Interaction Between Emergency Paid Sick Leave and Paid Family Leave/State Disability Insurance

CATEGORY: Special Bulletins
CLIENT TYPE: Private Education
PUBLICATION: LCW Special Bulletin
DATE: Apr 30, 2020

Employees who are eligible for Emergency Paid Sick Leave (“EPSL”) under the Families First Coronavirus Response Act (“FFCRA”) may also file a claim for Paid Family Leave (“PFL”) or State Disability Insurance (“SDI”), two benefits established under California law.

PFL provides 60-70% wage replacement benefits for up to 6 weeks (8 weeks effective July 1, 2020) in a 12-month period for eligible employees who need to take time off work to care for a seriously ill family member or bond with a new child. (Unempl. Ins. Code, § 3303(a).) SDI provides similar wage replacement benefits for up to 52 weeks when an eligible employee is unable to work for at least 8 days. (EDD “Am I Eligible for Disability Insurance Benefits”; EDD “Calculating Benefit Payment Amounts.”) Employees cannot receive PFL and SDI benefits at the same time.

EPSL provides employees with up to 80 hours of paid leave for six reasons, two of which include: (1) time off to care for a family member experiencing symptoms of COVID-19 and seeking a medical diagnosis; or 2) because the employee is experiencing symptoms of COVID-19 and seeking medical diagnosis.

Thus, when an employee uses EPSL for these reasons, the employee may also be eligible for PFL or SDI.

Given the overlap between EPSL and PFL/SDI, we have received numerous questions regarding how one may affect the other. This bulletin serves to provide practical guidance on how schools should handle those situations where an employee seeks benefits under both laws.

A.      Guidance on How to Respond to a Notice of PFL or SDI Claim Filed Form When an Employee is Receiving EPSL

PFL is a benefit provided by the State Disability Insurance (“SDI”) program and administered by the Employment Development Department (“EDD”). (Overview of California’s Paid Family Leave Program at pp. 5-6.)  Employers do not determine an employee’s eligibility for PFL or the amount of PFL benefits. PFL and SDI are only available to those employees whose employers participate in SDI or have adopted a Voluntary Plan. (EDD “FAQs – Paid Family Leave Eligibility”; EDD “FAQs – Voluntary Plan”.)  Not all religious schools participate in SDI, and employees of schools who do not participate in SDI will generally not be eligible for PFL benefits.

Further, the EDD now pays PFL benefits to employees directly by issuing a debit card, eliminating the need for employers to advance PFL or SDI benefits.

Once an employee has filed a claim for PFL or SDI with the EDD, employers will receive a Notice of Paid Family Leave Claim Filed (form DE 2503F) or Notice of Disability Insurance Claim Filed (form DE 2503). Employers must complete and return the form within two business days. (EDD “Employer Requirements”.)

Employers are likely to have processed an employee’s leave as EPSL before receiving notice that an employee has also filed a claim for PFL or SDI. Employees are required to file a PFL claim within 41 days of first taking leave and must file a SDI claim between 9 and 49 days after the disability begins. In addition, it takes about 14 days for the EDD to determine eligibility after receiving a claim. When responding to a Notice of PFL or SDI Claim Filed for an employee who is on EPSL, schools should report EPSL payments as wages. (EDD Information Sheet “Wages”; Overview of California’s Paid Family Leave Program at p. 13.) Employees should also report EPSL pay as wages when they file a claim. (EDD “Reporting Your Wages”.)

Employees who continue to receive wages while on PFL or SDI should have their PFL/SDI benefit amount reduced so that that the total does not exceed their regular wages (not including overtime). (Unempl. Ins. Code, § 2656(a).) Courts have held, and EDD forms reflect, that paid sick time constitutes “wages.” (Cooper v. Unemployment Ins. Appeals Bd. (1981) 118 Cal.App.3d 166 [sick time benefits provide under collective bargaining agreement constitutes wages]; Barret v. Unemployment Ins. Appeals Bd. (1961) 190 Cal.App.2d 854; DE 2530 at p. 13; e.g., Overview of California’s Paid Family Leave Program at p. 13; Sample DE Form 2503F Question 6.)

EPSL most likely constitutes paid sick time, as suggested by the fact that the FFCRA refers to EPSL throughout as “paid sick time.” Thus, it is likely that an employee who receives EPSL from an employer, while also receiving PFL from the EDD, will see their PFL benefits reduced, unless the employer and employee have agreed to coordinate/integrate the two benefits as discussed at the end of this bulletin.

B.      Employees Right to Receive Both PFL/SDI and EPSL

There is no law addressing whether employees who are receiving PFL or SDI benefits are also eligible for EPSL.    An employer that fails to provide EPSL as required by the FFCRA may be liable for failure to provide such leave.  The U.S. Department of Labor guidance suggests that employees receiving SDI are not eligible for EPSL, but is silent on the issue of PFL. However, this is only discussed in informal guidance and not the agency’s rules. Thus, in the absence of any rules, we recommend permitting employees receiving PFL or SDI benefits to also receive EPSL. While there is a risk that EPSL benefits paid to an employee receiving SDI may not be reimbursed by tax credits under the FFCRA, this is weighed against the risk of a lawsuit for failure to pay EPSL in the first place.

Schools that provide EPSL to employees on PFL or SDI should advise employees to report the income to EDD. (See Form DE 2501F Instructions at p. 2.) An employee’s failure to report wages could result in overpayment, penalties, and a false statement disqualification. (EDD “Reporting Your Wages – PFL”.)

Alternatively, an employee may choose to terminate PFL or SDI with EDD prior to going on EPSL.

C.       Coordination/Integration of Benefits

Integration or coordination of Disability Insurance or PFL benefits is a process in which the full PFL/SDI weekly benefit amount is paid to the employee and the employee is also paid wages from you or using their available leave to cover the difference. (EDD FAQ Integration and Coordination.) PFL/SDI coordination is a voluntary benefit that employers may choose to offer to supplement an employee’s PFL or SDI benefits to reach 100% compensation.

If an employer has adopted a policy of coordinating SDI/PFL benefits, the extent to which EPSL will supplement PFL or SDI will be determined by the terms of the policy. Any wages, including EPSL, that are coordinated to supplement PFL/SDI should be reported as “wages” on the Notice of PFL/SDI Claim Filed. (EDD FAQ Integration and Coordination.)