Parental Leave Mandate for Small Business Passes

A job killer bill mandating a new protected leave of absence for small businesses passed the Legislature this week and is on its way to the Governor.

SB 63 (Jackson; D-Santa Barbara) passed the Assembly on September 12 by a vote of 51-15. A day later, the Senate voted 25-13 to concur in Assembly amendments to the bill, sending the bill along to the Governor.

The California Chamber of Commerce and a coalition of business groups and local chambers of commerce have been opposing SB 63 because it unduly burdens and increases costs of small employers with as few as 20 employees by requiring 12 weeks of protected employee leave for child bonding. It also exposes employers to the threat of costly litigation.

The recent amendments do not limit the bill’s cost or employers’ exposure to litigation.

Governor Edmund G. Brown Jr. vetoed a similar, but narrower, proposal just last year.

Coalition Opposition

In opposing SB 63, the CalChamber and coalition have been pointing out that the bill will overwhelm small employers. The bill targets small employers with as few as 20 employees within a 75-mile radius and requires those employers to provide 12 weeks of leave in addition to the other leaves of absence California already imposes.

The mandate will overwhelm small employers as follows:

  • Creates a combined 7-month protected leave of absence on small employers.California employers with 5 or more employees already are required to provide up to 4 months of protected leave for an employee who suffers a medical disability due to pregnancy. SB 63 will add another 12 weeks of leave for the same employee, totaling 7 months of potential protected leave.
  • Could affect worksites that have substantially fewer than 20 employees. SB 63 is applicable to any employer that has 20 or more employees within a 75-mile radius. Employees at multiple worksites are aggregated together to reach the employee threshold. Accordingly, a worksite that has only 5 employees will be required to accommodate this mandatory leave if there are other worksites in a 75-mile radius that have enough employees to reach the 20-employee threshold.
  • Imposes a mandatory leave with no discretion to the employer. The leave under SB 63 must be given at the employee’s request, regardless of whether the employer has other employees out on other California-required leaves.
  • Imposes additional costs on small employers that are struggling with the increased minimum wage. Although the SB 63 leave is not “paid” by the employer, while the employee is on leave, the employer will have to maintain medical benefits, pay for a temporary employee to cover for the employee on leave (usually at a higher premium) or pay overtime to other employees to cover the work of the employee on leave.
  • Exposes small employers to costly litigation. Labeling an employer’s failure to provide the SB 63 leave as an “unlawful employment practice” exposes an employer to costly litigation under the Fair Employment and Housing Act (FEHA).

An employee who believes the employer did not provide the 12 weeks of protected leave, failed to return the employee to the same or comparable position, failed to maintain benefits while the employee was out on the 12 weeks of leave, or took any adverse employment action against the employee for taking the leave, could pursue a claim against the employer seeking: compensatory damages, injunctive relief, declaratory relief, punitive damages, and attorney’s fees

The cost for a small to mid-size employer to defend and settle a single plaintiff discrimination claim is approximately $125,000, according to a 2015 study by insurance provider Hiscox.

Family-Friendly State

California already imposes numerous family-friendly leaves of absence on employers. The National Conference of State Legislatures recognizes California as one of the most family-friendly states given its list of programs and protected leaves of absence, including: paid sick days, school activities leave, kin care, paid family leave program, pregnancy disability leave and the California Family Rights Act.

These state leaves are in addition to the leaves of absence required by federal law.

In a recent study, “The Status of Women in the States: 2015 Work & Family,” California ranked No. 2 for work and family policies that support workers keeping their jobs and also caring for their family members.

Action Needed

The CalChamber is encouraging members to contact the Governor and urge him to veto SB 63.

Staff Contact: Jennifer Barrera