State and Territory Updates

California

January 18, 2023

Reminder: California Minimum Essential Coverage (MEC) Reporting Due March 31, 2023

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As a reminder, if a self-insured employer employs at least one employee who resides primarily in California, the employer is subject to file copies of federal Forms 1094/1095-C with the California Franchise Tax Board annually. The current 2022 tax year’s filing is due on March 31, 2023. However, no penalty will apply if the filing is done on or before May 31, 2023, according to the state site.

For fully insured plans, the plans’ medical insurers are responsible for filing Form(s) 1095-B on behalf of the employers.

The main objective of this state reporting is for the state to enforce its Individual Mandate requirement by verifying that each resident had health coverage in the prior year. Failure to report can result in a $50 per person penalty.

Affected employers should be aware of these developments.

CA Site »
California Instructions for Filing Federal Forms 1094-C and 1095-C »
California Instructions for Filing Federal Forms 1094-B and 1095-B »


January 18, 2023

2023 SDI and PFL Maximum Weekly Contribution Amount Announced

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The California Employment Development Department (EDD) has published the 2023 weekly benefits maximum for the state’s disability insurance (SDI) and paid family leave (PFL) effective January 1, 2023.

The maximum weekly benefit increases from $1,540 to $1,620.

As indicated in our December 6, 2022, article, the 2023 employee contribution rate for SDI and PFL decreased from 1.1% to 0.9%. The taxable wage base from which the contributions are taken increased from $145,600 in 2022 to $153,164 in 2023.

EDD Announcement »


December 06, 2022

SDI and PFL Rates and Limits Revised for 2023

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The Employment Development Department (EDD) recently announced that the 2023 employee contribution rate for State Disability Insurance and Paid Family Leave will decrease from 1.1% to 0.9%. The taxable wage base from which the contributions will be taken will increase from $145,600 in 2022 to $153,164 in 2023.

Employers should be aware of this change in rates and limits, and they should work with their payroll provider to adjust employee contributions.

EDD Announcement »


December 06, 2022

San Francisco HCSO Rates for 2023

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making healthcare expenditures for their covered employees, among other reporting and notice requirements. The healthcare expenditure rate varies depending on the size of the employer and increases incrementally each year.

As of January 1, 2023, the healthcare expenditure rate for large employers with 100 or more employees increases to $3.40 per hour payable (up from $3.30 per hour in 2022). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $2.27 per hour payable (up from $2.20 per hour payable in 2022). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial or confidential employee earning $114,141 per year ($54.88 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $109,643 per year ($52.71 per hour).

All covered employers will be required to post the revised notice in all workplaces and job sites, when the poster becomes available.

2023 HCSO Announcement »


December 06, 2022

Employees Eligible to Take Paid Sick Days and CFRA Leave for “Designated Persons”

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On September 29, 2022, Gov. Newsom signed AB 1041 into law. The new law expands the definition of “family member” under CFRA and California Paid Sick Leave to include a “designated person” identified by the employee. Effective for leaves starting on or after January 1, 2023, eligible employees may take leave under CFRA to care for a designated person, which is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship. An employer may limit the employee to one designated person per 12-month period.

AB 1041 »


December 06, 2022

Summary of Dental Benefits and Coverage Matrix (SDBC) SB 1008

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California’s SB 1008 requires fully insured health plans and health insurance policies that provide dental benefits coverage in California to use a standardized form (called the Summary of Dental Benefits and Coverage Disclosure Matrix or SDBC) to report and disclose each plan’s dental benefits, such as cost-sharing, exclusion and examples of commonly used benefits. Like the ACA’s Summary of Benefits and Coverage requirement, which applies for medical plans, SB1008 requires insurers and employers to utilize SDBCs to assist eligible employees and individuals to help them understand and compare each dental plan.

For group plans, dental insurers subject to the requirement will complete SDBCs and provide the completed SDBCs to plan sponsors (generally, employers) for each dental plan. Insurers are required to provide the applicable SDBCs to the plan sponsors upon delivery of the policies and provide them at the same time the insurers provide other disclosure materials, including the applicable evidence of coverage. Then, plan sponsors are required to distribute SDBC copies to their eligible employees and other individuals prior to their enrollment, and other specified time indicated in the law.

A plan sponsor can provide a SDBC using one of the following methods:

  • Mail
  • Email (and notify the individual that a paper copy is available free of charge)
  • Direct the individual to the insurer’s website for a copy of SDBC (and notify the individual the availability of a paper copy upon request)

Employers should discuss with their dental insurers the applicability of SDBC and distribute SDBC to their eligible employees and other individuals timely.

SB 1008: Chapter 933 »


November 08, 2022

CFRA Revised to Include Bereavement Leave

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On September 29, 2022, Gov. Newsom signed AB 1949 into law. The new law adds an entitlement to bereavement leave to the state’s existing California Family Rights Act (CFRA). Employers with five or more employees will be required to provide at least five days bereavement leave for employees experiencing the death of the following family members: spouse, child, parent, sibling, grandparent, grandchild, domestic partner or parent-in-law. Employees will be eligible after 30 days of employment. The leave must be taken within three months of the family member’s death.

The entitlement is separate from and in addition to CFRA’s existing 12-week entitlement. The question of whether the leave is paid or unpaid is dependent upon the employer’s existing bereavement leave policy. The leave may be paid or unpaid, but it should be consistent with the employer’s policy. For example, if the employer has an existing bereavement leave policy in which employees are paid for three days, the employee must receive paid bereavement up to the employer’s existing allowance (three days) and any remaining days out of the five (two days) may be unpaid.

The new law is effective January 1, 2023. Employers should work to revise their leave policies as necessary. The CFRA poster is expected to be revised.

AB 1949 »


November 08, 2022

Disability and Paid Family Leave Benefits to Increase in 2025

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On September 30, 2022, Gov. Newsom signed SB 951 into law. The new law will increase benefit amounts payable under the state’s Disability and Paid Family Leave programs. Effective for leaves beginning on or after January 1, 2025, benefits will be paid at 90% of the employee’s wages (up to the annual maximum limit) when the employee’s wages (during the base period) were higher than $722.50, but equal to or lower than 70% of the state average quarterly wage. If the employee’s wages were more than 70% of the state average quarterly wage, benefits would be paid at 70% of the employee’s wages (up to the annual maximum limit).

Employers who supplement the state’s benefits or allow employees to integrate paid time off should be aware of the upcoming change and revise payroll systems and leave policies as necessary.

SB 951 »


April 26, 2022

San Francisco Health Care Security Ordinance (HCSO) and Fair Change Ordinance (FCO): Employer Annual Reporting Due May 2, 2022

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After a two-year break, San Francisco Health Care Security Ordinance employer reporting has resumed this year. Employers who are subject to the San Francisco Health Care Security Ordinance (HCSO) or the Fair Chance Ordinance (FCO) must submit the 2021 Employer Annual Reporting Form by May 2, 2022.

The HCSO applies to employers with 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. The ordinance requires the employer to meet a certain spending threshold for each San Francisco employee related to health care. Employers must report the number of employees covered by the ordinance per quarter in 2021 and detail the health care expenditures made each quarter (payments for health insurance, contributions to the City Option or irrevocable expenditures to a reimbursement account).

The FCO applies to employers who have five or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. Additionally, employers who have a service contract with the City of San Francisco are also subject to the ordinance, regardless of the number of employees. The FCO ordinance prohibits employers from asking about arrest or conviction records on a job application. Employers must report whether their employment application in San Francisco asks about arrest or conviction information; and whether they conducted background checks on conviction or arrest records before a live interview (including telephonic).

Failure to comply with the annual reporting may result in a penalty of $500 per quarter assessed against the employer.

Covered employers should ensure that they retain supporting records to establish compliance with the spending requirements and FCO requirements. For 2022 compliance, covered employers should ensure that they displayed the posters for the 2022 HCSO Notice and FCO Poster in their workplaces or job site. Covered employers should also contribute the 2022 minimum healthcare expenditures for the San Francisco employees and satisfy all other requirements under those ordinances during 2022.

Reporting Form »
Reporting Instructions »
San Francisco HCSO Main Site »


April 12, 2022

2022 COVID-19 Supplemental Paid Sick Leave FAQs

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The California Department of Industrial Relations published FAQs related to the 2022 COVID-19 Supplemental Paid Sick Leave (SPSL), which was originally discussed in the March 1, 2022, edition of Compliance Corner.

The SPSL requirement applies to employers with 26 or more employees. The new guidance clarifies that employers must include all employees nationwide to determine size. Employees are eligible for the leave if they work in California and are unable to work (including telework) due to their own COVID-19 related symptoms or are caring for a family member with COVID-19 related symptoms, they or a family member is receiving the vaccine, or they or a family member is experiencing vaccine related side effects. Independent contractors are not eligible for SPSL.

The law appeared to require employers to establish two different banks of leave: 40 hours for leave related to quarantine and the vaccine and an additional 40 hours if the employee or family member tested positive for COVID-19. The new guidance clarifies that an employer may alternatively have a single bank of up to 80 hours for any of the qualifying reasons.

Lastly, the law required employers to identify on the paystub the amount of COVID-19 SPSL used by the employee. Employers are not required to add separate lines for each 40-hour bank and may instead report a single line for the 80-hour 2022 SPSL. This requirement was effective for the payday related to the first full pay period starting after February 19, 2022.

Employers should adjust their policies and documentation accordingly based on the new guidance.

Department of Industrial Relations, 2022 COVID-19 SPSL FAQs »


March 01, 2022

2022 COVID-19 Supplemental Paid Leave

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On February 9, 2022, Gov. Newsom signed SB 114 into law, which is the 2022 COVID-19 Supplemental Paid Sick Leave (SPSL). The 2021 version of the law expired on September 30, 2021. Like the prior version, employers with 26 or more employees must provide paid leave to employees who are unable to work (including telework) for a COVID-19 related reason.

The new law is retroactively effective to January 1, 2022. Employers must make available two different banks of 40 hours paid leave each; this varies based on the reason for leave.

The first bank of COVID-19 SPSL, up to 40 hours, is available to covered employees unable to work or telework due to any one of the following reasons:

  • Employee’s own health: The employee is subject to a quarantine or isolation period related to COVID-19 or has been advised by a healthcare provider to quarantine due to COVID-19 or is experiencing symptoms of COVID-19 and seeking a medical diagnosis. This includes a quarantine period following exposure to COVID-19.
  • Caring for a family member: The employee is caring for a family member who is subject to a quarantine or isolation period related to COVID-19 or has been advised by a healthcare provider to quarantine due to COVID-19, or the employee is caring for a child whose school or place of care is closed or unavailable due to COVID-19 on the premises.
  • Vaccine-related: The employee or family member is attending a vaccine appointment or cannot work or telework due to vaccine-related side effects — this includes a booster shot.

The second bank of COVID-19 SPSL, up to 40 hours, is available only if an employee or a family member for whom they are providing care tested positive for COVID-19. As defined under the previous law, family members include a child, parent, spouse, registered domestic partner, grandparent, grandchild or sibling. A positive test result includes that from an over-the-counter testing product. The employer may require documentation of the test result, including a photo of the result or electronic communication from the testing provider. The employer may require an additional test five days after the initial negative test result, but only if the employer makes the test available to the employee either by securing a testing appointment or providing a test.

Employers should have posted a notice in the workplace by February 19, 2022. If employees do not report to a physical worksite, the employer should distribute the notice electronically. Starting with the paycheck related to the first full pay period following February 19, 2022, employers must identify on the paystub the amount of COVID-19 SPSL used by the employee.

Employers should take action to post the required notice, update their payroll system to reflect the required paystub information, revise their leave policies, and generally make the paid leave available to employees. Additionally, because the law is retroactive to January 1, 2022, employers should be prepared to reprocess payment, per employee request, for qualifying leave that occurred prior to February 19, 2022.

2022 COVID-19 Supplemental Paid Sick Leave FAQs »
2022 COVID-19 SPSL Poster »


January 19, 2022

Revised CFRA and PDL Posters

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The Department of Fair Employment and Housing (DFEH) updated the “Your Rights and Obligations as a Pregnant Employee” and “Family Care and Medical Leave and Pregnancy Disability Leave” posters. These publications inform employees of their rights under California’s Family Rights Act (CFRA) and Pregnancy Disability Leave (PDL). Employers with five or more employees must post the notices at their California worksites. If employees work remotely, the notice may be delivered electronically. If 10% or more of the company’s workforce speak a language other than English, the notice must be posted in that language, which is available from the DFEH publications webpage.

“Your Rights and Obligations as a Pregnant Employee” Poster, 2022 »
“Family Care and Medical Leave Pregnancy Disability Leave” Poster, 2022 »
DFEH Publications Webpage »


January 19, 2022

Revised CFRA Certification of Health Care Provider

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The Department of Fair Employment and Housing (DFEH) revised the Certification of Health Care Provider, which is used for an employee requesting leave under the California Family Rights Act (CFRA). CFRA is California’s version of FMLA. It previously applied to employers with 50 or more employees. However, effective January 1, 2021, the law and its requirements apply to employers with five or more California employees. The law provides up to 12 weeks of unpaid leave for an eligible employee with a serious health condition (except for maternity related disability, which is covered by Pregnancy Disability Leave, or PDL), to care for a family member with a serious health condition, or for an employee to bond with a newly born or adopted child.

The certification form has been changed to reflect the revised definition of a family member, which was effective January 1, 2021, and includes the employee’s child, parent, parent-in-law, grandparent, grandchild, sibling and spouse. Child and parent include those satisfying the loco parentis status.

Employers should begin using the revised form immediately.

Revised “Certification of Health Care Provider,” 2022 »


January 19, 2022

Cal-OSHA COVID-19 Prevention Emergency Temporary Standards

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Effective January 14, 2022, the Occupational and Health Standards Board issued revised regulations implementing Cal-OSHA’s COVID-19 Prevention Emergency Temporary Standards. The rules apply to all employees in all places of employment except worksites with one employee who has contact with no other persons, employees teleworking from a non-employer site and employees covered by the state’s Aerosol Transmissible Diseases Standard.

Employers must establish, implement and communicate a written COVID-19 Prevention Program. The policy may be integrated with the employer’s Injury and Illness Prevention Program (existing Cal-OSHA requirement). Required elements of the program include a procedure for employees to report COVID-19 symptoms and workplace hazards (without fear of retaliation); procedure for employees with medical conditions to request accommodations; provide information on COVID-19 testing access; process for screening employees for COVID-19 symptoms (which may include employees self-screening at home); evaluation of how to maximize ventilation with outdoor air, air filtration, air cleaning systems; process for correcting hazards and procedures for investigating COVID-19 cases in the workplace.

Within one business day of the date the employer knew or should have known of a COVID-19 case, the employer must provide written notice to all employees and contractors who were present at the same worksite within the high-risk period. The notice should not identify the case by name. The employer must make COVID-19 testing available during paid time at no cost to employees who had close contact. Close contact is defined as being within six feet of a COVID-19 case for 15 minutes or more in a 24-hour period. Tests must be approved for use by the FDA and include home kits if the test is not both self-administered and self-read by the employee.

Employers must also provide COVID-19 testing available to symptomatic employees who are not fully vaccinated. The cost of the test must be paid by the employer and the employee must be paid for the time spent taking the test.

If employees are not fully vaccinated, the employer must provide face coverings and the employees must wear them when indoors. Face covering for this purpose is defined as a surgical mask, medical procedures mask, a respirator (worn voluntarily) or a fabric mask of at least two layers. The mask requirement does not apply to an employee who is alone in a room or vehicle; while eating or drinking; or those who cannot wear a face covering due to a medical or mental condition (including hearing impairment). Those not wearing a face covering must be at least six feet from other persons unless they are fully vaccinated or test negative weekly.

Affected employers should work with outside counsel to establish and implement policies and procedures in compliance with the requirements.

Cal-OSHA COVID-19 Prevention Emergency Temporary Standards »


January 04, 2022

Small Employer Offer of Retirement Plan

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Beginning September 30, 2020, California employers with more than 100 employees were required to offer employees a qualified retirement plan (such as a 401(k)) or participate in the state-run retirement savings program known as CalSavers. The requirement applied to employers with 51 to 100 employees on June 30, 2021, and will apply to employers with five or more employees on June 30, 2022. For this purpose, employer size is based on the number of California-based employees reported on the Employment Development Department quarterly report.

Before the June 30, 2022 deadline, small employers must sponsor a qualified retirement plan or register with CalSavers. Under CalSavers, an employer must automatically enroll eligible employees in the retirement program with a contribution of at least 3% of earnings. New employees must be enrolled within 30 days of employment. Employees may opt out of or back into the program at any time.

CalSavers Employer Registration »


January 04, 2022

SDI and PFL Rates and Limits Revised for 2022

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The Employment Development Department (EDD) recently announced that the 2022 employee contribution rate for State Disability Insurance and Paid Family Leave will decrease from 1.2% to 1.1%. The taxable wage base from which the contributions will be taken will increase from $128,298 in 2021 to $145,600 in 2022. The maximum weekly benefit increases from $1,357 to $1,540.

Employers should be aware of this change in rates and limits, and they should work with their payroll provider to adjust employee contributions.

EDD Announcement »


January 04, 2022

Employer Coverage Reporting

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Signed into law in June 2019, the California Individual Health Coverage Mandate established a state individual mandate effective beginning 2020. The law requires California residents to maintain minimum essential coverage (MEC) or pay a penalty. In conjunction with this mandate, there is a reporting requirement for employers that provide self-insured MEC to residents.

Reporting for the 2021 coverage year is due March 31, 2022, to the California Franchise Tax Board. The state will accept copies of federal Forms 1095-B and 1095-C. Self-insured employers must report coverage for any California resident who had coverage for any portion of the calendar year 2021. Note that employers are only subject to these requirements if their carrier does not complete this reporting. Failure to report can result in a $50 per covered person penalty.

Similar to federal filing, electronic returns are required if filing 250 or more forms.

Franchise Tax Board, Reporting Instructions »


August 31, 2021

San Francisco HCSO Rates for 2022

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making healthcare expenditures for their covered employees, among other reporting and notice requirements. The healthcare expenditure rate varies depending on the size of the employer and increases incrementally each year.

As of January 1, 2022, the healthcare expenditure rate for large employers with 100 or more employees increases to $3.30 per hour payable (up from $3.18 per hour in 2021). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $2.20 per hour payable (up from $2.12 per hour payable in 2021). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial or confidential employee earning $109,643 per year ($52.71 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $107,991 per year ($51.92/hour).

All covered employers will be required to post the revised notice in all workplaces and job sites, when the poster becomes available

2022 HCSO Announcement »


April 27, 2021

San Francisco HCSO Annual Reporting Waived for CY 2020

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On April 21, 2021, the San Francisco Board of Supervisors approved an ordinance waiving the annual reporting requirement for calendar year 2020 related to the San Francisco Health Care Security Ordinance (HCSO). This supersedes the previous guidance issued by the San Francisco Office of Labor Standards Enforcement on March 24, 2021, which postponed the reporting for at least six months.

As background, employers with 20 or more employees must meet a minimum healthcare spending requirement on employees working at least eight hours in the city or county of San Francisco. Normally, an employer must file a report detailing their compliance by April 30 for the previous calendar year. However, the annual report has now been waived for calendar years 2019 and 2020 due to COVID-19 and the administrative burden the report places on employers. Employers should continue to comply with the spending requirement and maintain documentation.

San Francisco Board of Supervisors Ordinance »
San Francisco Office of Labor Standards Enforcement HCSO Information »


April 13, 2021

COVID-19 Supplemental Paid Sick Leave

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On March 9, 2021, Gov. Newsome signed SB 95 into law, requiring employers to provide supplemental paid sick leave to eligible employees. The law applies to employers with 26 or more employees. Unfortunately, neither the new law nor subsequent guidance clarified which employees have to be counted toward the 26-employee threshold. If we look conservatively to how California administers their other laws, all employees working for the employer nationwide would be counted.

Employees are eligible for paid leave for the number of hours they typically work in a two-week period up to 80 hours. The leave allotment is in addition to any normal PTO, paid leave, or mandated safe and sick leave.

The reasons for leave are:

  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.
  2. The covered employee has been advised by a healthcare provider to self-quarantine due to concerns related to 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 described in subparagraph A or who has been advised to self-quarantine, as described in subparagraph B. Family member for this purpose is defined as: child (biological, adopted, foster, stepchild, legal ward or a child to whom the employee stands in loco parentis); parent (biological, adoptive, foster, stepparent or legal guardian of an employee or the employee's spouse or registered domestic partner, or a person who stood in loco parentis when the employee was a child); spouse; registered domestic partner; grandparent; grandchild; and sibling.
  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.

Employees should be paid their normal rate of pay while on leave up to a maximum of $511 per day.

The law is effective retroactively back to January 1, 2021, and is in effect through September 30, 2021. Many counties and cities across the state of California have enacted their own COVID-19-related leave laws, which means that employers will need to make sure that their policies comply with both state and local laws. Remember, federal FFCRA emergency paid sick leave and expanded FMLA are currently optional for an employer. If an employee's leave qualifies under both state/local and federal, the employer would be able to receive a federal payroll tax credit.

Employers should update their leave policies, make adjustments to their payroll systems, post the required notice and communicate to employees as soon as possible.

California SB 95 »
Required Poster »
2021 COVID-19 Supplemental Paid Sick Leave FAQs »


March 16, 2021

San Jose: Paid Sick Leave Ordinance Extended and Expanded

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The San Jose COVID-19 Paid Sick Leave Ordinance was originally effective April 7, 2020 and expired December 31, 2020. The ordinance is extended to June 30, 2021.

As a reminder, the law requires employers to provide paid sick leave to employees who are unable to work for one of the following reasons:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a health care provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a health-care provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or daycare is closed due to COVID-19.

Employers who were required to provide leave under FFCRA were previously exempt. However, now that leave under FFCRA is optional for employers, the paid sick leave ordinance applies to all employers that meet the following two requirements:

  • The employer is subject to the Business License Tax required by Chapter 4.76 of the Municipal Code, or maintains a facility within the boundaries of the City; and
  • The employer is lawfully allowed to conduct business activities under the County of Santa Clara, state or federal health orders.

Employees are eligible only if they leave their residence to perform work and they have worked for the employer within the city of San Jose for at least two weeks.

Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period.

Employers who were originally exempt because of FFCRA should update their leave policies and communicate eligibility to employees in compliance with the revised ordinance.

Paid Sick Leave Ordinance, Extended and Expanded »


March 16, 2021

San Francisco: Extension of Public Health Emergency Leave

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The San Francisco Board of Supervisors and Mayor Breed recently extended the provisions of the Public Health Emergency Leave, which was originally enacted April 2020. The ordinance applies to employers with 500 or more employees (counting employees inside and outside San Francisco).

Employees working in San Francisco may take up to 80 hours (two weeks) of paid leave if they experience a qualifying reason. The reasons for leave are:

  • The employee is subject to an individual or general Federal, State, or local quarantine or isolation order related to COVID-19.
  • The employee has been advised by a health care provider to self-quarantine.
  • The employee is experiencing symptoms associated with COVID-19 and seeking a medical diagnosis.
  • The employee is caring for a family member who is subject to an order as described above, has been advised by a health care provider or is experiencing COVID-19 symptoms.
  • The employee is caring for a family member whose normal school or place of care has been closed, or the care provider is unavailable, due to the public health emergency.
  • The employee is experiencing any other substantially similar condition specified by the Local Health Officer, or under Section 5102(a) (6) of the Families First Coronavirus Act, by the United States Secretary of Health and Human Services.

Effective February 11, 2021, certain bona-fide Section 501(c)(3) non-profit employers are prospectively exempt from the leave requirement. To qualify for the exemption, the non-profit entity must not be engaged in healthcare operations and a majority of their annual revenue is "program service revenue that is not unrelated business taxable income" under Section 512 of the IRC.

Employers should remain in compliance with the posting requirement and provision of leave. While the current extension is only for 61 days, it is expected to be extended again.

Public Health Emergency Leave Extension »
Public Health Emergency Leave Poster »


March 16, 2021

San Francisco Healthy Airport Ordinance

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Effective March 21, 2021, employers with employees who are covered by SFO’s Quality Standards Program (QSP) – adopted by the San Francisco Airport Commission – are required to meet a health care spending requirement. It is important to note that the QSP does not apply to all workers employed at SFO, but personnel involved in performing services which directly impact safety and/or security at the Airport, such as checkpoint security screening, skycap baggage check-in, baggage handling, aircraft cleaning and fueling, food preparation for aircraft delivery, grounds maintenance, custodial, and other employees issued an Airport badge with air operations area access.

The employer of such employees must comply with one of the following health care spending options:

  1. Offer 90% actuarial value medical coverage to employees and dependents at no cost to the employee. All tiers of coverage must be employer paid. The coverage must provide benefits for all 10 categories of Essential Health Benefits including pediatric dental and vision. This applies to any employee covered by the QSP regardless of the number of hours worked.
  2. Pay $9.50 per hour (not to exceed $380 per week) for any QSP employee into the City Option Program.

The coverage for any program eligible employee should be effective before or on March 21, 2021. The employer should have an enrollment or waiver for each employee covered by the QSP. An employee must provide proof of other coverage with the waiver. Going forward, coverage for new employees must be effective on or before the first day following 30 days of employment.

Covered employers must also post the required notice.

San Francisco Healthy Airport Ordinance, FAQ's »
Waiver Form »
Notice »


March 16, 2021

Oakland: Emergency Paid Sick Leave Extended

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The City Council extended the Emergency Paid Sick Leave, which was originally enacted May 12, 2020 and expired December 31, 2020. The ordinance will now remain in effect until the end of the local health emergency (and is retroactively reinstated back to January 1, 2021).

Employers with 50 or more employees must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The reasons for leave are like those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or daycare is closed due to COVID-19.

Additionally, an employee may be eligible for leave if the employee:

  • Is 65 years of age or older.
  • Has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system.
  • Has any condition identified by an Alameda County, California or federal public health official as putting the public at heightened risk of serious illness or death if exposed to COVID-19.
  • Has any condition certified by a healthcare professional as putting the employee at a heightened risk of serious illness or death if exposed to COVID- 19.

Importantly, employers cannot request or require a healthcare provider’s certification.

Employees are eligible if they performed at least two hours of work within the city of Oakland after February 3, 2020. Full-time employees (those who average 40 hours per week) are eligible for up to 80 hours of paid leave with part-time employees eligible for their average hours worked over a two-week period. Employees must be paid normal wages up to $511 per day. Health benefits must be continued during the leave period.

Employers should continue to comply with the ordinance requirements. The employer is only required to provide up to 80 hours of leave one time. In other words, employees did not receive a new emergency paid sick leave allotment with the new calendar year.

Emergency Paid Sick Leave Extended »


March 16, 2021

Los Angeles County: Supplemental Paid Sick Leave Ordinance Extended and Expanded

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The Board of Supervisors retroactively extended and expanded the Supplemental Paid Sick Leave Ordinance, which was originally enacted on April 28, 2020. The ordinance required employers with 500 or more employees nationally to provide paid sick leave to employees in LA County and expired on December 31, 2020. The ordinance now expires two weeks after the end of the local COVID-19 health emergency (and is retroactively extended from January 1, 2021). Furthermore, since leave under FFCRA is now optional for employers, the Board expanded the law to apply to all sized employers in the unincorporated areas of the county.

Employees do not need to satisfy a service requirement. An employee merely needs to be employed during the period covered by the ordinance. To be eligible, an employee must not be able to work (including telework) due to one of the following reasons:

  • A public health official or health care provider requires or recommends the employee isolate or self-quarantine to prevent the spread of COVID-19.
  • The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19 (e.g., is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system).
  • The employee needs to care for a family member who is subject to a federal, state or local quarantine or isolation order related to COV1D-19 or has been advised by a health care provider to self-quarantine for reasons related to COVID-19.
  • The employee takes time off work because the employee needs to provide care for a family member whose senior care provider, school or childcare provider ceases operations in response to a public health or other public official's recommendation.

Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period during the eligibility period.

Importantly, an employer may not require a doctor’s note or other documentation from the employee.

Employers who were originally exempt because of size should revise leave policies and communicate eligibility to employees in order to comply with the ordinance’s requirements.

Supplemental Paid Sick Leave, Revised »


March 16, 2021

Los Angeles City: Supplemental Paid Sick Leave Revised

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The City Council and Mayor Garcetti recently revised the Supplemental Paid Sick Leave Ordinance, which was originally enacted on April 7, 2020. The ordinance applies to employers with 500 or more employees within the city of Los Angeles or 2,000 or more employees within the U.S. The following employers are exempt:

  • Employers who have an existing policy which provides 160 hours or more of paid leave annually.
  • New businesses (other than construction) that started in the city (or relocated from outside the city) on or after September 4, 2019, through March 4, 2020.
  • Any business that has been closed or inoperable for a period of 14 days or more due to a city official’s emergency COVID-19 order.
  • Governmental agencies, emergency and health services personnel, and global parcel delivery services.

Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period during the eligibility period.

Originally, an employee was eligible if they performed any work within the city of Los Angeles for the employer and had been employed with the same employer from February 3, 2020, through March 4, 2020.  These terms of eligibility excluded new employees because the public health emergency has continued for such a lengthy period. Accordingly, the city revised the ordinance to allow certain employees who have been employed by the employer for 60 days to become eligible. The revisions were effective February 10, 2021.

To be eligible, an employee must not be able to work (including telework) and satisfy one of the following conditions:

  • The employee has been diagnosed with COVID-19.
  • The employee has isolated or self-quarantined because of a requirement or recommendation of a public health official or health care provider.
  • The employee is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system.
  • The employee needs to care for a family member who is not sick but who public health officials or health care providers have required or recommended isolation or self-quarantine.
  • The employee needs to provide care for a family member whose senior care provider or whose school or childcare provider caring for a child under the age of 18 temporarily ceases operations in response to a public health or other public official’s recommendation. This provision is only applicable to an employee who is unable to secure a reasonable alternative caregiver.

An employer may not require a doctor’s note nor other documentation from the employee.

Employers should revise their policies and communicate eligibility to newer employees who were previously excluded. The ordinance will remain in effect until two weeks after the end of the local COVID-19 health emergency.

Supplemental Paid Sick Leave Ordinance, Revised »


January 05, 2021

SDI and PFL Rates and Limits Revised for 2021

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The Employment Development Department (EDD) recently announced that the 2021 employee contribution rate for State Disability Insurance and Paid Family Leave will increase from 1.0% to 1.2%. The taxable wage base from which the contributions will be taken will increase from $122,909 for calendar year 2020 to $128,298 in 2021. The maximum weekly benefit increases from $1,300 to $1,357.

Employers should be aware of this change in rates and limits, and they should work with their payroll provider to adjust employee contributions.

EDD Announcement »


November 10, 2020

Prop. 22: App-Based Drivers are Independent Contractors

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On November 3, 2020, California voters passed Proposition 22. The proposition provides that application-based drivers in the transportation and delivery industries are independent contractors if the company permits them to work for other companies, does not require a minimum number of hours to be logged into the company’s network, does not dictate their schedule, and does not require drivers to accept any specific ride or delivery request to maintain access to the company’s network.

Though they are considered independent contractors, the company must provide the drivers with certain benefits and protections, including the following.

  • The driver must receive the full gratuity provided by the customer. The company cannot retain a portion of or make a deduction from the gratuity amount.
  • The minimum earnings amount for a 14-day pay period cannot be less than 120% of minimum wage. This includes bonuses and incentives, but does not include tolls, cleaning fees, gratuities or airport fees. Additionally, the driver must be paid compensation per mile, which is $0.30 per mile for 2021.
  • The company must pay a quarterly healthcare subsidy amount to drivers based on the average number of hours worked for the company in that quarter. For an average of 25 hours or more per week, the subsidy must be 100% of the average employer payment toward a Covered California Plan (which is 82% of the total premium). Covered California will publish the average cost for a bronze health plan. The subsidy amount reduces to a 50% employer contribution for drivers averaging between 15 and 24 hours per week. The company may require a driver to submit proof of coverage as a condition to receiving the subsidy.

The company must also provide drivers with occupational accident insurance, death benefits, sexual harassment policy and training, and a nondiscrimination policy.

California employers who utilize application-based drivers should consult with legal counsel about their obligations under this proposal.

Prop. 22 »


September 01, 2020

Sonoma County Emergency Paid Sick Leave

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On August18, 2020, Sonoma County became the latest California jurisdiction to enact an emergency paid sick leave ordinance related to COVID-19. The law applies to employers with more than 500 employees — those not covered by the Families First Coronavirus Response Act (FFCRA). Employees, including healthcare industry workers and first responders, will be eligible for up to two weeks of paid leave if they have worked within the unincorporated area of Sonoma County for at least two hours. Those working in Santa Rosa are exempt as the city has passed its own emergency paid sick leave law.

Eligible full-time employees (those working 40 hours per week) are entitled up to 80 hours of paid sick leave benefits in a two week period. Eligible part-time employees would receive a prorated benefit based on the average number of hours worked in a two-week period during the previous six months. The maximum benefit is $511 per day.

Mirroring the FFCRA, the leave must be provided if the employee cannot work or telework because:

  • The employee has been advised by a healthcare provider to isolate or self-quarantine to prevent the spread of COVID-19
  • The employee is experiencing COVID-19 symptoms and is seeking a medical diagnosis
  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19
  • The employee needs to care for an individual who is subject to a federal, state or local quarantine or isolation order related to COVID-19; has been advised by a healthcare provider to self-quarantine related to COVID-19; or is experiencing COVID-19 symptoms and is seeking a medical diagnosis
  • The employee takes time off work because the employee needs to provide care for an individual whose senior care provider or whose school or childcare provider is closed or is unavailable in response to a public health or other public official’s recommendation

Employers may require employees to identify the reason for the leave, but may not require a doctor’s certification or other supporting documentation.

The law and its provisions are effective through December 31, 2020, unless the FFCRA is extended beyond that date.

Sonoma County Emergency Paid Sick Leave »


August 18, 2020

COVID-19 Employer Playbook Now Available

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The California Department of Health has released The COVID-19 Employer Playbook: Supporting a Safer Environment for Workers and Customers. Employers will find this a helpful resource that summarizes the various types of leave and benefits that must be made available to employees due to COVID-19, including paid sick leave, COVID-19 Supplemental Paid Sick Leave, Families First Coronavirus Response Act leave, California Family Rights Act leave, State Disability Insurance, and Paid Family leave. The playbook also provides guidance on COVID-19 testing and screening, reporting requirements for employees who test positive, and employer provided personal protective equipment.

California COVID-19 Employer Playbook »


July 21, 2020

Santa Rosa Paid Sick Leave

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On July 7, 2020, the Santa Rosa City Council enacted an emergency paid sick leave ordinance effective immediately. The ordinance will remain in effect until December 31, 2020. It applies to all private employers with at least one employee performing at least two hours work in Santa Rosa. There is an exception available for smaller employers with fewer than 50 employees that are experiencing severe economic hardship.

Applicable employers must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA), but importantly applies to large employers who are exempt from the federal law. Full-time employees would receive a maximum of 80 hours of paid sick leave; part-time employees would receive leave equivalent to their average number of hours worked over a two week period. Benefits are paid at 100% of normal wages up to a daily maximum of $511.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or care provider is closed due to COVID-19.

The employer cannot ask for a written certification from a health care provider.

Santa Rosa Paid Sick Leave »


July 21, 2020

San Mateo County Emergency Paid Sick Leave

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On July 7, 2020, the San Mateo County Board of Supervisors enacted an emergency paid sick leave ordinance effective July 8, 2020. The ordinance will remain in effect until December 31, 2020. It applies to employers with 500 or more employees nationwide with at least one employee performing work in San Mateo County’s unincorporated area since January 1, 2020. Food sector workers are excluded as they are already covered by California’s executive order. Also, an employer may limit leave for emergency responders, healthcare workers and aviation security.

Applicable employers must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA), but importantly applies to large employers that are exempt from the federal law. Full-time employees working 40 hours or more per week would receive a maximum of 80 hours of paid sick leave; while part-time employees would receive leave equivalent to their average number of hours worked over a two week period. Benefits are paid at 100% of normal wages up to a daily maximum of $511.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child (or senior adult) because a school or care provider is closed due to COVID-19.

The leave provided must be in addition to other available leaves. An employer cannot require an employee to take other available leave before or in lieu of the county’s emergency paid sick leave.

Employers should review this act and comply with its requirements.

San Mateo County Emergency Paid Sick Leave  »


July 21, 2020

Sacramento Supplemental Paid Sick Leave

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On June 30, 2020, the Sacramento City Council enacted the Worker Protection, Health and Safety Act, which includes a requirement for employers to provide paid sick leave effective July 15, 2020. The requirement will remain in effect until December 31, 2020. It applies to employers with 500 or more employees nationwide with at least one employee performing work in Sacramento. An employer may limit leave for emergency responders, healthcare workers and food service workers.

Applicable employers must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA), but importantly applies to large employers that are exempt from the federal law. Full-time employees working 40 hours or more per week would receive a maximum of 80 hours of paid sick leave; while part-time employees would receive leave equivalent to their average number of hours worked over a two week period. Benefits are paid at 100% of normal wages up to a daily maximum of $511. If the employee is caring for someone, the benefits are paid at two-thirds the normal wage up to a daily maximum of $200.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or care provider is closed due to COVID-19.
  • The employee is off work because the employee’s specific work location is temporarily closed due to a public health order or public official’s recommendation.

Leave is also available if the employee is over the age of 65 years or is considered vulnerable due to a compromised immune system.

The leave provided must be in addition to other available leaves. An employer cannot require an employee to take other available leave before the city’s supplemental paid sick leave.

Employers should review this act and comply with its requirements.

Sacramento Supplemental Paid Sick Leave  »


June 09, 2020

Oakland COVID-19 Emergency Paid Sick Leave Ordinance

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On May 12, 2020, the Oakland City Council passed an emergency ordinance establishing emergency paid sick leave related to COVID-19. Employers with 50 or more employees must provide up to two weeks of paid leave for employees who are unable to perform work (including telework) for COVID-19-related reasons. The law is similar to emergency paid sick leave under FFCRA, but importantly applies to large employers who are exempt from the federal law.

The reasons for leave are similar to those under the FFCRA:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19
  • The employee is caring for someone who is quarantined or isolated due to COVID-19
  • The employee is advised by a healthcare provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a healthcare provider
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis
  • The employee is caring for a minor child because a school or daycare is closed due to COVID-19

Additionally, an employee may be eligible for leave if the employee:

  • Is 65 years of age or older
  • Has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system
  • Has any condition identified by an Alameda County, California or federal public health official as putting the public at heightened risk of serious illness or death if exposed to COVID-19
  • Has any condition certified by a healthcare professional as putting the employee at a heightened risk of serious illness or death if exposed to COVID- 19

Importantly, employers cannot request or require a healthcare provider’s certification.

Employees are eligible if they have performed at least two hours of work within the city of Oakland after February 3, 2020. Full-time employees (those who average 40 hours per week) are eligible for up to 80 hours of paid leave with part-time employees eligible for their average hours worked over a two week period. To determine average hours worked, the employer should use the period from February 3, 2020, through March 4, 2020. Employees must be paid normal wages up to $511 per day. Health benefits must be continued during the leave period.

The ordinance took effect immediately and will expire on December 31, 2020. The city intends to publish a notice that employers will need to distribute to employees.

Emergency Ordinance »


May 12, 2020

Los Angeles County Supplemental Paid Leave

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On April 28, 2020, the Los Angeles County Board of Supervisors enacted an interim urgency ordinance related to supplemental paid leave. Employers with 500 or more employees nationally must provide two weeks of paid sick leave to certain employees for reasons related to COVID-19. Employees are eligible if they perform work within the unincorporated area of Los Angeles County and have a qualifying reason. Emergency responders and health care providers may be excluded from eligibility.

There is no service requirement. An employee merely needs to be employed on the effective date of the law. To be eligible, an employee must not be able to work (including telework) due to one of the following reasons:

  • A public health official or health care provider requires or recommends the employee isolate or self-quarantine to prevent the spread of COVID-19
  • The employee is subject to a federal, state or local quarantine or isolation order related to COVID-19 (e.g., is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system)
  • The employee needs to care for a family member who is subject to a federal, state or local quarantine or isolation order related to COV1D-19 or has been advised by a health care provider to self-quarantine for reasons related to COVID-19
  • The employee takes time off work because the employee needs to provide care for a family member whose senior care provider, school or childcare provider ceases operations in response to a public health or other public official's recommendation.

The employer cannot require employees to use any accrued paid time off prior to the supplemental paid leave. Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period during the eligibility period.

Importantly, an employer may not require a doctor’s note or other documentation from the employee. Additionally, if the employer has already provided paid sick leave to an employee for one of these reasons on or after March 31, 2020, the employer may reduce this amount from the maximum hours the employee would otherwise receive under this law.

The law is effective April 28, 2020, but applies to leaves taken on or after March 31, 2020.

Angeles County Supplemental Paid Leave Ordinance »


May 12, 2020

San Jose Paid Sick Leave Related to COVID-19: Additional Guidance

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On April 16, 2020, the San Jose Department of Public Works, Office of Equality Assurance provided guidance related to the COVD-19 paid sick leave ordinance. Under the new law, employers are exempt if they provide employees with some combination of paid personal leave at least equivalent to the paid sick time required by the ordinance.

The new guidance clarifies that an employer is only exempt if it provides the equivalent amount of paid leave time to an employee on the effective date of the ordinance: April 7, 2020. In other words, that amount of time must be available to an otherwise eligible employee on April 7, 2020. For example, let’s say that the employer provides employees with three weeks of PTO, which may be used as sick time. Prior to April 7, 2020, an employee had already used two weeks of the PTO for 2020. The employer must provide the employee with additional time to comply with the two week paid sick leave requirement if the employee has a COVID-19-related reason for leave.

San Jose Department of Works Memo »


April 28, 2020

San Francisco Public Health Emergency Leave

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On April 17, 2020, San Francisco Mayor Breed signed the San Francisco Public Health Emergency Leave Ordinance into law. On April 18, 2020, the San Francisco Office of Labor Standards Enforcement issued related guidelines for employers.

The law, which became effective immediately, applies to employers with 500 or more employees. To determine size, the employer should average the number of employees per pay period in 2019. This calculation should include all full-time, part-time, undocumented and temporary employees worldwide, not just those working in San Francisco. Independent contractors are not included; nor are private sector employees working at San Francisco International Airport, Fort Mason, the Presidio or the Golden Gate National recreation Area.

Employees working in San Francisco may take up to 80 hours (two weeks) of paid leave if they experience a qualifying reason. The employee’s leave entitlement is based on the average number of hours the employee worked over a one-week period for the six months prior to February 25, 2020. There are special rules for employees hired after February 25, 2020.

Importantly, the ordinance applies to businesses which are still open and those who have temporarily closed. Furloughed employees are eligible for paid leave.

For non-exempt employees, the employer has two choices for the rate of pay. The employer may use the regular rate of pay for the workweek in which the employee uses the paid leave or the employer may use the average pay, not including overtime premium pay, for the 90 days prior to the leave. For exempt employees, the employer would use the rate of pay typically used for other types of paid leave.

The reasons for leave are:

  • The employee is subject to an individual or general Federal, State, or local quarantine or isolation order related to COVID-19. This includes an employee who is a member of a “vulnerable population” who is unable to work or telework due to recommendations in Order No. C19-05. For this purpose, vulnerable populations include people who are 1) 60 years old and older; 2) people with certain health conditions such as heart disease, lung disease, diabetes, kidney disease, and weakened immune systems; and, 3) people who are pregnant or were pregnant in the last two weeks.
  • The employee has been advised by a health care provider to self-quarantine.
  • The employee is experiencing symptoms associated with COVID-19 and seeking a medical diagnosis.
  • The employee is caring for a family member who is subject to an order as described above, has been advised by a health care provider or is experiencing COVID-19 symptoms.
  • The employee is caring for a family member whose normal school or place of care has been closed, or the care provider is unavailable, due to the public health emergency.
  • The employee is experiencing any other substantially similar condition specified by the Local Health Officer, or under Section 5102(a) (6) of the Families First Coronavirus Act, by the United States Secretary of Health and Human Services.

“Family member,” for this purpose, includes a child, grandchild, parent, grandparent, legal guardian or ward, sibling, or spouse or registered domestic partner. It also includes a designated person if the employee has no spouse or registered domestic partner.

Employers must post a notice immediately. It must be provided in a manner calculated to reach all employees, such as posting at a job site, sending electronically, and/or posting to web-based or app-based platforms.

The ordinance will expire on June 17, 2020, or the termination of the public health emergency, whichever occurs earlier. Also, the Board of Supervisors may take action to extend the ordinance beyond the sunset date.

Public Health Emergency Leave Ordinance »
Public Health Emergency Leave FAQs »
Public Health Emergency Leave Poster »


April 14, 2020

State Disability Insurance and Paid Family Leave Benefits Related to COVID-19

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The Department of Employment Development Department (EDD) has issued guidance in the form of frequently asked questions related to state benefits available to employees who are unable to work because of COVID-19. If an employee is unable to work because they are sick or have been exposed and have supporting medical documentation, they may be eligible for State Disability Insurance (SDI) benefits. If an employee is unable to work because they are caring for an ill or quarantined family member with COVID-19, they may be eligible for Paid Family Leave (PFL) benefits. Pursuant to Gov. Newsome’s executive order issued on March 12, 2020, the seven-day waiting period for SDI benefits is waived for this purpose.

As a reminder, SDI and PFL apply to all sized employers with employees working in California, whereas the paid leave provided under the FFCRA applies only to private employers with fewer than 500 employees and non-federal governmental employers of any size. If an employer is subject to both laws and an employee is eligible for paid leave under both state law and FFCRA, the guidance is not clear as to how they would coordinate. Existing guidance provides information on how typically SDI/PFL would pay first with any salary continuation from an employer paying second. The employee may not receive more than their normal wage and the employer will only be eligible for the tax credit on wages it paid under FFCRA (not for benefits the employee received under SDI or PFL).

EDD Guidance on COVID-19 Related SDI and PFL Benefits »
EDD Existing Guidance on Coordination of Benefits with SDI/PFL and Employer Payments »
Executive Order, March 12, 2020 »


April 14, 2020

San Jose Paid Sick Leave Related to COVID-19

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Effective April 7, 2020, the San Jose COVID-19 Paid Sick Leave Ordinance requires employers to provide paid sick leave to employees who are unable to work because of one of the following reasons:

  • The employee is subject to quarantine or isolation by federal, state or local order due to COVID-19.
  • The employee is caring for someone who is quarantined or isolated due to COVID-19.
  • The employee is advised by a health care provider to self-quarantine due to COVID-19 or is caring for someone who is so advised by a health-care provider.
  • The employee experiences symptoms of COVID-19 and is seeking medical diagnosis.
  • The employee is caring for a minor child because a school or daycare is closed due to COVID-19.

Employers who are subject to the paid leave requirements under the FFCRA are exempt. Employees are eligible only if they are considered essential workers and leave their residence to perform work. They must have worked for the employer for at least two weeks for the employer within the city of San Jose.

Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period.

The ordinance sunsets on December 31, 2020.

San Jose Paid Sick Leave Ordinance »


April 14, 2020

Los Angeles Supplemental Paid Sick Leave Due to COVID-19

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On April 7, 2020, Mayor Garcetti issued a Public Order supplementing an ordinance passed by the L.A. City Council related to supplemental paid sick leave for workers affected by COVID-19. The ordinance applies to employers with 500 or more employees within the city of Los Angeles or 2,000 or more employees within the U.S. The following employers are exempt:

  • Employers who have an existing policy which provides 160 hours or more of paid leave annually
  • New businesses (other than construction) that started in the city (or relocated from outside the city) on or after September 4, 2019, through March 4, 2020
  • Any business that has been closed or inoperable for a period of 14 days or more due to a city official’s emergency COVID-19 order

An employee is eligible if they perform any work within the city of Los Angeles for the employer and has been employed with the same employer from February 3, 2020, through March 4, 2020. This includes a corporate officer, executive or temporary staffing worker. Eligible full-time employees may receive up to 80 hours of paid sick leave up to a daily max of $511. Part-time employees may receive paid sick leave based on the average number of hours and pay rate for a two-week period during the eligibility period. Certain emergency, health services and critical parcel delivery personnel are exempt.

To be eligible, an employee must not be able to work (including telework) and satisfy one of the following conditions:

  • The employee has been diagnosed withCOVID-19.
  • The employee has isolated or self-quarantined because of a requirement or recommendation of a public health official or health care provider.
  • The employee is at least 65 years old or has a health condition such as heart disease, asthma, lung disease, diabetes, kidney disease or weakened immune system.
  • The employee needs to care for a family member who is not sick but who public health officials or health care providers have required or recommended isolation or self-quarantine.
  • The employee needs to provide care for a family member whose senior care provider or whose school or child care provider caring for a child under the age of 18 temporarily ceases operations in response to a public health or other public official’s recommendation. This provision is only applicable to an employee who is unable to secure a reasonable alternative caregiver.

Importantly, an employer may not require a doctor’s note or other documentation from the employee. Additionally, if the employer has already provided paid sick leave to an employee for one of these reasons on or after March 4, 2020, the employer may reduce this amount from the maximum hours the employee would otherwise receive under this law.

Mayor’s Supplemental Paid Sick Leave Order »


March 31, 2020

New Notices Encouraging Carriers to Provide Prompt Services During COVID-19 Pandemic

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The Insurance Department recently published two new notices meant to encourage carriers to provide prompt services during the COVID-19 pandemic. The first, published on March 18, 2020, encourages insurance carriers to take steps necessary to maintain their ability to process and pay claims and provide other required customer services in a reasonable and timely manner. The second, published on March 20, 2020, provides additional background and guidance on “essential businesses” and insurance, which confirms that insurance is an essential business. The notice also encourages insurance carriers to continue providing as many core insurance functions as possible during the COVID-19 pandemic.

The notices contain no new employer obligations, but hopefully give employers confidence that California carriers will continue to operate as best they can during the COVID-19 pandemic, including processing and paying claims in a timely manner.

March 18, 2020 Notice »
March 20, 2020 Notice »


March 31, 2020

City of Emeryville Guidance on COVID-19 and the City’s Paid Sick Leave Law

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On March 17, 2020, the City of Emeryville published guidance on COVID-19 as it relates to Emeryville’s paid sick leave law. As background, Emeryville has a paid sick leave ordinance that requires employers to provide paid sick leave to all employees (including temporary and part-time employees) who perform work in the city for at least two hours per week.

Under the new guidance, Emeryville employers must allow covered employees to use accrued sick leave in five COVID-19-related situations. These include situations where the employee takes time off work because:

  • Public health officials or health care providers require or recommend an employee self-isolate or quarantine to prevent the spread of COVID-19
  • The employee falls within the definition of “vulnerable population” under state or official guidance
  • The employee’s business or a work location temporarily ceases operation in response to a public health or other public official’s recommendation
  • The employee needs to provide care for a family member who is not sick but who public health officials or health care providers have required or recommended isolate or quarantine
  • The employee needs to provide care for a family member whose school, childcare provider, senior care provider or work temporarily ceases operations in response to a public health or public official’s recommendation

Guidance  »
Emeryville Paid Sick Leave Ordinance FAQs »


March 31, 2020

City of San Francisco Announces Program to Fund COVID-19-Related Paid Sick Leave

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On March 16, 2020, the City of San Francisco announced a Workers and Families First Program to provide paid sick leave to private sector employees who have been impacted by the COVID-19 pandemic. The program will provide city financial assistance to businesses and nonprofits to provide additional sick leave time to employees, above and beyond their existing policies. All SF employers will be eligible, with up to 20% of the funds reserved for small businesses (those with 50 or fewer employees). SF will contribute up to one week (40 hours) at $15.59 per hour (minimum wage) per employee, or $623 per employee. The employer will pay the difference between the minimum wage and an employee’s full hourly wage.

The program is available only if the employee has exhausted their currently available sick leave, has exhausted or is not eligible for federal or state supplemental sick leave, and the employer agrees to extend sick leave beyond current benefits. The program is available for employees to use pursuant to SF’s Paid Sick Leave Ordinance, including when employees are sick, self-quarantined to prevent spread, caring for a sick family member, home because of a temporary work closure in response to a public official’s recommendation, or caring for a child who is home because of school or day care closures in response to a public official’s recommendation.

Announcement »


March 31, 2020

OLSE Guidance on Use of SF Paid Sick Leave During COVID-19 Pandemic

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On March 24, 2020, the City and County of San Francisco, via the Office of Labor Standards Enforcement (OLSE), published guidance regarding the use of San Francisco paid sick leave during the current COVID-19 pandemic. As background, the SF paid sick leave ordinance requires employers to provide paid sick leave to all employees (including temporary and part-time employees) who perform work in San Francisco.

With respect to employer verification of paid sick leave, the new guidance states that employers may not require a doctor’s note or other documentation for the use of paid sick leave during the duration of the COVID-19 pandemic. This is a temporary change from the normal rule that allows employers to require a doctor’s note or other documentation for the use of paid sick leave of more than three consecutive work days.

With respect to eligibility for paid sick leave, workers who have been laid off by their employer are no longer eligible for paid sick leave. In addition, employees whose hours are reduced or eliminated are not entitled to use accrued paid sick leave to account for such reductions/eliminations; but employees who remain scheduled to work may continue to use accrued paid sick leave for any qualifying reason for any portion of their scheduled hours they are unable to work.

With respect to eligibility, employers must allow covered employees to use accrued sick leave if the employee takes time off work because:

  • Public health officials or health care providers require or recommend an employee self-isolate or quarantine to prevent the spread of COVID-19
  • The employee falls within the definition of “vulnerable population” under state or official guidance (which, as of March 6, 2020, includes a person who is 60 years old or older or a person with a health condition such as heart or lung disease, diabetes, kidney disease, or weakened immune system)
  • The employee’s business or a work location temporarily ceases operation in response to a public health or other public official’s recommendation
  • The employee needs to provide care for a family member who is not sick but who public health officials or health care providers have required or recommended isolate or quarantine
  • The employee needs to provide care for a family member whose school, childcare provider, senior care provider or work temporarily ceases operations in response to a public health or public official’s recommendation

Employers with employees in San Francisco will want to review the guidance and work with counsel to develop appropriate leave policies that reflect the changes in paid sick leave requirements outlined by the new guidance.

OLSE Guidance »
SF Paid Sick Leave Ordinance Info »


March 31, 2020

Covered California Announces Special Enrollment Window for All Californians

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On March 20, 2020, Covered California – California’s state health insurance exchange – announced that any uninsured Californian can enroll in Covered California health coverage through June 30, 2020. The new enrollment window is effective on March 20, 2020. Californians do not need a special enrollment event to enroll; the window is open for all Californians. The announcement also confirms that all medically necessary screening and testing for COVID-19 are free of charge, and that all health plans available through Medi-Cal and Covered California offer telehealth options.

For employers, the announcement does not bring new compliance obligations. However, if an employee wants to drop employer coverage because they intend to enroll in coverage through the exchange (Covered California), it may be a section 125 qualifying event (even if the employee remains eligible for the employer’s plan). So, employers should be aware of a potential qualifying event that would allow an employee (including a furloughed employee) to drop employer coverage if the employee intends to enroll in Covered California coverage (proof of actual enrollment is not necessary).

Covered California Announcement »


March 31, 2020

Notice Requesting Carriers Provide 60-day Grace Period for Insurance Premium Payments

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On March 18, 2020, the Insurance Department published a notice requesting insurance carriers to provide their insureds with at least a 60-day grace period to pay insurance premiums. The notice is meant to help employers (and others who have any type of insurance policy) so that insurance policies are not cancelled for nonpayment of premium during this challenging time of COVID-19. The notice also encourages all insurance agents, brokers and other licensees who accept payments on behalf of insurance carriers to take steps to ensure that customers have the ability to make prompt insurance payments. This should include allowing alternate methods of payment (such as online payments) to eliminate the need for in-person payment methods.

The notice contains no new requirements for employers. If an employer is in need of additional time to make a premium payment, the employer should reach out to their carrier.

Notice »


March 17, 2020

Coverage for Coronavirus

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On March 5, 2020, the Department of Insurance published Bulletin 2020-2, which relates to coverage of screening and testing for the coronavirus (COVID-19). According to the bulletin, fully insured plans in California must immediately eliminate cost sharing (including but not limited to copayments, deductibles and coinsurance) for medically necessary screening and testing for COVID-19 and associated hospital, emergency department, urgent care and provider office visits where the purpose of the visit is to be screened and/or tested for COVID-19. The bulletin also reminds plans and administrators that California law requires emergency care without prior authorization, whether that care is at an in-network or out-of-network hospital.

The bulletin is directed towards carriers, but employers should be aware of these developments.

Bulletin 2020-2 »
Press Release »


January 22, 2020

San Francisco HCSO Rates for 2020

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. The health care expenditure rate varies depending on the size of the employer and increases incrementally each year.

As of January 1, 2020, the health care expenditure rate for large employers with 100 or more employees increases to $3.08 per hour payable (up from $2.93 per hour in 2019). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $2.05 per hour payable (up from $1.95 per hour payable in 2018). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial, or confidential employee earning $104,761 per year ($50.37 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $100,796 per year ($48.46/hour).

All covered employers are required to post the revised notice in all workplaces and job sites.

2020 HCSO Announcement »
2020 HCSO Poster »


January 22, 2020

Family, Medical, and Disability Leave Poster Revised

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The Department of Fair Employment and Housing (DFEH) has published a revised Family Care and Medical Leave and Pregnancy Disability Leave poster. The poster discusses an employee’s right to leave connected with certain medical and family incidents. All employers with 20 or more employees in California must post the notice in each location where there are employees.

The DFEH also revised the Rights and Obligations as a Pregnant Employee poster. The poster discusses an employee’s right to Pregnancy Disability Leave if certain conditions are met. All employers with five or more employees in California must post the notice in each location where there are employees.

Although not directly employee benefits related, the DFEH also revised posters related to workplace discrimination and harassment and transgender rights. For all posters, if 10% or more of the workforce speaks a language other than English, the notice must also be posted in that language(s).

DFEH Posters  »
DFEH Posting Requirements »

2020 HCSO Poster »


November 26, 2019

Coverage for Standard Fertility Preservation Services

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On October 12, 2019, Gov. Newsom signed SB 600 into law. The new law requires insurers to provide coverage for standard fertility preservation services when a covered treatment may cause iatrogenic infertility for a participant. Iatrogenic infertility is defined as infertility caused indirectly or directly by surgery, chemotherapy, radiation, or other medical treatment. For example, if a participant with cancer has received chemotherapy, standard fertility preservation services would be a covered basic health care service and could not be declined as an infertility expense. The law is effective January 1, 2020.

SB 600 »


November 26, 2019

Telemedicine Parity Required

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On October 13, 2019, Gov. Newsom signed AB 744 into law. Effective for policies issued or renewed on or after January 1, 2021, the insurer shall pay benefits for the diagnosis, consultation, or treatment provided through telehealth on the same terms as it pays for in-person services. This includes applying the same copayments, coinsurance, deductibles, and out-of-pocket maximums.

AB 744 »


November 26, 2019

Cost-Sharing Limit for Air Ambulance Services

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On October 7, 2019, Gov. Newsom signed AB 651 into law. Effective for policies issued or renewed on or after January 1, 2020, participants shall pay no more than the in-network cost sharing amount for services received from a non-network air ambulance.

AB 651 »


October 29, 2019

FSA Notice Requirement

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On August 30, 2019, Gov. Newsome signed AB 1554 into law. The new law is effective January 1, 2020 and requires employers to provide notice to health FSA, dependent care FSA, and adoption assistance account participants if the deadline to submit claims is earlier than the end of the plan year.

The notice is not required to be distributed to all participants — only those whose coverage terminates mid-plan year and who have to submit their claims before the end of the plan year. In other words, they have an accelerated run-out period. For example, let’s say that under an employer’s plan design, participants who terminate employment mid-year have 90 days from termination to submit claims. That employer would need to send the notice to those participants. Alternatively, if the FSA permits mid-year terminated employees to submit claims all the way through the end of the plan year the notice would not apply to them.

The law itself is only three sentences. As of now, there is no model notice or language. The only requirement is for employers to notify the affected participants of the appropriate deadline to submit claims. Best practice would be to add the plan name, contact information for questions, and instructions for submitting claims to the notice.

Importantly, employers are required to provide the notice in two different forms. One may be electronic (email), but the second must be telephonic, by text message, through postal mail, or in person.

Lastly, there is some question as to whether the law would be preempted by federal law since a health FSA is governed by ERISA. However, this is not clear and employers should plan on complying in 2020 until further guidance is provided.

AB 1554 »


October 15, 2019

Expansion of Paid Family Leave Benefits

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On September 27, 2019, Gov. Newsome signed SB 1123 into law. Under existing law, eligible employees may receive benefits under the state’s Paid Family Leave program for an absence from work following the birth (or placement) of a new child or due to care for a family member. Under the new law, an employee will also be eligible for benefits for an absence from work in connection with a qualifying exigency related to the covered active duty or call to covered active duty of the employee’s spouse, domestic partner, child, or parent in the armed forces of the US. The new law is effective January 1, 2021.

SB 1123  »


October 15, 2019

Extension of Paid Family Leave Benefits

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On June 27, 2019, Gov. Newsome signed AB 83 into law. Under existing law, eligible employees may receive up to six weeks of benefits under the state’s Paid Family Leave program for an absence from work following the birth (or placement) of a new child or due to care for a family member. Under the new law, the duration of benefits is extended from six weeks to eight weeks effective July 1, 2020.

SB 83 »


October 01, 2019

CA Passes Law to Avoid Misclassification of Employees

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On September 18, 2019, Gov. Newsome signed AB 5 into law. The new law codifies the decision of the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court of Los Angeles, 4 Cal.5th 903 (April 30, 2018). Prior to the ruling, the determination of whether an individual was an independent contractor or employee was based on a totality of facts analyzed through a multiple-factor standard. The Superior Court established a new three prong test, commonly known as the ABC test. Effective, January 1, 2020, AB 5 codifies these provisions into California law. (See our May 15, 2018 article in Compliance Corner for more information.)

California workers are presumed to be common law employees. They can only be classified as independent contractors if they satisfy all three of the following conditions:

  • The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work and in facts
  • The worker performs work that is outside the usual course of the hiring entity's business
  • The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

The law provides many exemptions from the requirement, including the following:

  • California licensed insurance agents
  • Physicians, surgeons, dentists, podiatrists, psychologists, or veterinarians performing professional or medical services
  • Lawyers, architects, engineers, private investigators, or accountants who have an active California license
  • Securities broker-dealers or investment advisers or their agents and representatives that are registered with the Securities and Exchange Commission or the Financial Industry Regulatory Authority or licensed by the State of California
  • Direct salespeople
  • Commercial fishermen working on American vessels

The previous multi-factor test will still apply to certain professional services contracts where the worker meets the following conditions. Professional services includes marketing, human resources, graphic design, travel agency, grant writer, photographer, freelance writer, and licensed manicurist. The worker must:

  • Maintain a business location separate from the hiring entity’s location, which may be the worker’s residence
  • Have a business license, in addition to any required professional licenses (effective July 1, 2020)
  • Have the ability to set or negotiate their own rates
  • Have the ability to set their own hours
  • Have contracts with other hiring entities or hold themselves out to other potential customers
  • Customarily and regularly exercise discretion and independent judgment in performance of services

The stated purpose of the law is to reduce the harm caused to misclassified workers who miss out on payment of payroll taxes, workers compensation coverage, Social Security contributions, unemployment insurance, and state mandated disability insurance. Thus, the law doesn’t directly change eligibility for group health plan coverage under ERISA or the ACA’s employer mandate. However, an employer will need to carefully consider the classification of a worker as an independent contractor or a common law employee.

The employer mandate requires large employers (those with 50 or more full-time employees, including equivalents) to offer minimum value, affordable coverage to common law employees working 30 hours or more per week. If an independent contractor will be reclassified as a common law employee, the large employer will likely need to offer them coverage if the employee is working full-time hours. Otherwise, the employer could be at risk for a penalty under the employer mandate. Depending on the percentage of affected workers, the employer could be at risk for the more costly Penalty A for failure to offer coverage to substantially all full-time employees (95%).

An employer who wishes to review their employee classifications should contact outside counsel. If workers are found to be misclassified, there may be previous tax liability and filings to be addressed as well as future benefit offerings and labor law protections.

AB 5 »


September 04, 2019

Revised Definition of Domestic Partner

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On July 30, 2019, Gov. Newsome signed AB 30 into law, revising the definition of a domestic partner in California.

Previously, to register as a domestic partnership in California, the couple must meet all of the following criteria:

  • Both are capable of consenting to the partnership.
  • Neither is married.
  • Neither is a party to another partnership.
  • Both are at least 18 years of age. An individual younger than 18 may register as a domestic partner with a court order and parental permission.
  • Both must be of the same sex; or in an opposite sex couple, at least one partner must be over the age of 62.

It is this last requirement that has changed. Effective immediately, individuals of the opposite sex are now permitted to register as domestic partners, without regard to one being over the age of 62.

As a reminder, any group insurance policy covering a California resident must provide coverage for registered domestic partners in California. This applies regardless of where the fully insured policy is issued. Coverage provided to domestic partners must be on the same terms and conditions as that offered to spouses. The cost of coverage for a registered domestic partner would not be subject to state taxation. However, the federal government does not recognize domestic partners. Thus, if the partner is not a tax dependent, the cost of coverage would be subject to federal taxation. If an employer does not request relationship documentation (such as a marriage certificate) from married employees, it should not make a domestic partner’s coverage contingent upon submission of evidence of the domestic partnership.

Employers should work with outside counsel to revise plan documentation to reflect the change.

SB 30 »


September 04, 2019

State Individual Mandate

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On June 28, 2019, Gov. Newsom signed SB 78 into law, establishing a state individual mandate, effective January 1, 2020. This state-based individual mandate will require California residents to maintain minimum essential coverage or pay a penalty, beginning in 2020. In an effort to address health insurance affordability issues, the law also offers subsidies to individuals and families with income between 400% and 600% of the federal poverty level. Currently, only individuals and families with income between 100% and 400% are eligible for federal government subsidies for purchasing health insurance through Healthcare.gov or a state-exchange.

It is important to remember that large employers who are subject to the employer mandate are at risk for a penalty if a full-time employee purchases an individual policy through the exchange and receives a premium tax credit from the federal government to subsidize their premiums. If an employee receives premium assistance through the state of California because their income is between 400% and 600% of the federal poverty level, this should not trigger a penalty for the employer.

This new mandate was enacted in response to the effective elimination of the federal individual mandate penalty under the ACA. The ACA’s individual mandate penalty was reduced to zero under the Tax Cuts and Jobs Act, beginning in 2019.

Insurers and self-insured employers will need to report coverage information to the California Franchise Tax Board beginning in January 2021 for coverage year 2020. The law states that it will be the same information that is required on Form 1095-C. So, it may be possible that the forms will be submitted to California as well as the IRS. This will be determined in future regulations.

SB 78 »


July 23, 2019

Employers Required to Provide Retirement Plan

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Beginning June 30, 2020, employers with more than 100 employees will be required to offer employees a qualified retirement plan (such as a 401(k)) or participate in the state-run retirement savings program known as CalSavers. The requirement applies to employers with 51 to 100 employees on June 30, 2021 and to employers with five or more employees on June 30, 2022. For these purposes, employer size is based on the number of California-based employees reported on the Employment Development Department quarterly report.

Before the applicable deadline, employers must sponsor a qualified retirement plan or register with CalSavers. Under CalSavers, an employer must automatically enroll eligible employees in the retirement program with a contribution of at least 3% of earnings. New employees must be enrolled within 30 days of employment. Employees may choose to opt out of the program.

If an employer fails to comply for up to 90 days, a penalty of $250 per employee could be assessed against the employer. If noncompliance continues, the per-employee penalty could increase to $500.

CalSavers registration opened on July 1, 2019. Interested employers may register earlier than the required deadline.

CalSavers, Employer Resources »


April 16, 2019

Oakland Minimum Wage Ordinance for Hotel Workers

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In November 2018, voters in Oakland approved a ballot measure entitled “Oakland Minimum Wage Charter Amendment.” Oakland hotels with 50 or more rooms must pay workers a certain wage based on whether the employee receives health benefits from the employer. Those employees who receive health benefits must be paid at least $15 per hour. Those who do not receive health benefits must be paid at least $20 per hour.

The requirement is effective July 1, 2019, and applies to any person who leases, owns, or sublets an operation in a covered hotel. Thus, a restaurant or retail space located within a covered hotel will likely also need to comply. Employees covered by the new law are those working five hours or more for four weeks.

In addition to the minimum wage requirement, the covered hotels must also implement procedures to protect employees from threatening behavior, limit the workload for housekeeping staff, and comply with the city’s paid sick leave requirement.

The Oakland Department of Workplace and Employment Standards is expected to issue guidance and regulations. There are many unanswered questions at this time such as how the term “health benefits” will be defined and when the department will enforce the law. For now, it appears that the department may not begin enforcement until July 2020.

Oakland Minimum Wage Charter Amendment »


February 21, 2019

Drug Formulary Limitations

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Recently enacted SB 1021 prohibits a drug formulary maintained by a health insurer or health care service plan from containing more than four tiers effective Jan. 1, 2019. Additionally, the new law requires health insurance policies and contracts to cover combination antiviral drug treatments that are medically necessary for the prevention of AIDS/HIV, effective Jan. 1, 2019 until Jan. 1, 2023. Existing law already requires such coverage for the treatment of AIDS/HIV.

Finally, the bill also extends the following existing laws until Jan. 1, 2024. They previously would have expired Jan. 1, 2020:

  • The drug formulary for outpatient prescriptions of a health insurer or health care service plan cannot discourage the enrollment of or reduce benefits for individuals with particular health conditions.
  • The copayment, coinsurance or other form of cost sharing for a covered outpatient prescription drug can generally not exceed $250 for a 30-day supply with limited exceptions. This provision does not apply to a qualified HDHP until the deductible has been met.

Plan sponsors should consider these requirements and work with their insurer to make any necessary changes to their drug formulary.

SB 1021 »
EDD Announcement »


November 13, 2018

Limit on Prescription Costs

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On Sept. 26, 2018, Gov. Brown signed AB 2863 into law. The new law, effective Jan. 1, 2019, limits the amount that a health plan participant will pay for a covered prescription at the point of sale at the pharmacy. Specifically, a participant will pay the applicable cost-sharing amount (copayment or coinsurance) or the retail price, whichever is less. A participant cannot be required to pay a cost-sharing amount that exceeds the retail price.

AB 2863 »


November 13, 2018

Coverage for Oral Anti-Cancer Medications Revised

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Under current law, group health plans that provide coverage for prescribed, orally administered anti-cancer medications cannot impose a cost sharing amount greater than $200 for a 30-day supply for such medication. On Sept. 17, 2018, Gov. Brown signed AB 1860 into law, which increases the permissible cost sharing limit to $250. The law is effective Jan. 1, 2019 and will expire Jan. 1, 2024 unless further legislative action is taken.

AB 1860 »


November 13, 2018

San Francisco HCSO Rates for 2019

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. The health care expenditure rate varies depending on the size of the employer and increases incrementally each year.

As of Jan. 1, 2019, the health care expenditure rate for large employers with 100 or more employees increases to $2.93 per hour payable (up from $2.83 per hour in 2018). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $1.95 per hour payable (up from $1.89 per hour payable in 2018). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial or confidential employee earning $100,796 per year ($48.46 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $97,693 per year ($46.97/hour).

All covered employers are required to post the revised notice by Jan. 1, 2019, in all workplaces and job sites. The revised notice is not yet available. Please look for it in a future edition of Compliance Corner.

2019 HCSO Announcement »


November 13, 2018

SDI and PFL Benefits Revised for 2019

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The CA Employment Development Department (EDD) recently announced that the 2019 employee contribution rate for State Disability Insurance (SDI) will remain at 1.0 percent. The taxable wage base from which the contributions will be taken will increase from $114,967 for calendar year 2018 to $118,371 in 2019. The maximum weekly benefit increases from $1,216 to $1,252.

EDD Announcement »


July 24, 2018

San Francisco Paid Sick Leave Ordinance Revised

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On May 7, 2018, the San Francisco Office of Labor Standards Enforcement (OLSE) published revised rules related to the Paid Sick Leave Ordinance. As a reminder, the ordinance, which has been in place since 2007, requires San Francisco employers to provide paid sick leave to all employees working in San Francisco, including part-time employees, temporary employees and undocumented immigrant employees.

Employees must accrue at least one hour of paid sick leave for every 30 hours worked. Accrual begins after the first 90 days of employment. If the employer has fewer than 10 employees, maximum accrual is 40 hours. Maximum accrual for larger employers is 72 hours. Accrued time rolls over from year to year; however, hours in excess of the total allowed for employers of each size are forfeited. To determine the number of employees, the employer must count all employees, not just the ones who work in San Francisco.

Under the new rules, an employer may not require a doctor’s note or other documentation for the use of paid sick leave of three or fewer consecutive work days. This practice is considered unreasonable with two noted exceptions:

  1. An employer may request documentation to verify an employee’s absences when there’s a pattern or clear instance of abuse, even in absences of three or fewer days.
  2. Further, an employer may request documentation when an employee’s use of paid sick leave is used to attend an appointment.

The new rules clarify treatment of an employee who terminates employment prior to completion of the 90-day waiting period. If that employee returns to employment with the employer within one year, all prior days of employment shall count toward the employee’s new waiting period.

The ordinance applies to employees who perform work in San Francisco, including working from home. The new rules clarify that the ordinance only applies to employees who perform at least 56 hours of work in San Francisco within a calendar year. If an employee stops in the city for pickups or deliveries, all hours worked in the city are covered by the ordinance, including travel time between stops.

In regards to employer size, the OLSE has clarified that an employer’s size is based on the average number of employees in the previous calendar year. For new employers, their size will be based on the number of employees in the employer’s first 90 days.

Under the new rules, an exempt employee’s accrual is based on 40 hours worked per week unless evidence shows that the employee’s regular work week is less than 40 hours.

If the OLSE determines that an employer has failed to comply with the ordinance, they will send the employer a Notice of Preliminary Determination. The employer will have 15 days to pay the amount due or appeal the determination by requesting an OLSE Review Meeting. If the failure is related to retaliation, the employer will only have seven days to respond. The penalty for noncompliance is the dollar amount of paid sick leave owed to the employees multiplied by three or $250, whichever is greater. The penalty for retaliation is $50 per day per affected employee. Additionally, the OLSE may charge the employee up to $50 per day per impacted employee to compensate the city for its investigation costs.

The new rules were effective June 7, 2018.

Paid Sick Leave Revised Rules »


May 15, 2018

Supreme Court Rules in Independent Contractor Misclassification Case

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On April 30, the California Supreme Court issued a ruling in Dynamex Operations West, Inc. v. Superior Court related to the classification of workers as independent contractors or common law employees.

The court’s ruling emphasized the importance of the issue by stating that misclassification results in a financial burden to workers and loss of labor law protections. Further, the court stated that employers who misclassify workers as independent contractors have an unfair competitive advantage over other employers, since they don’t have the cost of complying with any of the following:

  • Federal and state labor laws
  • Federal Social Security and payroll taxes
  • Unemployment insurance and state employment taxes
  • Workers’ compensation insurance requirements

The case involved drivers for a package and document delivery company. In 2004, Dynamex adopted a policy in which all delivery drivers were classified as independent contractors. Dynamex obtained the customers, set the delivery rates and determined the delivery assignments. The drivers were permitted to set their own schedules but had to inform Dynamex of the days they intended to work. The drivers were permitted to hire assistants but had to pay for the assistants themselves. The drivers had to provide their own vehicles and pay for transportation costs (fuel, tolls, vehicle maintenance and vehicle insurance). The drivers were required to purchase and wear Dynamex uniforms. In some cases, the drivers were required to attach Dynamex logos to their vehicle.

The Supreme Court ruled that the drivers were misclassified and were, in fact, common law employees. The determination was based on the following three-prong test. Importantly, this ruling establishes a new standard for employers when determining whether workers are independent contractors or employees. In the past, the determination was based on a totality of facts analyzed through a multiple-factor standard. Under the new test, workers are presumed to be common law employees. They can only be classified as independent contractors if they satisfy all three of the following conditions:

  1. That the worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of such work
  2. That the worker performs work that’s outside the usual course of the hiring entity’s business
  3. That the worker is customarily engaged in an independently established trade, occupation or business of the same nature as the work performed for the hiring entity

Importantly, the ruling specifically only applies for purposes of California wage orders (minimum wage, maximum hours, meal and rest breaks). It doesn’t directly apply to eligibility for group health plan coverage under ERISA and the ACA’s employer mandate. However, an employer will need to carefully consider the consequences of reclassifying a worker from an independent contractor to a common law employee. The employer mandate requires large employers (those with 50 or more full-time employees, including equivalents) to offer minimum value, affordable coverage to common law employees working 30 hours or more per week. If an employee has been reclassified as a common law employee, the employer will likely need to offer them coverage if they’re working full-time hours. Otherwise, the employer could be at risk for a penalty under the employer mandate. Depending on the percentage of affected workers, the employer could be at risk for the more costly Penalty A for failure to offer coverage to substantially all full-time employees (95 percent).

An employer who wishes to review their employee classifications should contact outside counsel. If workers are found to be misclassified, there may be previous tax liability and filings to be addressed as well as future benefit offerings and labor law protections.

Dynamex Operations West, Inc. v. Superior Court »


April 17, 2018

San Francisco: Employer Annual Reporting Due

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Employers who are subject to the San Francisco Health Care Security Ordinance (HCSO) or the Fair Chance Ordinance must submit the 2017 Employer Annual Reporting Form by April 30, 2018.

The HCSO applies to employers with 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. The ordinance requires the employer to meet a certain spending threshold for each San Francisco employee related to health care. Employers must report the number of employees covered by the ordinance per quarter in 2017 and detail the health care expenditures made each quarter (payments for health insurance, contributions to the City Option or irrevocable expenditures to a reimbursement account).

The Fair Chance Ordinance applies to employers who have 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. Additionally, employers who have a service contract with the City of San Francisco are also subject to the ordinance, regardless of the number of employees. The ordinance prohibits employers from asking about arrest or conviction records on a job application. Employers must report whether their employment application in San Francisco asks about arrest or conviction information; and whether they conducted background checks on conviction or arrest records before a live interview (including telephonic).

Failure to comply with the annual reporting may result in a penalty of $500 per quarter assessed against the employer.

Reporting Form »
Reporting Instructions »


December 12, 2017

State Disability Insurance and Paid Family Leave Benefits Revised for 2018

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As a reminder, benefits payable under California State Disability Insurance (SDI) and Paid Family Leave (PFL) are scheduled to increase effective Jan. 1, 2018. The changes are a result of AB 908, which Gov. Brown signed into law back in April 2016.

Under current law, eligible workers receive up to 55 percent of wages under SDI and PFL. However, under the new law, benefits vary based on whether the worker’s normal earnings are above or below the state’s average weekly wage. If an employee earns less than 33.3 percent of the state's average weekly wage ($1,120.67), the employee’s benefit will be 70 percent of normal earnings. Alternatively, if an employee earns at least 33.3 percent of the state's average weekly wage, that employee’s benefit will be 60 percent of normal earnings or 23.3 percent of the state average weekly wage, whichever is greater.

Also effective Jan. 1, 2018, the seven-day waiting period under PFL is eliminated.

Additionally, the California Employment Development Department (EDD) recently announced that the 2018 employee contribution rate for SDI will increase to 1.0 percent from 0.9 percent. The taxable wage base from which the contributions will be taken will increase from $110,902 for calendar year 2017 to $114,967 in 2018. The maximum weekly benefit increases from $1,173 to $1,216.

EDD Announcement »
AB 908 »


December 12, 2017

San Francisco HCSO Rates for 2018

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. For more information on what constitutes covered employers/covered employees, please visit the San Francisco HCSO website link below.

The health care expenditure rate varies depending on the size of the employer and increases incrementally each year. As of Jan. 1, 2018, the health care expenditure rate for large employers with 100 or more employees increases to $2.83 per hour payable (up from $2.64 per hour in 2017). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $1.89 per hour payable (up from $1.76 per hour payable in 2017). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial or confidential employee earning $97,693 per year ($46.97 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $95,101 per year ($45.72/hour).

All covered employers are required to post the new notice by Jan. 1, 2018, in all workplaces and job sites.

HCSO 2018 Rates »
HCSO 2018 Poster »


November 14, 2017

Lead Poisoning Screening

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On Oct. 5, 2017, Gov. Brown signed AB 1316 into law. The new law adds blood lead level screening as a preventive care service for which a health insurer must provide coverage. Specifically, health insurance policies issued on or after Jan. 1, 2018, must provide such coverage for children age 18 and younger who are at risk for lead poisoning when the screening is prescribed by a physician or surgeon affiliated with the plan.

This new law doesn’t contain any new employer compliance obligations. However, California employers will want to be aware of the changes to the insurance laws in California should employees have questions regarding health insurance coverage.

AB 1316 »


October 17, 2017

Small Employers Required to Provide Unpaid Leave for Baby Bonding

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On Oct. 12, 2017, Gov. Brown signed SB 63 (the New Parent Leave Act) into law. This law will require certain employers to provide 12 weeks of protected, unpaid leave for parents to bond with a new child within one year of birth, adoption or foster care placement.

This law applies to employers with 20 to 49 employees within a 75-mile radius of one another. To be eligible for parental bonding leave, an employee must have at least 12 months of service and 1,250 hours of service during the 12-month period prior to the beginning of the leave.

Employers must maintain and pay for the employee’s group health plan coverage at the same level and conditions as if the employee were still an active employee. It also protects the employee from discrimination, refusal to hire, termination, retaliation or any other prohibited action for exercising their right to parental leave. However, employers subject to the New Parent Leave Act may recover their portion of the premium if the employee fails to return to work once the leave is exhausted and the failure to return to work is not due to the continuation, reoccurrence or onset of a serious health condition, or “other circumstances beyond the control of the employee.” Further, upon funding from the legislature, the Act also provides for the creation of a two-year pilot mediation program, which aims to quell the impact of civil litigation on small employers by requiring mediation before an employee could file a civil suit.

Therefore, small employers in California should determine whether they are subject to the New Parent Leave Act and update leave policies, forms and procedures to ensure compliance with this law. Because the law impacts other employment law issues, outside counsel is the best option to assist employers with questions and policy drafting and amendments. This law is effective Jan. 1, 2018.

SB 63 »


October 17, 2017

Law Mandates Prescription Drug Price Transparency

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On Oct. 9, 2017, Gov. Brown signed SB 17 into law. This new legislation generally requires prior notice of prescription drug rate increases and better understanding of prescription drug costs for health plans and insurers.

Specifically, this law requires pharmaceutical companies to notify health insurers and issuers at least 60 days prior to the effective date of a price increase that exceeds 16 percent over a two-year period. This requirement will apply to prescription drugs that have a wholesale price of at least $40 for the course of therapy.

Manufacturers must also provide information to justify drug price increases, such as factors that lead to such a decision and documentation of increased clinical effectiveness (if any). Health plans and insurers must also annually report the 25 most frequently prescribed medications, the 25 most expensive drugs by total annual spending and the 25 drugs with the highest year over year increase in total annual spending. Lastly, regulators must assemble this data to create a consumer-friendly report that illustrates the overall impact of drug costs on health care premiums.

No employer action is required, but employers in California should be aware of this legislation’s effects on group health plans. This law becomes effective on Jan. 1, 2019.

SB 17 »
SB 17 Fact Sheet »


May 31, 2017

Amendments Made to California State-Based SHOP Regulations

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On April 17, 2017, the California Office of Administrative Law approved emergency amendments to three sections of Title 10 of the California Code of Regulations (Sections 6520, 6522 and 6528). These regulations establish standards and processes for small employers to qualify for and enroll in the state-based Small Business Health Options Program (SHOP). These amendments were made as a result of updates to state and federal law, and also to streamline processes and improve language clarity.

The first amendment includes a new requirement that employers disclose any contributions to employees’ group dental premiums when applying for SHOP coverage. The second adds criteria specifically for SHOP group dental plan eligibility. The third clarifies that a new employee’s waiting period is calculated as of the eligibility date, regardless of when the employer actually notifies the SHOP.

Thus, employers wishing to enroll in California SHOP coverage should make note of these changes and include any newly applicable information. These amendments are effective as of April 17, 2017, and will expire on Oct. 1, 2018.

Emergency Readoption Action »


May 16, 2017

Labor Commissioner’s Office Releases New Paid Sick Leave FAQs

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On March 29, 2017, the California Department of Industrial Relations Labor Commissioner’s Office issued frequently asked questions (FAQs) to address the statewide paid sick leave law and its interaction with “grandfathered” paid time off (PTO) and attendance policies (those in existence prior to July 1, 2015).

As background, the California State Paid Sick Leave law, which went into effect on July 1, 2015, requires that eligible employees must accrue at least one hour of paid sick leave for every 30 hours worked starting from the date of hire. Employees may use paid sick leave for the purpose of diagnosis, treatment or care of an existing health condition, preventive care for an employee or family member, or leave due to being the victim of domestic violence, sexual assault or stalking. There is also a poster requirement for applicable employers.

The new FAQs address three common questions received from employers with pre-existing PTO policies. The first FAQ confirms that if an existing PTO policy provides adequate or more generous paid sick leave than mandated by the law, then the employer is permitted to continue providing the same PTO plan. The second FAQ verifies that the prescribed rate of pay calculation methods to be used for paid sick leave are not applicable to any other types of leave. The third FAQ generally says that employers are prohibited from disciplining an employee for taking any earned, unused paid sick leave (i.e., blanket penalties for unscheduled absences/tardiness may be prohibited).

Therefore, applicable employers should ensure any pre-existing PTO and attendance policies are in line with the new FAQs and the state’s mandated paid sick leave law. Employers may want to work with outside counsel to incorporate any employment or labor law issues, both at the state and federal levels, with respect to leaves of absence.

California Paid Sick Leave FAQs »


April 04, 2017

San Francisco: Employer Annual Reporting Due

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Employers who are subject to the San Francisco Health Care Security Ordinance or the Fair Chance Ordinance must submit the 2016 Employer Annual Reporting Form by May 1, 2017. The Health Care Security Ordinance applies to employers with 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. The ordinance requires the employer to meet a certain spending threshold for each San Francisco employee related to health care. The Fair Chance Ordinance applies to employers who have 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. Additionally, employers who have a service contract with the city of San Francisco are also subject to the ordinance, regardless of the number of employees. The ordinance prohibits employers from asking about arrest or conviction records on a job application. The 2016 online form and instructions are now available. Failure to comply with the annual reporting may result in a penalty of $500 per quarter assessed against the employer.

Reporting Form »
Reporting Instructions


April 04, 2017

Los Angeles: Sick Leave Law Revised

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Like many other California cities, Los Angeles implemented its own sick leave ordinance. The ordinance requires employers to provide paid sick leave to employees who work 2 hours or more per week in the city of Los Angeles. There is a staggered effective date based on employer size. Employers with 26 or more employees were subject to the ordinance July 1, 2016; and employers with fewer than 26 employees must comply starting July 1, 2017.

For every 30 hours work, an employee accrues 1 hour of sick leave. When using this method, the employer may impose a maximum leave bank balance of 72 hours. As an alternative to the accrual method, the employer may provide 48 hours of paid sick leave as a lump sum. Under transition relief, large employers may have complied by front loading only 24 hours for July 1 through Dec. 31, 2016. New employees begin accruing on the date of hire, but cannot use the sick leave until after 90 days of employment.

Employees may use the sick leave for their own sickness or that of a family member or closely associated individual who has the equivalence of a family relationship.

On March 14, 2017, the City of Los Angeles Office of Wage Standards (OWS) revised the paid sick leave requirements and guidance. Below are a summary of the most pertinent provisions.

  • An employer’s size is based on the number of covered employees working in Los Angeles. For businesses in operation prior to Jan. 1, 2016, size is based on 2015 data. On the other hand, for businesses in operation on or after Jan. 1, 2016, size is based on the first pay period data.
  • Small employers wishing to use the front load method may comply by providing a lump sum of 24 hours of paid sick leave for the period of July 1, 2017, through Dec. 31, 2017.
  • If an employer’s policy does not fully comply with the ordinance, but is overall more generous to employees, the employer may file for approval.
  • Leave balances rollover to the next year.

Employers with existing paid leave policies are not required to provide additional leave if their existing practices comply with the ordinance. However, employers should carefully review to make sure that all aspects are in compliance, specifically providing paid sick leave to temporary and part-time employees if they work 2 hours or more in a week.

OWS, Paid Sick Leave FAQs

OWS, Paid Sick Leave Revised Regulations


February 22, 2017

New Ordinance Mandates Paid Parental Leave for San Francisco Employees

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On April 21, 2016, Mayor Lee signed the San Francisco Paid Paternal Leave Ordinance (SF PPLO) into law. The ordinance will enhance the California Paid Family Leave (CA PFL) program by supplementing compensation available to covered employees who take time off to bond with a new child. Under the current CA PFL law, California workers may receive 55 percent of their wages for up to six weeks (set to increase to 60 or 70 percent in 2018, depending on income).

However, effective Jan. 1, 2017, the SF PPLO requires covered employers (as defined by the San Francisco Police Code) with 50 or more total employees to provide the balance remaining after the CA PFL so that the covered employee’s compensation equals 100 percent. Further, a phase in schedule requires covered employers with 35 or more employees to comply by July 1, 2017 and those with 20 or more employees to comply by Jan. 1, 2018.

The SF PPLO defines a “covered employee” (i.e., one who is eligible for additional compensation) as one who meets all of the following criteria:

  1. Began employment at least 180 days before start of the leave period.
  2. Performs a minimum of 8 hours per week for the employer located in San Francisco.
  3. At least 40 percent of weekly hours worked for the employer are in San Francisco; and
  4. Eligible to receive CA PFL compensation for purposes of bonding with a new child.

In addition, covered San Francisco employers have a new SF PPLO poster requirement, compensation calculation instructions and a specific leave form that employees must complete in order to receive additional compensation. The San Francisco Office of Labor Standards Enforcement is responsible for enforcing the employer requirements of the PPLO.

San Francisco Paid Paternal Leave Ordinance »
PPLO Final Rule »
PPLO Supplemental Compensation Calculation Instructions »
PPLO FAQs »
PPLO Poster »


January 24, 2017

San Francisco HCSO Health Care Expenditure Rates Increased for 2017

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The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. For more information on what constitutes covered employers/covered employees, please visit the San Francisco HCSO website link below.

The health care expenditure rate varies depending on the size of the employer and increases incrementally each year. As of Jan. 1, 2017, the health care expenditure rate for large employers with 100 or more employees increases to $2.64 per hour payable (up from $2.53 per hour in 2016). For medium-sized employers with 20 to 99 employees, the expenditure rate will rise to $1.76 per hour payable (up from $1.68 per hour payable in 2016).

In addition, beginning Jan. 1, 2017, the city of San Francisco now requires that 100 percent of the required amount of health care expenditures for each covered employee be made as irrevocable expenditures. An irrevocable health care expenditure is a health care expenditure that has not been retained by and cannot at any time be recovered by or returned to the employer. Importantly, an irrevocable expenditure now also includes all employer contributions to HRAs. For more information on what constitutes an irrevocable expenditure, please visit the HCSO website link below.

Finally, all covered employers are required by the HCSO to post an official notice regarding the HCSO in a conspicuous place at any workplace or job site where any covered employee works. The HCSO has released the updated 2017 Official OLSE Notice. The San Francisco Office of Labor Standards Enforcement (OLSE) is responsible for enforcing the employer requirements of the HCSO. Covered employers should ensure the revised version of the notice is displayed at applicable job sites. A copy of the new 2017 Notice can be found below.

2017 San Francisco HCSO Overview and Rates »
2017 San Francisco HCSO FAQs on Health Care Expenditures »
HCSO 2017 Official OLSE Notice »


October 04, 2016

Out-Of-Network Coverage and Cost-Sharing

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On Sept. 23, 2016, Gov. Brown signed AB 72 into law. This new legislation amends the California Health & Safety Code to address reimbursement for out of network (OON) providers who provide services at in-network facilities. California joins several other states, including New York, Connecticut and Florida, which offer consumers protections against surprise OON bills, as well as a process for providers and insurers to resolve payment disputes for OON care.

The legislation provides that if an insured receives services covered by his/her health plan by an OON provider at an in-network facility, the insured is only obligated to pay the OON provider the cost sharing amount that he/she would otherwise be obligated to pay had the same covered service been provided by an in-network provider. In addition, the OON provider is prohibited from billing or collecting any amount beyond the insured’s cost sharing obligation, unless the insured has a plan that includes an OON benefit and the insured consents in writing to receive services from the OON provider at least 24 hours in advance of the episode of care. At the time consent is provided, the OON provider must give the insured a written estimate of his/her total out-of-pocket cost of care.

A health plan must pay an OON provider who provides covered services to an insured at an in-network facility the greater of the average contracted rate or 125 percent of the amount Medicare reimburses for the same or similar service. Payment made by the plan to the OON provider will constitute payment in full unless either party uses the independent dispute resolution process or other means to resolve the dispute. The Department of Managed Health Care will establish a new independent dispute resolution process for resolving payment disputes between OON providers and payers.

AB 72 is effective July 1, 2017.

AB 72 »


October 04, 2016

Immigration Status

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Earlier this year, Gov. Brown signed SB 10 into law. SB 10 expands health care coverage to all Californians, regardless of immigration status, by permitting the state to apply for a federal waiver that would allow undocumented immigrants and their non-US born children to buy coverage through Covered California, the state’s health insurance marketplace, by using their own money. PPACA explicitly excludes undocumented immigrants from receiving health coverage through federally-funded programs, including Covered California. This law removes that barrier by directing the state to apply for a waiver under PPACA Section 1332. If granted, the waiver would make it possible for undocumented adults to review and purchase plans from Covered California. These individuals will remain ineligible to receive subsidies.

While the law is effective immediately, the requirement to offer qualified health plans to undocumented individuals on the state’s exchange does not become operative until Jan. 1, 2018, for coverage beginning Jan. 1, 2019. This allows the state time to apply for and receive a Section 1332 waiver.

SB 10 »


October 04, 2016

Premium Rate Change Notice

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On Sept. 23, 2016, Gov. Brown signed SB 908 into law. This law is meant to help alert consumers whenever state regulators consider increases to their health insurance premiums to be too high. Under current law, the California Department of Managed Health Care and the California Department of Insurance review premium rate increases proposed by insurers and health plans that each agency regulates. When the agencies conclude that an increase is unjustified, they can ask the insurer to rescind the increase, but the company is not legally obligated to comply. The agencies’ only recourse is to post the information on their websites.

Under this new legislation, insurers are required to send written notices to policyholders advising them that regulators found their small group premium rate increases to be unreasonable or unjustified. The notices must be sent at least 60 before the policy renewal date, or 10 days before the start of the next health insurance open enrollment period, thereby giving consumers time to shop for a new plan.

SB 908 is effective Jan. 1, 2017.

SB 908 »


October 04, 2016

Notice of Timely Access to Care

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On Sept. 23, 2016, Gov. Brown signed SB 1135 into law. The new legislation requires health plans and insurers in California to notify consumers and health care providers about a patient’s right to timely care and language assistance. Under current law, consumers have the right to timely access to care and care in their preferred language. However, very few people know these consumer protections exist. Therefore, this new law requires health plans and insurers to communicate these rights through existing documents and communication channels, such as:

  • Evidence of coverage documents;
  • Wherever information on language assistance is provided, as required by existing law;
  • Provider directories;
  • Health plan and insurer websites; and
  • Annual enrollment or renewal notices.

In addition, SB 1135 requires health plans and insurers in California to provide doctors, hospitals and other health providers with information about timely access requirements.

SB 1135 is effective July 1, 2017.

SB 1135 »


October 04, 2016

Cost-sharing Changes

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On Aug. 25, 2016, Gov. signed SB 923 into law. This law prohibits health plans and insurers in the individual and small group markets from changing the cost-sharing design during the plan year except when required by state or federal law. Under current law, health plans and insurers are prohibited from changing the premium rates in a given “rate year.” This new law extends that protection to a plan’s cost-sharing design as well. For purposes of this legislation, cost-sharing refers to what the copays or coinsurance are for a specific benefit: For example, the copay for a generic drug is $10 or $25; the copay for the brand name drug is $20 or $50 while the coinsurance for a hospital stay is 20 percent of the cost.

SB 923 is effective on Jan. 1, 2017.

SB 923 »


October 04, 2016

Contraceptives: Annual Supply

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On Sept. 23, 2016, Gov. Brown signed SB 999 into law. This law enables doctors and other health-care providers to prescribe up to a 12-month supply of FDA-approved, self-administered hormonal contraceptives such as birth control pills, the ring and the patch. In addition, it authorizes pharmacists to dispense, at a patient’s request, up to a 12-month supply of FDA-approved contraceptives at one time and it requires health care service plans and health insurance policies to cover the costs of a 12-month prescription. Currently, women are allowed to fill at most a 90-day prescription of birth control at one time.

SB 999 becomes effective Jan. 1, 2017.

SB 999 »


October 04, 2016

Autism and Pervasive Developmental Disorders

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On Sept. 23, 2016, Gov. Brown signed AB 796 into law, which amends California’s Lanterman Developmental Disabilities Services Act. Under that law, every health care service plan contract and health insurance policy issued in California must provide coverage for behavioral health treatment for pervasive developmental disorder or autism until Jan. 1, 2017. This new legislation simply deletes the sunset date in the Lanterman Act and extends the operation of these provisions indefinitely, thereby creating a new state-mandated program that will provide services for people with developmental disabilities, including autism.

AB 796 is effective Jan. 1, 2017.

AB 796 »


June 01, 2016

June 1, 2016

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On Oct. 8, 2015, California Gov. Jerry Brown signed AB 1305 into law. This law imposes a maximum out-of-pocket (OOP) limit for an in individual participant enrolled in family coverage that is no greater than the maximum OOP limit for self-only coverage for that insurance product. Essentially, this means that for all fully-insured plans sitused in California, an individual enrolled in family coverage will not be required to pay more than what he/she would pay in OOP expenses if he/she were enrolled in self-only coverage under the same insurance product. In other words, the self-only OOP maximum is “embedded” in the family coverage. This OOP maximum requirement went into effect on Jan. 1, 2016.

Additionally, AB 1305 requires embedded deductibles. This means that if a family plan includes a deductible, the plan may not impose a greater deductible on an individual participant in family coverage than the deductible for self-only coverage. For individual and small group plans, the embedded deductible requirement became effective Jan. 1, 2016, and for large group plans, this requirement becomes effective Jan. 1, 2017.

AB 1305 does pose a compliance concern for employers offering fully-insured HSA-compatible HDHP coverage in California if that coverage offers a self-only deductible or OOP maximum amount that is below the minimum federal deductible required for family HDHP coverage.

As background, PPACA imposes OOP maximums on individual and group health plans. For 2016, those maximum limits are $6,850 for self-only coverage, and $13,700 for family coverage. Furthermore, to be eligible to contribute to an HSA, federal law requires that an individual be covered under an HDHP that meets certain deductible thresholds (and those are indexed each year). For 2016, an HDHP must have a minimum deductible of $1,300 for self-only coverage and $2,600 for family coverage.

However, in light of this new law, let’s consider a fully-insured HSA-compatible plan with a deductible and OOP maximum of $1,500 for individual coverage and $3,000 for family coverage. AB 1305 requires that the family HSA benefit have an embedded OOP maximum of $1,500 for individuals since the OOP maximum is $1,500 for individuals; despite the fact that federal law requires that in order to be considered as a qualified HDHP for HSA purposes, the family deductible has to be no lower than $2,600. This contradicts federal rules. Therefore, in order to satisfy AB 1305 requirements and at the same time comply with federal HSA-HDHP rules, fully-insured HSA-compatible HDHP plans in California have increased their self-only OOP maximums to meet the family $2,600 deductible threshold.

Changes may be forthcoming to resolve this potential problem, and NFP Benefits Compliance will provide an update if the legislation is revised. Also, it’s worth noting that AB 1305 does not apply to grandfathered plans; rather it applies to non-grandfathered individual and group health care service plan contracts that provide for essential health benefits.

AB 1305 »


April 19, 2016

April 19, 2016

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As a reminder, employers covered by San Francisco's Health Care Security Ordinance (HCSO) are required to submit the 2015 Employer Annual Reporting Form to the Office of Labor Standards Enforcement (OLSE) by April 30, 2016. Failure to submit the form may result in penalties of $500 per quarter. If you were not covered by the HCSO in any quarter of 2015, you do not need to submit the form, and no further action is required.

Employers can check whether they are required to complete the form by completing a short survey on the first page of the Annual Reporting Form. Employers that were not covered by the HCSO in 2015 will be directed to a web page indicating that they do not need to complete the remainder of the 2015 Employer Annual Reporting Form.

Annual Reporting Form »
Additional Information »

On April 11, 2016, Gov. Jerry Brown signed AB 908 into law. The law will bolster the Paid Family Leave (PFL) program for all California workers by increasing the PFL wages available to workers who take time off to care for ill family members or bond with a new child.

Under the current California PFL law, California workers may receive 55 percent of their wages for up to six weeks. However, starting Jan. 1, 2018, those wages will increase as follows:

If an employee earns up to 33 percent of the state's average weekly wage ($1,120.67), the employee’s PFL wage replacement will go from 55 to 70 percent of normal earnings; If an employee earns more than 33 percent of the state's average weekly wage ($1,120.67), that employee’s PFL wage replacement will go from 55 to 60 percent of normal earnings. In addition to PFL wage increases, the new law eliminates the one-week waiting period for PFL claims. The 6-week period for PFL benefits will not change.

AB 908 »


January 12, 2016

January 12, 2016

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The California Employment Development Department (EDD) recently announced that the 2016 employee contribution rate for State Disability Insurance will remain at 0.9 percent. The taxable wage base from which the contributions will be taken will increase from $104,378 to $106,742 for calendar year 2016 and the maximum cost to an employee will be $960.68.

For claims beginning on or after Jan. 1, 2016, weekly benefits range from $50 to a maximum of $1,129. To qualify for the maximum weekly benefit amount ($1,129) an individual must earn at least $26,070.92 in a calendar quarter during the base period.

Finally, effective Jan. 1, 2016, the tax rate for employers, partners and self-employed individuals who choose coverage in California's temporary disability insurance program is 4.67 percent.

Disability Insurance and Paid Family Leave Benefit Amounts »

Rates, Withholding Schedules and Meals and Lodging Values »

The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making health care expenditures for their covered employees, among other reporting and notice requirements. For more information on what constitutes covered employers/covered employees, please visit the San Francisco HCSO website, linked below.

The health care expenditure rate varies depending on the size of the employer and increases slightly each year. As of Jan. 1, 2016, the health care expenditure rate for employers with 100 or more employees will be $2.53 per hour payable (up from $2.48 per hour payable in 2015). For employers with 20 to 99 employees, the expenditure rate will increase to $1.68 per hour payable (up from $1.65 per hour payable in 2015).

The San Francisco Office of Labor Standards Enforcement (OLSE) is responsible for enforcing the employer requirements of the HCSO.

San Francisco HCSO Website »

Beginning Jan. 1, 2016, the city of San Francisco requires that at least 80 percent of the required amount of health care expenditures for each covered employee must be made as irrevocable expenditures. An irrevocable health care expenditure is a health care expenditure that has not been retained by and cannot at any time be recovered by or returned to the employer. For more information on what constitutes a revocable and irrevocable expenditure, please visit the HCSO website.

San Francisco HCSO Website »

All covered employers are required by the HCSO to post an official notice regarding the HCSO in a conspicuous place at any workplace or job site where any covered employee works. The HCSO has released a new 2016 Official OLSE Notice (note: the Notice is 8.5” x 14”). Covered employers should ensure the new version of the notice is displayed at applicable job sites. A copy of the new 2016 Notice can be found here.

here.


November 03, 2015

CA State Updates - 2015 Jan 03 No.01

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On Sept. 28, 2015, Gov. Brown signed AB 1515, which clarifies and corrects sections in the insurance code and restores the requirement that interest be applied to claim payments under non-health disability policies when a payment is made more than 30 days after receipt of the claim. In addition, the law updates the California Department of Insurance’s contact information on notices and disclosures for consumers by requiring these disclosures to include the Department of Insurance’s website address. In addition, the law aims to increase the department’s efficiency in processing and approving administrative settlements by allowing the commissioner to delegate settlement authority for minor non-insurer cases to a deputy commissioner. Finally, AB 1515 makes several other changes that include increasing conformity to the National Association of Insurance Commissioner’s Model Laws.

AB 1515 is effective January 1, 2017.

AB 1515 »


November 03, 2015

CA State Updates - 2015 Jan 03 No.02

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On Oct. 9, 2015, Gov. Brown signed AB 387 into law. The new law is intended to improve the department's ability to approve draft disability policies by extending the period of time allowed for the department to review the policy forms and any associated risks and premium rates from 30 to 120 calendar days. Moreover, it authorizes the commissioner to develop new guidelines to streamline the file review process for life and disability insurance forms and then to publish these procedures on the department’s website for public review. The legislature hopes that by providing clearer guidelines for insurers to follow when submitting policies for approval, and increasing time allowed to review and approve policies, the new law will improve the overall process and reduce confusion for consumers and the industry.

AB 387 »


November 03, 2015

CA State Updates - 2015 Jan 03 No.03

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On Oct. 6, 2015, Gov. Brown signed SB 575 into law, giving consumers new protections concerning non-forfeiture benefits under their long-term care contracts. The new law protects consumers, specifically the elderly and their caregivers, by requiring long-term care insurers to provide annual notification of the availability of non-forfeiture benefits and contingent benefits to the insured and the insured's designated backup contact. The notification must include the availability of the non-forfeiture benefit, the dollar amount of the non-forfeiture benefit and the name, address and telephone number of the insurer for questions about the benefit. Insurers must send the first annual revised notice to affected policyholders by July 1, 2016.

SB 575 »


October 06, 2015

CA State Updates - 2015 Jan 06 No.01

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On July 16, 2015, Gov. Brown signed into law AB 987, which amends the Fair Employment and Housing Act (FEHA) to provide protection for employees who make a request for an accommodation of a disability or religious beliefs. Existing law requires an employer to provide reasonable accommodation for, among other things, a person’s disability and religious beliefs and prohibits discrimination against any person who has either opposed any practices forbidden under the act or filed a complaint. This bill would also prohibit an employer from retaliating or otherwise discriminating against a person for requesting accommodation of his or her disability or religious beliefs, regardless of whether the accommodation request was granted.

AB 987 was initiated in reaction to Rope v. Auto-Chlor System of Washington, Inc., a 2013 decision from a California appellate panel. In that case the employee requested a leave of absence to donate a kidney to his sister five months prior to the surgery. Two months before the surgery the employee was terminated. He sued for associational disability discrimination under FEHA, but the appellate panel affirmed dismissal of his suit, holding that "a mere request—or even repeated requests—for an accommodation, without more" does not constitute protected activity sufficient to support a claim for retaliation in violation of FEHA. AB 987 amends the statute to establish that "[a] request for reasonable accommodation based on religion or disability constitutes protected activity … such that when a person makes such a request, he or she is protected against retaliation for making the request."

The changes to FEHA take effect Jan. 1, 2016.

AB 987 »


August 25, 2015

CA State Updates - 2015 Jan 25 No.01

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On July 14, 2015, Gov. Brown signed AB 1541 into law. The new law amends Section 1798.81.5 of the California Civil Code that requires employers to protect employees' and applicants' personal information for accessing online accounts. Existing law requires employers to implement and maintain reasonable security procedures and practices to protect state residents' personal information from unauthorized access, destruction, use, modification and disclosure. Current law defines ‘personal information’ as first name/initial and last name in combination with data such as a Social Security number, where the name or data are unencrypted. AB 1541 expands the definition of personal information to include username or e-mail address in combination with a password or security question and answer that permits access to online accounts. Personal information will not include information lawfully made available to the public from government records.

The new law takes effect Jan. 1, 2016.

AB 1541 »


August 25, 2015

CA State Updates - 2015 Jan 25 No.02

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On July 27, 2015, California’s Office of Administrative Law voted to approve an emergency regulation submitted by the California Department of Insurance. The regulation amends Title 10 of the California Code of Regulations that requires health insurers to maintain adequate medical provider networks that meet the needs of their policyholders, maintain accurate provider directories and requires disclosure of out-of-network providers who may participate in a patient’s planned care.

The amended provisions include:

Insurers must ensure their networks have an adequate number of primary care physicians accepting new patients. The network must include providers of the following services: Behavioral health therapy, substance use disorder, psychiatric inpatient hospitalization, detoxification, psychological testing and outpatient retail pharmacies. Participants must be able to access information about mental health and substance use disorder services, such as benefits and providers, by calling a customer service representative during normal business hours. The network must include an adequate number of providers with admitting and practice privileges at network hospitals. If medically appropriate care cannot be obtained from a network provider, then the insurer shall arrange for care from a non-network provider with the patient only responsible for in-network cost sharing. The network should have adequate capacity and availability of licensed health care providers to allow for appropriate appointment waiting times. For example, a participant should not have to wait more than 48 hours for an urgent care appointment that does not require prior authorization; 10 business days for a non-urgent primary care physician or mental health provider appointment; 15 days for a non-urgent specialist appointment. The network must ensure triage or screening services are available by telephone, and that the waiting time for these services does not exceed 30 minutes. Insurers shall also ensure that during normal business hours, the waiting time for a person to speak with a customer service representative does not exceed 10 minutes. Policies that cover pediatric dental and/or vision essential health benefits must assure that there are adequate oral and vision providers, including general and specialists, to accommodate anticipated enrollment growth. Online network provider directories must include specific information about each provider and be made available to both covered persons and consumers. The network provider directory must be updated weekly.

While the new regulations apply to insurers, employers should understand the new safeguards and provisions that will be included under their group insurance policy.

The emergency regulation is effective from July 27, 2015, to Oct. 27, 2015, with the expectation of further legislative action.

Title 10 CCR Section 2240 »


June 30, 2015

CA State Updates - 2015 Jan 30 No.01

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On June 17, 2015, Gov. Brown signed SB 125 into law. The law provides that for plan years starting on or after Jan. 1, 2016, employer size will be determined using the federal method of calculating full-time equivalent employees for employer mandate purposes. When determining whether an employer is eligible for a small or large group policy, the employer will need to calculate the number of full-time employees working 30 hours or more per week. They will then need to total the number of hours by all non-full-time employees and divide by 120. The sum of the two calculations will yield the employer’s number of full-time equivalents. If an employer has 100 or fewer full-time equivalent employees, they will be considered a small employer. Finally, it is important to note that when determining size, the employer must include employees of all related employers.

SB 125 »


May 05, 2015

CA State Updates - 2015 Jan 05 No.02

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The California Division of Labor Standards Enforcement recently posted guidance related to the state’s new paid sick leave law on its website in the form of frequently asked questions. The guidance provides clarification on rehired employees. If an employee is rehired within one year by the same employer, the employee’s previously accrued hours are restored. Additionally, the rehired employee’s 90 day waiting period is waived if they met the requirement during their previous employment period.

The guidance also states that employers are required to provide individualized notice to new employees hired after Jan. 1, 2015. Existing employees must receive a notice by July 8, 2015.

Paid Sick Leave FAQs »

Employee Notice »


May 05, 2015

CA State Updates - 2015 Jan 05 No.01

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On March 5, 2015, the California Fair Employment and Housing Council amended the California Family Rights Act, which is the state’s version of FMLA.

Existing California law is already similar to FMLA in that it provides up to 12 weeks of unpaid job protected leave for employees who have worked for the employer for at least 12 months and at least 1,250 hours in the last 12 month period. Under both laws, the employee must have a qualifying reason for leave. Qualifying reasons include birth, adoption, foster care or serious health condition of an employee or family member.

The amendments more closely align the state’s regulations with FMLA. The amended provisions include:

An employer may deny reinstatement to a key employee if certain requirements are met. A covered employer includes a successor employer. Joint employers may share responsibility for an eligible employee. A joint employment relationship occurs when two or more businesses control the work conditions of the employee (such as a PEO or staffing agency and recipient organization). When determining whether the employee has met the 12-month service requirement, the employer must include employment records for the last seven years. When determining whether the employer has at least 50 employees within a 75-mile radius, employees with no fixed worksite (for example, working from home) would be included in the count for the worksite from which they receive assignments or to which they report. The term 'serious health condition' includes inpatient care or continuing treatment, which may include substance abuse. The employee has the right be reinstated to the same or comparable position. Comparable is clarified to mean that the position is equivalent in terms of pay, benefits, shift, schedule, geographic location, working conditions, privileges, perquisites, status, duties, responsibilities, skill, effort and authority. The employer must respond to a request for leave within five business days. (The deadline under CFRA was previously 10 calendar days.) If the employee’s leave is unpaid, the employee may agree to prepayment of any required premiums or the employer may require payment during the leave.

The regulations include a revised certification form. There is a new posting requirement; however, the revised poster is not yet available. The amendments are effective July 1, 2015.

Regulations »


January 13, 2015

CA State Updates - 2015 Jan 13 No.02

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On Sept. 30, 2014, Gov. Brown signed AB 1710 into law. Existing law requires businesses that maintain computerized personal information to notify affected individuals of a security breach in which their information was accessed by an unauthorized person. The new law, which took effect Jan. 1, 2015, requires the business to provide the affected individuals with 12 months of appropriate identify theft prevention and mitigation services.

AB 1710 »


January 13, 2015

CA State Updates - 2015 Jan 13 No.01

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As discussed in the Sept. 23, 2014 edition of Compliance Corner, eligible employees must accrue at least one hour of paid sick leave for every 30 hours worked beginning July 1, 2015. Effective Jan. 1, 2015, employers must notify employees of the new law effective by posting the new employment poster.

Paid Sick Leave Poster »