Governor Signs Family Benefits Law

On September 23, 2002, Governor Davis signed SB 1661, which expands the current State Disability Insurance Program (“SDI”) to pay family temporary disability insurance (“FTDI”) wage replacement benefits to workers. Workers are eligible for FTDI when they must take time off to care for a new baby, or a seriously ill child or other family member. A “child” includes the employee’s stepson or stepdaughter, or the child of the employee’s registered domestic partner. A “family member” includes the employee’s parent, spouse or registered domestic partner. In order for an employee to qualify for the benefit, another family member must not be able or available to provide the care. Providing psychological comfort and arranging for a third party to provide care also qualifies for the FTDI benefit.

FTDI applies to private employers regardless of size. The law applies to some, but not all, governmental employers. An employee need not work a minimum amount of time to be eligible for FTDI benefits. Employees may receive up to six weeks of FTDI benefits in a twelve month period. FTDI will be funded by increased worker contributions; the employer is not required to pay for a portion of the FTDI benefit. There is a seven-day waiting period during which no benefits will be paid.

Employers who have 50 or more employees and are subject to the California Family Rights Act (“CFRA”) and federal Family Medical Leave Act (“FMLA”) must hold the employee’s position open during the length of the leave. FTDI leave runs concurrently, not consecutively, with CFRA and FMLA leave. Smaller employers, however, have no obligation to reinstate an employee who decides to take such a leave of absence, unless the employer’s policies grant such a leave. The new law does not provide a limit on how many workers from one employer may take leave at any one time.

If an employer provides vacation benefits, an employer may require the employee to use up to two weeks of vacation leave as a condition to receiving FTDI benefits. If the employer chooses this option, one week of the vacation must be applied toward the seven day waiting period.

An employee taking a CFRA/FMLA leave may elect to use a portion of any accrued sick leave, but will not be required to do so. Labor Code Section 233 currently gives employees the right to use half of their accrued sick leave to care for an ill child, parent or spouse. If an employee chooses to use accrued sick leave, we anticipate the Employment Development Department, which will administer the program, will coordinate FTDI benefits with sick leave as it does under the current SDI program. The new law goes into effect January 1, 2004. The State will begin paying FTDI benefits for leaves beginning on or after July 1, 2004. Employers must give notice of FTDI rights to each new employee hired on or after January 1, 2004, as well as give notice to employees who qualify for the leave on or after July 1, 2004. The Employment Development Department will provide the form of notice.

Employers should carefully review their current leave policies in light of this new legislation. Particular thought must be given to any personal leave of absence policy voluntarily provided by the employer, and the coordination of vacation, sick leave, and FTDI benefits. We anticipate that given this new benefit, the length of time an employee will choose to take leave will increase substantially, especially in the case of lower income workers.