In March 2021, in response to the public health emergency caused by COVID-19, the California legislature adopted Senate Bill (SB) 95.[1] The bill added Labor Code section 248.2, which required that employers provide COVID-19 Supplemental Paid Sick Leave (SPSL) to their employees in the event that an employee could not work or telework for certain qualifying reasons related to COVID-19. Now that Labor Code section 248.2 requirements are about to expire[2], employers are assessing and evaluating their legal obligations regarding the provision of leave for reasons related to COVID-19.
This bulletin addresses the following legal issues implicated by the expiration of SPSL and provides practical guidance to employers on how to respond:
This bulletin also discusses potential sources of financial relief under the American Rescue Plan Act (ARPA).
Continuing SPSL Obligations after September 30
As of this bulletin’s writing, there is no pending legislation that will extend SPSL beyond September 30.[3] This does not mean that the California legislature will not take such action at a later date, but that there is no pending legislation that will do so.
While SPSL expires on October 1, 2021,[4] employers should note that there is a continuing statutory obligation to provide SPSL to employees who are using such leave on September 30. If an employee is using SPSL on September 30, the employer must allow the employee to continue to use SPSL for the qualifying reason until the employee either no longer qualifies or has exhausted the leave to which the employee is entitled.[5]
Employers should monitor situations in which employees are or may be using SPSL on September 30. Employers should ensure that such employees receive the full amount of leave to which they are entitled.
Obligations under the Cal/OSHA COVID-19 Regulations
The Cal/OSHA COVID-19 Regulations[6] require that employers exclude employees from the workplace when they qualify as COVID-19 cases[7] or in the event that an unvaccinated employee has a close contact exposure to a COVID-19 case.[8] During the exclusion period, the regulations require that employers maintain such employees’ earnings, benefits, and wages if the close contact exposure was work-related.[9] Through September 30, employers may require that excluded employees use SPSL in order to provide for their continued compensation.[10]
Beginning on October 1, excluded employees will no longer be able to use SPSL as a source of compensation during their exclusion period. The expiration of SPSL raises the question of whether employers may require employees to use other forms of accrued paid leave as compensation while excluded. This important question is unresolved and therefore involves an element of risk for employers.
Allowances and Limitations in Cal/OSHA COVID-19 Regulations and Related Guidance
The Cal/OSHA COVID-19 Regulations state that “[e]mployers may use employer-provided employee sick leave for this purpose [i.e., to compensate employees excluded due to a COVID-19 case or a close contact exposure at work] to the extent permitted by law.”[11] However, the regulations do not explain the phrase, “to the extent permitted by law,” or clarify whether employers may require the use of leaves provided to employees under the employers’ paid sick leave policies or as provided in collective bargaining agreements.
In a Frequently Asked Questions (FAQ) guidance published by the Department of Industrial Regulations (DIR)[12], the Department provides the following:
Employers that provide a paid leave policy that is separate and in addition to the paid sick leave policy required by California’s Paid Sick Leave law (Labor Code section 246) may require their employees to use that separate sick leave as permitted by law. . . . However, an employer cannot require the employee to use the standard paid sick leave mandated under Labor Code section 246, even when there has been a workplace exposure and the employer is required to exclude employees under the ETS.[13], [14]
The DIR guidance prohibits employers from requiring that employees use paid sick leave provided under Labor Code section 246 during their exclusion from work.
Sick Leave Protected by Labor Code section 246[15]
Labor Code section 246 applies to employees who have worked for the same employer for 30 or more days within a year.[16]
Under Labor Code section 246, employees are entitled to an accrual rate of at least one hour of sick leave per 30 hours worked[17], with accruals carrying over from one year to the next.[18] By default, sick leave will accrue to a maximum of 48 hours.[19]
However, Section 246 authorizes employers to limit sick leave use to 24 hours per year, where employers provide a full 24 hours of sick leave at the beginning of each year.[20] If an employer provides 24 hours of sick leave at the beginning of the year, then Section 246 will not require any accrual or carryover of sick leave beyond the 24 hours provided.[21] As a result, employers may also effectively limit accruals to 24 hours per year by providing all 24 hours up-front.
Use of Employer-Provided Sick Leave for Excluded Employees
Most employers maintain only one sick leave bank and do not distinguish the minimum leave amounts to which employees are entitled under Labor Code section 246 from sick leave provided in excess of that amount.[22]
As a result, employers with one sick leave bank will need to distinguish between the statutory and employer-provided leaves if they intend to require that employees excluded from the workplace for reasons related to COVID-19 use sick leave during the exclusion period. Importantly, employers that require excluded employees to use accrued sick leave in excess of Section 246 requirements, should not deplete an employee’s sick leave to the extent that it invades the 24 or 48-hour maximum[23] accrued leave protected by Section 246.
An employee may argue that statutory leave provided under Section 246 is comingled and indistinguishable from non-statutory leave provided under a more generous employer-provided policy, and that any requirement that the employee use accrued sick leave is a prohibited use of Section 246 leave.
The employer may respond by showing the employee’s accrued leave amount exceeds the 24 or 48-hour maximum protected by Section 246 (depending upon whether the employer provides all 24 hours at the beginning of each year). If the employee’s accrued leave exceeds the maximum amount protected by Section 246, the employer may assert that the employee possesses the full Section 246 leave entitlement, and may reasonably draw down the excess in order to provide for the employee’s compensation during the exclusion period.[24]
Employers should be mindful that the proper use of sick leave when an employee is excluded from the workplace under the Cal/OSHA COVID-19 Regulations is an unresolved issue that may be subject to challenge. If they elect to require excluded employees to use employer-provided sick leave, they should track employees’ sick leave amounts to ensure that sick leave use does not cut into protected Labor Code section 246 leave amounts.
Flexible Approach to Employees’ Use of Non-Statutory Leaves
Continuing Need for COVID-19-Related Leave
The Cal/OSHA COVID-19 Regulations require that employers continue to provide compensation to employees excluded from work as a result of being diagnosed with COVID-19 cases or having a close contact exposure to someone diagnosed with COVID-19.[25]
However, the Regulations do not address every possible reason for COVID-19-related leave. Before its expiration, SPSL provided paid leave for the following qualifying reasons:
Due to the ongoing public health emergency, many employees will still require leave for one or more of the reasons provided above in the months ahead.
However, because employees no longer have SPSL available, employers should allow employees to use accrued sick leave (statutory or employer-provided), for those purposes that would qualify as sick leave at the agency and allow employees to use other accrued leave (e.g., vacation time, compensatory time off, floating holiday leave or administrative leave) for these reasons.[31]
Potential Federal Financial Assistance for COVID-19 Leave
In addition to the expiration of SPSL, September 30, 2021 marks the end of the federal payroll tax credits available to employers that elected to provide their employees with Emergency Paid Sick Leave (EPSL) under the American Rescue Plan Act (ARPA).[32]
While the payroll tax credits for EPSL are expiring, certain employers may use funding from the Coronavirus Local Fiscal Recovery (CLFR) fund in order to offset costs associated with providing employees compensation during their exclusion from work.[33] Specifically, the Treasury Department, which administers CLFR payments, provides that such funding may be used to recover “[e]xpenditures for the mitigation and prevention of COVID–19, including . . . . [e]xpenses for quarantining or isolation of individuals; [and] Expenses of providing paid sick and paid family and medical leave to public employees to enable compliance with COVID–19 public health precautions.”[34]
Accordingly, public employers that qualify to receive CLFR fund payments may reasonably use such funds to compensate employees for COVID-19-related reasons.
Conclusion
The expiration of SPSL raises many questions for employers as they adapt to changing legal requirements surrounding COVID-19.
LCW attorneys have experience advising employers on the administration of COVID-19-related leaves, and we are ready to help employers navigate this important change in the law.
[1] Sen. Bill No. 95 (2021-2022 Reg. Sess.).
[2] Labor Code section 248.2 is set to expire after September 30, 2021. (Labor Code, § 248.2, subd. (f).)
[3] The legislature considered a bill, Assembly Bill (AB) 455, that would have extended COVID-19-related leave past September 30. On August 24, 2021, the legislature circulated amendments to AB 455 that would have added Labor Code section 248.4 and provided employees up to 24 hours of additional of paid leave to either: (1) receive a COVID-19 vaccination; or (2) recover from symptoms related to the vaccination against COVID-19. However, AB 455 was not formally amended and did not advance before the end of the legislative session. As a result of the inaction on AB 455, the legislature did not undertake any action this term to extend SPSL past its original expiration date.
[4] Labor Code, § 248.2, subd. (f).
[5] Labor Code, § 248.2, subd. (f).
[6] 8 C.C.R. §§ 3205 et seq.
[7] The Cal/OSHA ETS defines “COVID-19 case” as a person who (1) has a positive COVID-19 test; (2) has a positive COVID-19 diagnosis from a licensed health care provider; (3) is subject to a COVID-19-related order to isolate issued by a local or state health official; or (4) has died due to COVID-19, as determined by a local health department or county. (8 C.C.R. § 3205(b)(3).). The ETS obligates employers to exclude all COVID-19 cases from the workplace, as applicable. (8 C.C.R. § 3205(c)(9)(A).)
[8] 8 C.C.R. § 3205(c)(9)(B). The current Cal/OSHA COVID-19 Regulations provide some exceptions to the exclusion requirement for close contact exposures. (See 8 C.C.R. § 3205(c)(9)(B)(1) and (2).)
[9] 8 C.C.R. § 3205(c)(9)(C).
[10] Labor Code, § 248.2, subd. (b)(5).
[11] 8 C.C.R. § 3205(c)(9)(C), emphasis added.
[12] DIR, COVID-19 Emergency Temporary Standards Frequently Asked Questions (Updated June 18, 2021) <https://www.dir.ca.gov/dosh/coronavirus/COVID19FAQs.html#exclusions> (as of September 20, 2021) (“DIR ETS FAQ”).
[13] “ETS” stands for “Emergency Temporary Standard,” i.e., the Cal/OSHA COVID-19 Regulations. (8 C.C.R. §§ 3205, et seq.)
[14] DIR ETS FAQ, supra, note 12, “Exclusion Pay and Benefits” FAQ #3, emphasis added.
[15] NOTE: Local ordinances may create greater protections for employee sick leave. (See, e.g., Los Angeles Municipal Code, Chapter XVIII: Employee Wages and Protections, Section 187.04: Sick Time Benefits.) This bulletin does not address the various local ordinances that may apply to different employers.
[16] Labor Code, § 246, subd. (a).
[17] Labor Code, § 246, subd. (b)(1).
[18] Labor Code, § 246, subd. (d).
[19] Labor Code, § 246, subd. (j).
[20] Labor Code, § 246, subd. (d).
[21] Labor Code, § 246, subd. (d).
[22] This bulletin presumes that the employer maintains one sick leave bank for its employees and not two separate paid sick leave banks (one to comply with Labor Code section 246 obligations and another to provide for any additional paid sick leave).
[23] Employers must affirmatively limit Labor Code section 246 leave uses and accruals to 24 hours per year by providing all 24 hours at the start of each year. The statute protects up to 48 hours of accrued leave by default. (Labor Code § 246, subds. (d), (j).)
[24] If an employee’s accrued leave does NOT exceed the maximum amounts protected by Labor Code section 246, then the employer should presume that all of the employee’s leave is protected and should not require the employee to use the accrued leave until it exceeds Section 246 maximums.
[25] Employers need not exclude from the workplace close contacts who are fully vaccinated and asymptomatic, or recently recovered from a COVID-19 case.
[26] This reason is covered by the quarantine or isolation order related to COVID-19 under the Cal/OSHA COVID-19 Regulations.
[27] Employers should note that President Biden’s COVID-19 Action Plan instructs the federal Occupational Safety and Health Administration (OSHA) adopt a rule requiring that employees under federal OSHA’s jurisdiction that have 100 or more employees provide leave for this reason. It is likely that the state Occupational Safety and Health Standards Board (OSHSB) which promulgates Cal/OSHA regulations will adopt a comparable rule.
[28] See footnote 25.
[29] NOTE: Employees may also qualify for other types of leave to care for relatives, such as leave provided by the Family and Medical Leave Act or the California Family Rights Act.
[30] NOTE: Employees may also seek leave under Labor Code section 230.8 to care for children who have been excluded from school or a childcare facility due to COVID-19-related reasons.
[31] Employers may want to permit the use of sick leave for purposes that would have been covered by SPSL but would not qualify as sick leave. If an employer makes such a decision, it should communicate that decision to the agency’s labor organizations.
[32] Pub.L. No. 117-2 (March 11, 2021) (H.R. 1319).
[33] ARPA § 9901(a), 42 U.S.C. § 803.
[34] 31 C.F.R. § 35.6(b)(1)(xiii)-(xiv).
This Special Bulletin is published for the benefit of the clients of Liebert Cassidy Whitmore. The information in this Special Bulletin should not be acted upon without professional advice.