Major Protected-Leave Changes for Companies with 5 or More Employees

On September 17, 2020, Governor Gavin Newsom signed SB1383 into law, which dramatically expands the California Family Rights Act ("CFRA").  Under the new law, any employer with 5 or more employees (a reduction from the current 50-employee requirement for general CFRA leave, and the 20-employee count for New Parent Leave) must provide certain protected unpaid leave to eligible employees. The new law will also affect larger companies, as it eliminates the 75-mile-radius employee count limitation and contains several other critical expansions to the CFRA's language. The new law goes into effect on January 1, 2021. 

How the Law Will Change on January 1, 2021

Under the current law, the CFRA requires that covered companies (those with 50 or more employees within a 75-mile radius, or 20 or more employees within a 75-mile radius for New Parent Leave) must provide eligible employees up to 12 workweeks of protected unpaid leave during a 12-month period for a serious health condition, to take care of a family member with a serious health condition, or to bond with a new child. An employee is eligible for CFRA/FMLA protected leave if they (1) have worked for the company for at least 12 months, (2) worked at least 1,250 hours for the company within the 12-month period preceding the leave request.

Under the new CFRA language, which takes effect January 1, 2021:

  • The employee count for determining whether an employer must provide CFRA leave (including New Parent Leave) is reduced to 5 employees.
  • The 75-mile radius limitation is eliminated – the CFRA will now apply to any employer with 5 employees regardless of where those employees are working
  • The term "Family Members," which currently includes only the employee's parent, child, spouse, or domestic partner, is expanded to include an employee's grandparents, grandchildren, and siblings, now mirroring several of California's other leave laws (e.g., Paid Sick Leave, Paid Family Leave, etc.)
  • Parents who work for the same company will no longer be limited to a collective 12 weeks of unpaid leave for bonding with a child following birth, adoption, or placement of a foster child – each parent will get separate 12-week entitlements, and both can theoretically elect to take this leave at the same time.
  • The "key employee" exception (which allowed companies to refuse reinstatement to an employee returning from leave to the same or a comparable position if they were among the top 10% highest-paid employees and if the refusal was necessary to prevent substantial and grievous economic injury to the operations of the employer) is eliminated.
  • Eligibility for leave is expanded to include employees with a qualifying exigency related to covered active duty or call to covered active duty of an employee's spouse, domestic partner, child, or parent in the United States Armed Services (which was already required under the FMLA).

New Difficulties with Tracking Concurrent CFRA and FMLA Leave

Unfortunately, this expansive CFRA language will make tracking concurrent CFRA and FMLA leave (time which an employer can apply to both laws' 12-week banks) more difficult.

Under the current law, the circumstances triggering protected CFRA leave are virtually identical to the circumstances triggering protected FMLA. leave As a result, employers falling under both the CFRA and FMLA could often track a single 12-week leave bank for each of their employees, as the CFRA permits its 12 weeks of leave to run concurrently with the FMLA's 12 weeks of leave. 

With the CFRA expanding the definition of "family member" to include individuals beyond what the FMLA allows, there is an incongruity between the two laws. Under this new language, employees working for employers covered by the FMLA may be entitled to up to 24 weeks of protected unpaid leave

For example, for employers falling under both the CFRA and FMLA, an employee could hypothetically take an initial 12 weeks of protected leave under the CFRA to care for a grandparent, grandchild, or sibling, and then take an additional 12 weeks of protected leave under the FMLA to take care of a parent, child, spouse or domestic partner, or because of their own serious health condition. In this hypothetical, the first 12-weeks of leave under the CFRA cannot be counted as FMLA leave, and thus cannot run concurrently with the CFRA's 12-week count. Perhaps counterintuitively, if the employee in this hypothetical took 12 weeks of leave under the FMLA first, they would be unable to take additional leave under the CFRA because that time would have run concurrently with their available CFRA leave. 

As a result, employers will need to pay special attention to the reasons and timing of their employees' FMLA and CFRA leave requests, and they may need to designate and track two different leave banks.

Mandatory Mediation Available for Employers with 5 to 19 Employees Facing CFRA Claims

The CFRA has been a major source of litigation for larger employers due to the wide-ranging protections it provides employees. Anticipating the potentially high legal costs that smaller employers could face under the new CFRA, Governor Newsom also signed AB1867 into law, which requires the Department of Fair Employment and Housing ("DFEH") to create a mandatory mediation program for employers with 5 to 19 employees. Under this program, an employer may, within 30 days of receipt of a Right-to-Sue notice alleging any violation of the CFRA, request all parties to participate in the DFEH's mediation program. Similarly, the employee may also request this within 30 days of obtaining a Right-to-Sue notice alleging a violation of the CFRA.

If either the company or employee timely elects mediation, the employee is prohibited from filing a lawsuit until the mediation is complete (i.e., after the DFEH department notifies the parties that it believes further mediation would be fruitless). The statute of limitations for the employee to file a lawsuit alleging violation of the CRFA (including any other "additional related claims") is also tolled during this time.

This program gives smaller employers (those with between 5 and 19 employees) who react quickly a short but valuable window of time to force the complaining employee (and if they have one, that employee's attorney) to forestall litigation and explore possible resolution before incurring greater litigation defense costs. It can also provide the employer with an extra window of time to retain counsel and begin mounting a defense to the claim before litigation commences.

What Should Employers Do Now?

  • Small employers with less than 50 employees, or larger employers who have benefited from the 75-mile radius limitation, should immediately begin preparing for January 1, 2021. The new year is approaching fast, and this law is expected to impact upwards of 6 million Californians. Employers should act swiftly and engage with counsel as needed to ensure that they understand the new requirements and are ready to begin applying them immediately in 2021.
  • Consider updating employee handbooks. Employers often dedicate significant portions of their employee handbooks to CFRA/FMLA leave. For a majority of these handbooks, this language will be out of date on January 1, 2021. Employers should consider updating their written policies to ensure the language remains accurate with California law. While there is currently no law that requires a company to maintain a written CFRA policy, out-of-date policy language can be a major tripping point if matters progress to litigation.
  • Train key staff that handle leave requests on the new requirements. Many small employers who will find themselves under the umbrella of the CFRA for the first time may not have a dedicated HR Department, so employers should be sure that those who deal with such requests know the new requirements. Larger employers are no exception: Human Resource employees who handle and process leave requests need to be aware of the expanded scope to avoid accidentally denying leave requests that are permissible under this new CFRA language.
  • Ensure there is a system to track potentially non-concurrent CFRA and FMLA leave. Failure to permit FMLA/CFRA leave when it is available, as well as improper designation of FMLA/CFRA leave, can create liability for a company. Given the new incongruity between the two Acts concerning what constitutes a "family member," employers should ensure they have a system to track circumstances where leaves taken under the two laws do not overlap.
  • Employers with 5 to 19 employees should act quickly when receiving a Right-to-Sue notice. The opportunity to compel an employee to engage in mandatory mediation expires 30 days after receiving a Right-to-Sue notice alleging violation of the CFRA. Employees or their attorneys may not wait the full 30 days, however. Acting quickly and engaging with counsel may help save significant fees and costs if litigation can be avoided.

Figuring out how to navigate the complexities of leave laws can be difficult. If you have questions regarding your company's obligations under this new CFRA language or any other issue related to employment law, please contact one of our attorneys

Shareholders Associates
Eric C. Bellafronto Ernest M. Malaspina Sean Bothamley
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