On March 19, 2021, California Governor Gavin Newsom signed into law Senate Bill (“SB”) 95, a new COVID-19 supplemental paid sick leave requirement. SB 95 went into effect on March 29, 2021 but applies retroactively to January 1, 2021. SB 95 was passed in response to the expiration of sick leave benefits under the Families First Coronavirus Response Act (“FFCRA”) and Assembly Bill (“AB”) 1867 at the end of 2020. SB 95, however, is more expansive than either of those prior acts. The California Department of Industrial Relations (“DIR”) has published a comprehensive FAQ providing guidance on SB 95 compliance. The FAQ can be found here: https://www.dir.ca.gov/dlse/COVID19Resources/FAQ-for-SPSL-2021.html
I. What are the Qualifying Reasons for Leave Under SB 95?
SB 95 applies to both public and private employers with more than 25 employees, regardless of the industry. Employees may qualify for paid sick leave if they are unable to work or telework for qualifying reasons, which include:
(1) The covered employee is subject to a quarantine or isolation period related to COVID-19;
(2) The covered employee has been advised by a healthcare provider to quarantine due to COVID-19;
(3) The covered employee is experiencing symptoms of COVID-19 and seeking a medical diagnosis;
(4) The covered employee is caring for a family member who is subject to a quarantine or isolation period related to COVID-19;
(5) The covered employee is caring for a family member who has been advised by a healthcare provider to quarantine due to COVID-19;
(6) The covered employee is caring for a child whose school or place of care is closed or unavailable due to COVID-19 on the premises;
(7) The covered employee is attending a vaccine appointment; or
(8) The covered employee cannot work or telework due to vaccine-related symptoms.
Employers must make leave available to employees immediately upon written or oral request. This means that employees are not required to provide supporting documentation of the qualified reason for the leave. According to the DIR, however, documentation can be requested if the employee has requested leave and the employer has information suggesting that the employee is not taking leave for a qualified reason.
An important distinction between SB 95 and AB 1867, however, is that SB 95 does not apply to independent contractors.
II. How Much Paid Leave are Employees Entitled to Under SB 95?
Under SB 95, full-time employees are entitled to 80 hours of paid sick leave. Part time employees with fixed schedules are entitled the sick pay equal to the number of hours they are normally scheduled over a two-week period. For employees working variable schedules, the amount of paid leave is based on a calculation of the total number of hours worked over the prior six-months, divided by the total number of days worked, times 14. The DIR provides the following as an example: An employee worked 520 hours and 182 days over the prior six months. 520 hours ÷ 182 days = 2.857 hours. 2.857 hours x 14 = 40 hours of paid sick leave. SB 95 caps paid sick leave at 80 hours. If an employee has worked less than 14 days, that employee is entitled to paid leave equal to the total number of hours worked during those 14 days.
III. What is the Rate of Pay for Employees Under SB 95?
For non-exempt employees, the rate of pay for the paid sick leave is the highest of the following:
• The employee’s regular rate of pay for the workweek in which the leave is taken;
• A rate calculated by dividing the employee’s total wages (not including overtime premium pay), by the employee’s total hours worked in the full pay periods of the prior 90 days of employment;
• The State minimum wage; or
• The local minimum wage.
Exempt employees are paid at the same rate at which the employer calculates wages for other forms of paid leave time. In all cases, however, leave pay is capped at $511 per day or $5,110 in total.
IV. What if Employees are Already Provided with Paid Sick Leave?
Supplemental paid sick leave under SB 95 is in addition to other paid leave. An employer cannot require employees to use paid or unpaid leave prior to, or in lieu of, supplemental paid sick leave. Supplemental paid sick leave, however, may run concurrently with leave under the FFCRA or other similar COVID-19 paid sick leave, if that leave was taken on or after January 1, 2021, so long as the employee was compensated at the proper rate. Employers are permitted to “true up” the compensation if the employee was not properly compensated.
V. How does the Retroactivity Requirement Work?
SB 95 is retroactive to January 1, 2021. As such, if an employee took COVID-19 related leave between January 1, 2021 and March 29, 2021, the employee is entitled to compensation under SB 95 on written or oral request from the employee. Payment must be made on or before the payday for the next full pay period and must be reflected on the employee’s pay stub.
SB 95 and the DIR’s FAQ are both silent as to how an employer should proceed if an employee took accrued vacation or sick leave for a COVID-19 related issues between January 1, 2021 and March 29, 2021. The safest course of action, however, would be to reinstate the employee’s vacation and sick leave, deduct the hours from the employee’s allotted supplemental paid sick leave time, and “true-up” any differences owed to the employee.
VI. What are the Employer’s Record Keeping Requirements?
SB 95 requires employers to provide employees with the DIR poster or to display the posters in visible place in the worksite. The DIR poster can be found here: https://www.dir.ca.gov/dlse/2021-covid-19-supplemental-paid-sick-leave.pdf
Additionally, available supplemental paid sick leave must be listed on employee pay stubs, separate and apart from regular paid sick leave. If an employee has a variable work schedule, the employer must only list the available leave initially. The employer is not required to update the leave for a variable employee until the employee requests leave.
VII. When Does the Supplemental Paid Sick Leave Requirement Under SB 95 Expire?
The supplemental paid sick leave requirements under SB 95 expire September 30, 2021. Employees on leave at the time the paid leave requirements expire may continue their leave. It is possible, however, that the legislature may extend SB 95 in the future.
VIII. Are Tax Credits Available for Employers Paying Supplemental Paid Sick Leave Under AB 95?
Employers may be entitled to tax credits for paying supplemental paid sick leave under AB 95. Tax credits were previously available for employers providing paid sick leave under the federal FFCRA through December 31, 2020. The tax credit, however, was only available to small employers with fewer than 500 employees. This tax credit was extended by the federal government for small employers who continued to provide paid leave to employees. The tax credit is capped at $511/day for employee “self-care.” Employers should be aware, however, that the tax credit for “caring for others” is capped at $200/day.
Tax issues concerning the intersection of the FFCRA and SB 95 are complex and evolving. Employers should consult with tax professionals regarding these issues.
Gibbs Giden can assist you with questions about SB 95 compliance.
For more information contact:
Matthew Wallin is a senior associate in the Los Angeles office where he practices labor and employment law. He has extensive experience defending private business and public entities in litigation and advising clients on labor compliance issues.
The content contained herein is published online by Gibbs Giden Locher Turner Senet & Wittbrodt LLP (“Gibbs Giden”) for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel. The content contained herein may contain attorney advertising.