Job Killer Update: Assembly Passes Costly New Leave Mandate

Action Needed: Contact the Governor to Request a Veto

Yesterday, the Assembly passed a job killer bill that will significantly harm small businesses in California who employ as few as 20 employees by requiring them to offer six weeks of protected leave for baby-bonding. This proposed mandate comes on top of the current requirement that employers with only 5 employees allow sixteen weeks of protected pregnancy-related leave.   During yesterday’s debate, legislators failed to discuss or explain the existing leave programs and the true burden this additional mandated leave will have on California’s small businesses.

“If one listened to the debate yesterday on SB 654, you would not have known that current law already requires all employers with at least five employees to provide pregnancy leave for sixteen weeks,” said Allan Zaremberg, CalChamber President. “They made it sound as if employees are not entitled to any leave at all and that is simply not the case.  In fact, California employers, particularly those with 50 or more employees, must navigate a maze of protected leaves including pregnancy disability leave, military spouse leave, organ donation leave, bone marrow leave, school and child care leave, volunteer firefighting, reserve peace officer, and emergency rescue and personnel leave, and paid sick leave.  Unfortunately, SB  654 would now require yet another leave program for employers with 20 or more employees—including part time employees—to manage, adding another six weeks of time off for all parents. This new leave program comes with a new private right of action to sue small employers who can’t accurately calculate how much time off they are required to provide.”

CalChamber Issues Call to Action

SB 654 is on the Senate Floor. Contact your Senator and the Governor and ask them to oppose SB 654.

Using the gut and amend process in the last two weeks of session, SB 654 (Jackson; D-Santa Barbara) revived the language of a previously dead job killer bill that failed because lawmakers recognized the harmful impact it would have on California’s job climate. After some membership changes to the Assembly Labor and Employment Committee, Senator Hannah-Beth Jackson brought the measure back, incorporating the leave mandate language into SB 654 on August 18.

The California Chamber of Commerce has identified SB 654 as a job killer because it will overwhelm small employers. SB 654 targets small employers with only 20 employees within a 75-mile radius.  It would:

  1. Create Over a 5-Month Protected Leave of Absence on Small Employers:California already requires employers with 5 or more employees to provide up to 4 months of protected leave for an employee who suffers a medical disability because of pregnancy. SB 654 will add another 6 weeks of leave for the same employee, totaling over 5 months of protected leave. It is unreasonable for a small employer with a limited workforce to accommodate such an extensive period of time.
  2. Impose a Mandatory Leave, with No Discretion to the Employer: As a “protected leave,” with a threat of litigation, SB 654 mandates the small employer to provide 6 weeks of leave. The leave under SB 654 must be given at the employee’s request, regardless of whether the employer has other employees out on other California required leaves. This mandate on such a small employer with a limited workforce creates a significant challenge for the employer’s ability to maintain operations.
  3. Impose Additional Costs on Small Employers That Are Struggling with the Increased Minimum Wage:Even though the leave under SB 654 is not “paid” by the employer, that does not mean the small employer will not suffer added costs. While on leave, the employer will have to: (1) maintain medical benefits while the employee is on leave; (2) pay for a temporary employee to cover for the employee on leave, usually at a higher premium, given the limited duration of employment; or (3) pay overtime to other employees to cover the work of the employee on leave. The cost of overtime is higher given the increase of the minimum wage, which will add to the overall cost on small employers.
  4. Expose Small Employers to Costly Litigation:SB 654 labels an employer’s failure to provide the 6-week leave of absence as an “unlawful employment practice.” This label is significant as it exposes an employer to costly litigation under the Fair Employment and Housing Act (FEHA). An employee who believes the employer did not provide the 6 weeks of protected leave, failed to return the employee to the same or comparable position, or maintain benefits while out on the 6 weeks of leave, could pursue a claim against the employer seeking: compensatory damages, injunctive relief, declaratory relief, punitive damages, and attorney’s fees. A 2015 study by insurance provider Hiscox regarding the cost of employee lawsuits under FEHA estimated that the cost for a small to mid-size employer to defend and settle a single plaintiff discrimination claim was approximately $125,000. This amount, especially for a small employer, reflects the financial risk associated with defending a lawsuit under FEHA, such as the litigation created by SB 654, and the ability to leverage an employer into resolving or settling the case regardless of merit.

California Already Imposes a List of Family-Friendly Leaves of Absence on Employers

 California is already recognized by the National Conference of State Legislatures 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. This list is in addition to the leaves of absence required at the federal level.

Another 6-week leave of absence, targeted specifically at small employers, is simply too much for employers to bear.

Key Votes

SB 654 passed the Assembly 44-16 on August 30.

Ayes: Alejo (D-Salinas), Atkins (D-San Diego), Baker (R-San Ramon), Bloom (D-Santa Monica), Bonilla (D-Concord), Bonta (D-Oakland), Brown (D-San Bernardino), Calderon (D-Whittier), Campos (D-San Jose), Chau (D-Monterey Park), Chiu (D-San Francisco), Chu (D-San Jose), Cooley (D-Rancho Cordova), Dababneh (D-Encino), Dodd (D-Napa), Eggman (D-Stockton), Frazier (D-Oakley), C. Garcia (D-Bell Gardens), Garcia (D-Coachella), Gatto (D-Glendale), Gonzalez (D-San Diego), Gordon (D-Menlo Park), Hadley (R-Torrance), Hernández (D-West Covina), Holden (D-Pasadena), Jones-Sawyer (D-South Los Angeles), Levine (D-San Rafael), Lopez (D-San Fernando), Low (D-Campbell), McCarty (D-Sacramento), Medina (D-Riverside), Mullin (D-South San Francisco), Nazarian (D-Sherman Oaks), Quirk (D-Hayward), Rendon (D-Paramount), Ridley-Thomas (D-Los Angeles), Rodriguez (D-Pomona), Santiago (D-Los Angeles), Stone (D-Scotts Valley), Thurmond (D-Richmond), Ting (D-San Francisco), Weber (D-San Diego), Williams (D-Carpinteria), Wood (D-Healdsburg).

Noes: Allen (R-Huntington Beach), Bigelow (R-O’Neals), Brough (R-Dana Point), Chang (R-Diamond Bar), Gaines (R-El Dorado Hills), Grove (R-Bakersfield), Harper (R-Huntington Beach), Jones (R-Santee), Lackey (R-Palmdale), Mathis (R-Visalia), Mayes (R-Yucca Valley), Obernolte (R-Big Bear Lake), Patterson (R-Fresno), Steinorth (R-Rancho Cucamonga), Wagner (R-Irvine), Wilk (R-Santa Clarita).

Not Voting: Achadjian (R-San Luis Obispo), Arambula (D-Kingsburg), Burke (D-Inglewood), Chávez (R-Oceanside), Cooper (D-Elk Grove), Dahle (R-Bieber), Daly (D-Anaheim), Gallagher (R-Yuba City), Gipson (D-Carson), Gomez (D-Los Angeles), Gray (D-Merced); Irwin (D-Thousand Oaks), Kim (R-Fullerton), Linder (R-Corona) Maienschein (R-San Diego), Melendez (R-Lake Elsinore),  O’Donnell (D-Long Beach), Olsen (R-Modesto), Salas (D-Bakersfield), Waldron (R-Escondido).

Action Needed

SB 654 will be heard by the Senate today.

Contact your Senator and the Governor and ask them to oppose SB 654.

Staff Contact: Jennifer Barrera

Jennifer Barrera
Jennifer Barrera took over as president and chief executive officer of the California Chamber of Commerce on October 1, 2021. Previously, she oversaw the development and implementation of policy and strategy as executive vice president and represented the CalChamber on legal reform issues. She led CalChamber advocacy on labor and employment and taxation from September 2010 through the end of 2017. As senior policy advocate in 2017, she worked with the executive vice president in developing policy strategy. Before joining the CalChamber, she worked at a statewide law firm that specializes in labor/employment defense. Barrera earned a B.A. in English from California State University, Bakersfield, and a J.D. with high honors from California Western School of Law. See full bio.