New Burden for Small Businesses Awaiting Action by Full Senate

(​April 30, 2013) A California Chamber of Commerce-opposed “job killer” bill that creates a new burden on small businesses as well as additional opportunities for frivolous litigation is awaiting action by the Senate.

SB 761 (DeSaulnier; D-Concord) transforms the wage replacement benefits under the Paid Family Leave (PFL) program into an additional protected leave of absence, thereby adding to the cost and burden for all California employers, especially small employers.

Paid Family Leave

Paid Family Leave (PFL) is a wage replacement program, meaning that it provides employees with partial compensation while they are out on an employer-approved leave of absence or mandated protected leave of absence.

The existing PFL, however, does not independently provide an employee with a right to a protected leave of absence.

SB 761 dramatically alters PFL and transforms it into an additional protected leave of absence. Specifically, by allowing an employee to sue for alleged discrimination on the basis that the employee applied for, used, or expressed an intent to use PFL, it essentially forces an employer to provide an employee with six weeks of leave while receiving PFL, or face costly litigation.

California Family Rights Act

For example, the right to a leave of absence under the California Family Rights Act (CFRA) applies only to employers with 50 or more employees. Before qualifying for leave under CFRA, an employee must have worked at least 1,250 hours in the prior year and certify that he or she satisfies one of the triggering events for the leave, such as the serious medical condition of a spouse. Leave under CFRA is unpaid and, therefore, an employee who qualifies for such leave may be able to take advantage of the wage replacement benefits under PFL.

Pursuant to CFRA, employees have a right to return to work and a private right of action if they are discriminated or retaliated against due to their request and use of CFRA leave.

Creates New Protected Leave

Under SB 761, however, an employee of an employer with fewer than 50 employees would be able to request six weeks of leave, regardless of whether the employee worked one day, one week or one year for the employer.

If the employer denies the employee such leave because the employee does not qualify for any leave mandated by law, such as CFRA, and within a short time of the leave being denied, the employee suffers an adverse employment action, such as a written warning, the employee could file a lawsuit against the employer claiming discrimination or retaliation. This threat of potential litigation, with an employee-only right to attorney fees, transforms PFL into an additional protected leave, which will burden employers of all sizes.

Cumulative Impact

California already has multiple protected leaves of absence that employers struggle to comply with and still manage their business operations effectively including: CFRA, pregnancy disability leave, military spouse leave, bone marrow donation leave, organ donation leave, school activities leave, school appearance leave, domestic abuse/sexual assault leave, volunteer firefighter/reserve peace officer leave, voting leave, juror leave, and disability leave. The cumulative impact of these existing leaves already creates a significant burden for California-only employers. Accordingly, any expansion of such leaves, or the creation of new protected leaves, further impedes California employers’ growth and their ability to manage their businesses.

Potentially Frivolous Litigation

SB 761 also allows an employee to pursue civil litigation for discrimination, without first exhausting an administrative remedy. Discrimination or retaliation claims under the Fair Employment and Housing Act and CFRA require an employee to file a complaint with the Department of Fair Employment and Housing (DFEH) before pursuing civil litigation.

Although this initial requirement to file with the DFEH is not overly burdensome, it still provides the agency with an opportunity to investigate the complaint. SB 761 sidesteps this requirement that other similar discrimination complaints are forced to satisfy, thereby easing the process for potentially frivolous litigation.