSE can also impose civil penalties of $100 plus liquidated damages of $500 per employee per day.

Liability is not limited to the employer, but can be extended to any person, including corporate officers and executives, who owns or operates an enterprise and exercises control over the wages, hours, or working conditions of employees.

Anything Else?

Yes, there are record-keeping requirements! For at least three years, measured from the date of written notice of an employee’s layoff, the employer must retain specified information about the employee, contact information, written layoff notices, and records of communications with the employee regarding job offers.

This state law does not restrict localities from implementing their own “right of recall” ordinances. Several have, particularly in the Los Angeles area.

The above is just a summary of the basic provisions of the new law. If you believe your business may be subject to SB 93, you should consult legal counsel to make sure you fully understand and implement these new requirements.

On Friday, we replayed our March 23 webinar covering various topics including the American Rescue Plan’s renewal of FFCRA benefits and California’s brand new COVID-19 Supplemental Paid Sick Leave (SB 95). In both the original run and the replay, we got tons of great questions from employers about these two new laws. Below are answers to a few of the most common questions we get.

If an employee took paid leave in 2020 under the FFCRA, do I have to provide them new paid leave in 2021?

Yes and no. Whereas FFCRA paid sick and family leave was mandatory for covered employers last year, the renewed FFCRA for 2021 is optional. Eligible employers can elect to make FFCRA leave available to employees, but are not required to do so. Because California employers have corresponding mandatory leave obligations under California law (including COVID-19 Supplemental Paid Sick leave and Cal/OSHA exclusion pay), California employers may prefer to provide FFCRA leave in order to take advantage of the payroll tax credits available exclusively under the federal law.

If an employer does elect to make FFCRA leave available to employees, then the amount of leave available resets from 2020. So, employees who used any or all of their 2020 FFCRA leave would be entitled to new leave for 2021. Employees who did not use all of their 2020 FFCRA leave cannot carry it over into 2021 (except to the extent they were on a qualifying leave that started in 2020 and carried over into 2021).

If an employee was out of work in January or February 2021 for reasons that would qualify under the Supplemental Paid Sick Leave, do I have to go back and pay them for that time?

Yes…but only if they ask for it. SB 95, the law enacting COVID-19 Supplemental Paid Sick Leave, went into effect on March 29, 2021, but the paid leave is available for qualifying leaves retroactive to January 1, 2021.

That does not mean the employer has to unilaterally make retroactive payments. Rather, an employer’s obligation to make retroactive payments arises only if the employee makes an oral or written request. Once the employee makes the request, the employer has to make the retroactive payment on or before the payday for the next full pay period after the request.

Is the employee required to provide documentation to support COVID-19 Supplemental Paid Sick Leave eligibility?

No, says the Labor Commissioner. An employee is entitled to leave upon oral or written request, and an employer cannot condition leave or payment on medical certification or other documentation. On the other hand, if the employer has information indicating an employee was not truthful about the qualifying reason for the leave—e.g., “Bill says he needed to quarantine last week, but his social media account has pictures of him at the beach every day.”—then an employer could request documentation. (It’s always best to get legal counsel to advise on such issues.)

I paid an employee exclusion pay under Cal/OSHA back in February. Can I get any COVID-19 Supplemental Paid Sick Leave credit for that? If the employee requests CV-19 SPSL for that time, do I have to pay them twice?

You do not have to pay them twice. You can potentially claim a credit for that pay, but you have to act fast. For any qualifying leave taken in 2021 for which the employee was provided paid leave—for example, as Cal/OSHA exclusion pay or as a voluntary benefit, excluding vacation—the employer can credit that leave against the employee’s available COVID-19 Supplemental Paid Sick Leave, provided the leave was for a qualifying reason and either the employee was paid the applicable rate of pay or the employer makes a retroactive catch-up payment.

However, keep in mind that the employer is also obligated to advise each employee of the amount of available supplemental paid sick leave, either on a wage statement or a separate written notice provided on payday. So, to claim retroactive credit for any paid leave provided earlier this year, the employer probably needs to calculate that credit now so that the available leave reported to the employee reflects this deduction. In other words, you should not wait for the employee to take leave in the future before calculating any credit you intend to claim.

“Fomite” is a medical term that refers to inanimate objections that can carry infectious agents to a new host.  The concept of a fomite in the medical context is a valuable concept that can be applied in management, human resources, and employment context.  It is critical for companies and managers to apply the lessons from fomites in the medical context to the employment context and in developing a company culture:

1. What are fomites in the employment context?

The medical concept of a fomite has many similar applications and lessons for managers.  The effect that fomites in the employment context can have on a workplace culture is enormous, and being able to recognize the difference between a fomite and a virus in the employment context is critical.  Just to be clear – I’m not referring to “fomites” in the medical sense, but am borrowing the term to use in a managerial, human resources, and employment context.

2. Fomites can take many forms in the workplace.

Items that can negatively impact the workplace (which I’ll borrow another medical term and refer to as contagion) can spread through different ways.  The fomite that spread this contagion in the workplace can take many types of forms: other employees, managers, issues, gossip, clients, workplace habits, how meetings are run, and workplace culture.  Fomites, as I use the term here, does not only have to be people, but it could also refer to ideas or practices in the workplace.  Unlike how the term is used in the medical context which refers to inanimate objects, fomites in the workplace can also be an idea or practice.

3. Fomites are not ill-intentioned.

It is important to note that a fomite is not the disease or germ that it is carrying.  The co-worker, employee, or supervisor is not the disease or virus, but they are the ones that are carrying the contagion.  Managers need to remember that the contagion, not the fomites, need to be attacked and eradicated.  Just as in the medical context, the fomite itself is not the virus, but it is instead something that is carrying the virus.

Also, in terms of personnel, fomites are not necessarily toxic employees.  Toxic employees hurt the work environment and company culture and need to be removed from the workplace.  Employees can be fomites when they act a certain way, say certain things, or fall into certain habits without consciously doing so, and this negatively impacts company culture.  However, it may be difficult to distinguish between a fomite and a toxic employee, and managers need to be careful in making this determination.

4. Fomites can spread contagion from outside of the workplace.

Like the medical context, in the employment arena fomites can bring contagion from outside of the workplace in to hurt company culture and employee morale.  Personal issues at home can have negative impacts at work.  Similarly, current events and politics can carry over from outside the employment environment into a company and negatively impact the workplace.  Managers must be careful to keep fomites from bringing outside viruses into the workplace.  However, just like a healthy immune system is exposed to some viruses, a workplace cannot be completely sterile, and a company culture must have some exposure to viruses to build an immunity.

5. Fomites can be critical to the company.

Just as in the medical context, fomites can be items that are critical to a company.  For example, in medical terms, skin is a fomite.  In the employment context, a manager can be a fomite.  Just as a body cannot survive without its skin, a company cannot survive without managers.  The key with recognizing fomites in the employment context is to recognize that it is not the managerial position or person filling that position that needs to be removed.  Companies must protect against the virus, not the fomites.

The California supreme court provided further guidance on employer obligations to provide meal breaks as required under the Labor Code and applicable Wage Orders.  In Donohue v. AMN Services LLC, the California supreme court held that employers may not use time rounding policies in context of meal periods, and time records for meal periods that are incomplete or inaccurate raise a rebuttable presumption of meal period violations.  Here are five key takeaways from the opinion for California employers:

1. Reminder of meal break timing requirements

The California supreme court reiterated that, as it set forth in Brinker Restaurant Corp. v. Superior Court (2012), “employers must generally provide ‘a first meal period [of at least 30 minutes] no later than the end of an employee’s fifth hour of work, and a second meal period [of at least 30 minutes] no later than the end of an employee’s 10th hour of work.”  And that an employer “satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so. . . .  [¶]  . . . [T]he employer is not obligated to police meal breaks and ensure no work thereafter is performed.”

Under Brinker, “[t]here is no meal period violation if an employee voluntarily chooses to work during a meal period after the employer has relieved the employee of all duty.”

2. Time rounding for meal breaks is not permitted under California law

The California Court of Appeal held in See’s Candy Shops, Inc. v. Superior Court (2012) that employers may use time rounding policies to calculate regular and overtime wages “if the rounding policy is neutral on its face and as applied.”  The supreme court noted that it has “never decided the validity of the rounding standard” set forth in See’s Candy, but even assuming the holding is valid, such a rounding policy in regards to meal periods “does not comport with its neutrality standard.”  The supreme court explained that in context of regular and overtime wages, a rounding policy “averages out” and it is possible that employees are “fully compensated over a period of time.”

In contrast, when viewed in the meal break context, an employee’s 30-minute meal break could lose 9 minutes due to rounding, which amounts to nearly a third of the meal break.  If an employee is not provided a full 30-minute meal break because of rounding, there is no mechanism that makes up for the premium pay owed to the employee that would average out over time.  The supreme court held, “The precision of the time requirements set out in Labor Code section 512 and Wage Order No. 4 — “not less than 30 minutes” and ‘five hours per day’ or ‘ten hours per day’ — is at odds with the imprecise calculations that rounding involves.  The regulatory scheme that encompasses the meal period provisions is concerned with small amounts of time.”

3. Rebuttable presumption against employer if time records show meal period violations

The supreme court explained that if an employer’s “time records show missed, short, or delayed meal periods with no indication of proper compensation, then a rebuttable presumption arises.”  The court explained that a rebuttable presumption arises against the employer if “time records show missed, short, or delayed meal periods with no indication of proper compensation.”  The “proper compensation” referred to by the court is the premium pay of one hour of pay at the employee’s regular rate of pay for each workday that the meal period is not provided.  The court explained that, “Employers can rebut the presumption by presenting evidence that employees were compensated for noncompliant meal period or that they had in fact been provided compliant meal periods during which they chose to work.”

What type of evidence could employers use to rebut this presumption?  The court explained that representative testimony, surveys and statistical analysis are some types of evidence that employers could present to rebut the presumption.  In addition, employee attestation forms that they received their meal breaks may also be evidence as explained below.

4. Potential use of employee acknowledgements confirming breaks were taken

The supreme court explained that if an employer’s records do not show a compliance meal break was taken by the employee, it may be possible for the employer to use electronic attestations at the time an employee does not take a full meal break, a late meal break, or misses a break in order to ensure accurate tracking.

In Donohue, the employer’s timekeeping system provided a dropdown menu that prompted the employee to choose one of three options:

  1. “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose not to”;
  2. “I was provided an opportunity to take a 30 min break before the end of my 5th hour of work but chose to take a shorter/later break”;
  3. “I was not provided an opportunity to take a 30 min break before the end of my 5th hour of work.”

The employee was required to choose an option by the end of the pay period, and if the employee selected item #3, they were paid a premium wage for the missed break.  The supreme court explained that this procedure “would have ensured accurate tracking of meal period violations if it had simply omitted rounding.”

5. Potential use of biweekly certifications by employees that they received meal periods

The employer in Donohue also argued that its biweekly certifications signed by employees show there were no meal period violations.  The certification stated:

I was provided the opportunity to take all meal breaks to which I was entitled, or, if not, I have reported on this timesheet that I was not provided the opportunity to take all such meal breaks.

Because the employer used time rounding to record the meal periods, the plaintiff argued that these certifications were not valid as the employees were not on notice of potential violations.  In addition, plaintiff argued that the certification “should be discounted because employees had to sign them to get paid.”  The court did not rule on the effect that the certification would have in this case and left the issue to be addressed by the trial court on remand.  However, it does raise considerations for employers to review the use of certifications that can be used as evidence to rebut the presumption of any time records showing potential meal period violations.

(Thanks to Veenita Raj who co-wrote this week’s Friday’s Five)

An employer’s obligation to provide mandatory paid sick and family leave under the Families First Coronavirus Response Act (FFCRA) ended on December 31, 2020.  The FFCRA applies to employers with 500 or fewer employees.  The payroll tax credits for employers who voluntarily decided to continue providing FFCRA leave were expanded through March 31, 2021.  The American Rescue Plan Act (ARPA), effective on April 1, 2021, extends the tax credits for employers who voluntarily continue or start providing Emergency Paid Sick Leave (Paid Sick Leave) or Emergency Family Medical Leave (Family Leave) through September 30, 2021.   ARPA also makes several other key changes to both the FFCRA’s Paid Sick Leave (which provides two weeks/up to 80 hours of paid leave) and Family Leave provisions (which originally provided up to 10 weeks of paid Family and Medical Leave).  Here are five key impacts California employers must be aware of:

1. Changes to the Emergency Paid Sick Leave Requirements

ARPA resets the 10-day/80-hour limits for Paid Sick Leave starting April 1, 2021. This means that if employees previously exhausted their entitlement to Paid Sick Leave under the FFCRA, they now have another 10 days/80 hours to use.  However, any paid sick leave not used before April 1, 2021 does not roll over.

ARPA adds three (3) qualifying reasons for Paid Sick Leave, which are:

  • Obtaining a COVID-19 vaccine,
  • Recovering from any illness or condition related to the COVID-19 vaccine, or
    • Seeking or awaiting the results of a COVID-19 diagnosis or test if either the employee has been exposed to COVID-19 or the employer requests the test or diagnosis.

2. Changes to the Emergency Family Medical Leave Requirements

With regard to Family Leave, the ARPA made the following changes:

  • Increased the number of paid weeks available to employees from ten (10) weeks under the FFCRA to twelve (12) weeks by removing the initial two-week unpaid period.  This means that if an employee qualifies for family leave, he/she is eligible for 12 weeks of paid leave, assuming he/she has not previously used any family leave time.
  • Increased the total paid leave tax credit available to employers for Family Leave from $10,000 to $12,000, meaning that employers can now take an additional $2,000 in payroll tax credits per employee.
  • Expanded the qualifying reasons to use Family Leave. Previously, leave could only be taken by employees caring for children whose schools or place of care was closed, or whose care provider was unavailable for reasons related to COVID-19.  However, starting on April 1, 2021, qualifying reasons for Family Leave also include any of the Paid Sick Leave qualifying reasons.  If an employee qualifies for Paid Sick Leave and needs leave beyond the 10-day/80-hour entitlement for Paid Sick Leave, the employee could take up to an additional 12 weeks of Family Leave.  Therefore, after April 1, 2021, an employee could potentially take up to a total of 14 weeks of paid FFCRA leave.

 3. Caps on Payroll Tax Credit

A $511 tax credit per day, per employee, at the employee’s regular rate of pay, is available for employers providing voluntary Paid Sick Leave if the employee:

  • Is on leave because of any of the newly added qualifying reasons,
  • Is subject to a governmental quarantine or directed to quarantine by a medical care provider, or
  • Has COVID-19 symptoms and is seeking a diagnosis.

On the other hand, if the employee is taking leave for any of the remaining Paid Sick Leave qualifying reasons, the payroll tax credit is limited to two-thirds of the employee’s regular rate of pay and is capped at $200 a day.

4. Non-Discrimination Provision

The American Rescue Plan also added a non-discrimination provision for both Paid Sick Leave and family leave.  If an employer opts to voluntarily provide FFCRA leave and discriminates with respect to leave:

  • In favor of highly compensated employees,
  • In favor of full-time employees, or
  • Based on employment tenure, then the employer will not be able to obtain tax credits for any leave paid under the FFCRA framework.

Considering the above, employers who decide to continue or start providing the voluntary FFCRA leave should make sure that the leave is being offered to all employees.

5. California Employers May be Eligible for FFCRA Tax Credit When Providing California 2021 Supplemental COVID-19 Paid Sick Leave under SB 95

As we have written about previously (here and here), California enacted SB 95 that requires employers with more than 25 employees to provide supplemental COVID-19 paid sick leave to qualifying employees.  SB 95 is retroactive to January 1, 2021.  California’s SB 95 paid sick leave requirement does not provide a tax credit for this paid leave requirement.  However, SB 95 does permit employers to take credit for “any federal or local law in effect or that became effective on or after January 1, 2021.”  This credit does not include any paid sick leave required under California’s Healthy Workplaces, Healthy Families Act of 2014.  Moreover, this credit only applies if the paid leave is provided to the employee at the same rate required under SB 95 and for the same qualifying reasons as established by SB 95.

Therefore, it is possible for employers (who have more than 25 but fewer than 500 employees) to receive a tax credit for paid sick leave to the extent an employer is required to provide paid leave under California’s SB 95 and the paid leave qualifies as voluntarily leave under the FFCRA (which does provide a tax credit for qualifying leaves).  However, employers must be careful in this regard, as SB 95’s qualifying reasons for leave do not exactly match up with the FFCRA’s qualifying reasons for leave.  For example, SB 95 requires paid sick leave for employees who are “subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidelines of the State Department of Public Health, the federal Centers for Disease Control and Prevention, or a local health officer who has jurisdiction over the workplace.” (emphasis added) The FFCRA provides a similar, but much more narrow qualifying reason for an “employee who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19.”  In addition, SB 95 requires employers to pay the full rate for employees for all qualifying reasons, while the FFCRA only permits a tax credit of two-thirds of the employee’s pay when they are caring for another person.  Therefore, employers must carefully review the interplay between the qualifying reasons and the rate of pay calculations between SB 95 and the FFCRA when evaluating the potential for claiming tax credits for paid sick leave provided.

Legislation at the federal and state level this month changed many paid sick leave regulations for California employers.  California employers could be subject to at least five different paid sick leave laws spanning federal law, state law, state-regulations, and local government regulations.  As employers reopen in California, it is important to review the various paid sick leave requirements to understand which ones apply to your business to ensure compliance.

1. Families First Coronavirus Response Act (FFCRA)

The FFCRA enacted under the Trump administration on March 19, 2020 expired on December 31, 2020.  The Consolidated Appropriations Act of 2021 permitted employers to take a tax credit who continued to voluntarily provide paid FFCRA leave to employees through March 31, 2021.  The American Rescue Plan of 2021 passed on March 11, 2021, extended the payroll tax credits for qualifying leave that is voluntarily paid by employers through September 30, 2021.  The FFCRA and these extensions for the tax credits for the voluntary paid leave applies to employers with fewer than 500 employees.  The FFCRA does not require employers to provide paid sick leave in 2021, but employers who are voluntarily providing the paid sick leave for qualifying reasons are eligible for a tax credit for this paid leave.

2. 2021 California Supplemental Paid Sick Leave

Governor Newsom signed new legislation on March 19, 2021 requiring California employers to provide COVID-19 supplemental paid sick leave.  The new law applies to employers with more than 25 employees, expands the list of covered reasons for the paid leave from the old 2020 requirements, applies for all leave taken by employees in 2021 (upon verbal or written request by an employee, employers must pay for leave retroactively to January 1, 2021), must update and provide notice to employees on their pay stubs of the new amounts of supplemental paid sick leave the employee is entitled to at the end of the first full paid period following March 29, 2021, and there is a new posting requirement.

3. Cal/OSHA Emergency Temporary Standards (Cal/OSHA ETS)

On November 30, 2020, California’s Office of Administrative Law approved Cal/OSHA’s emergency standards setting forth new requirements for California employers. Under the new requirements, employers must develop a written COVID-19 prevention program, train employees, provide personal protective equipment to employees, provide certain information to employees, and abide by record keeping and new reporting requirements.  In addition, the Cal/OSHA ETS requires employers to provide “exclusion pay” to employees under certain circumstances.

4. Local County and City COVID-19 Paid Sick Leave Ordinances

Many local county and city governments have enacted their own COVID-19 paid sick leave requirements as well, including:

  • Los Angeles County:
    • Extended until 2 weeks after the expiration of the COVID-19 local emergency declared in March 2020
    • Applies retroactively to business starting on January 1, 2021.
  • Los Angeles City: Extended until 2 weeks after the expiration of the COVID-19 local emergency declared in March 2020
  • Long Beach City: Reviewed every 90 days and still in force.
  • Oakland City: Extended until the end date of Oakland’s COVID-19 emergency declaration
  • City of Sacramento: Expires on March 31, 2021
  • San Francisco County and City: Both extended until April 12, 2021
  • City of San Jose: Expires on June 30, 2021
  • San Mateo County: Expires on May 1, 2021
  • City of Santa Rosa: Expires on March 31, 2021
  • Sonoma County: Expires June 30, 2021

5. California’s Healthy Workplaces, Healthy Families Act of 2014 and Local Paid Sick Leave Ordinances

California’s paid sick leave law, the Healthy Workplaces, Healthy Families Act of 2014, became effective on January 1, 2015.  The law requires employers of all sizes to provide 1 hour of paid sick leave for every 30 hours worked or another approved method.  Employer may cap the accrual of paid sick leave at 48 hours and cap the use of paid sick leave at 3 days or 24 hours, whichever is greater, within a 12-month period.

Some local governments also have their own paid sick leave requirements employers must comply with.  These requirements were in place pre-COVID-19.  Some examples of cities in Southern California with their own requirements include:

As written about previously, Governor Newsom signed new legislation on March 19, 2021 requiring California employers to provide COVID-19 supplemental paid sick leave.  California employers were required to provide California COVID-19 supplemental paid sick leave under an old law passed in 2020 that expired on December 31, 2020.  There are a few key differences between the old requirements and the new 2021 COVID-19 Supplemental Paid Sick Leave just enacted, and California employers need to beware of these new requirements.  Below are a few of the new key provisions of the 2021 COVID-19 Supplemental Paid Sick Leave:

2021 COVID-19 Supplemental Paid Sick Leave Requirements Apply to California Employers With More than 25 Employees.

The new 2021 COVID-19 supplemental paid sick leave requirements apply to employers with more than 25 employees.  The old California supplemental paid sick leave law applied to employers with 500 or more employees.

Expanded List of Covered Reasons.

Old COVID-19 SPSL – Qualifying Reasons for employees unable to work due to any of the following reasons: New 2021 COVID-19 SPSL – Qualifying Reasons for employees unable to work or telework due to any of the following reasons:
1. The covered worker is subject to a federal, state, or local quarantine or isolation order related to COVID-19. 1. The covered employee is subject to a quarantine or isolation period related to COVID-19 as defined by an order or guidelines of the State Department of Public Health, the federal Centers for Disease Control and Prevention, or a local health officer who has jurisdiction over the workplace. If the covered employee is subject to more than one of the foregoing, the covered employee shall be permitted to use COVID-19 supplemental paid sick leave for the minimum quarantine or isolation period under the order or guidelines that provides for the longest such minimum period.
2. The covered worker is advised by a health care provider to self-quarantine or self-isolate due to concerns related to COVID-19. 2. The covered employee has been advised by a health care provider to self-quarantine due to concerns related to COVID-19.
3. The covered worker is prohibited from working by the covered worker’s hiring entity due to health concerns related to the potential transmission of COVID-19. 3. The covered employee is attending an appointment to receive a vaccine for protection against contracting COVID-19.
4. The covered employee is experiencing symptoms related to a COVID-19 vaccine that prevent the employee from being able to work or telework.
5. The covered employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis.
6. The covered employee is caring for a family member who is subject to an order or guidelines or who has been advised to self-quarantine.
7. The covered employee 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.

Applies Retroactively to January 1, 2021.

The new law applies retroactively to January 1, 2021.  The Labor Commissioner’s FAQs explains:

The requirement to provide “retroactive” 2021 COVID-19 Supplemental Paid Sick Leave does not start until March 29, 2021. This “retroactive” payment is only required if the covered employee makes an oral or written request to be paid for leave that qualifies (as described above).

For example, if a covered employee had to take two hours off for a vaccine appointment on February 15, 2021, the employee can make an oral or written request to the employer to be paid for that time off in February, since it is a qualifying reason for taking 2021 COVID-19 Supplemental Paid Sick Leave.  The oral or written request must be made on or after March 29, 2021. A request made before March 29 does not count.  If an employee is unable to make the request themselves or has difficulty locating an employer to provide proper notice, they may contact the Labor Commissioner’s Office, which may be able to provide assistance.

After the employee makes the request, the employer will have until the payday for the next full pay period to pay the “retroactive” 2021 COVID-19 Supplemental Paid Sick Leave. On that payday, the employer must also provide accurate notice on the itemized wage statement of how many 2021 COVID-19 Supplemental Paid Sick leave hours remain available to the covered employee.

Employers Must Post New Poster.

The Labor Commissioner published the new 2021 COVID-19 Supplemental Paid Sick Leave required notice on its website.  Employers are required to post this notice in a location where employees can easily read it.  If employees do not visit a physical location, employers may distribute it electronically.