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Attorneys

Governor Brown Signs Bill to Expand the Amount of Wage Replacement Available under California’s Paid Family Leave Law

April 19 2016

By Beth West

On April 11, 2016, Governor Brown signed Assembly Bill (AB) 908 which amends certain provisions of California’s Unemployment Insurance Code as it relates to the State’s Paid Family Leave (PFL) program. Before explaining the amendments provided for under AB 908, I think it is important to clarify something that is too often misstated in the press. Despite its name, California’s PFL program is not a statutory leave of absence program that guarantees paid family leave to employees in California. Instead, it is a partial wage replacement benefit for eligible employees who are on some other authorized statutory or discretionary leave of absence from work. As such, employees do not have the right to “take leave” under the PFL program.Beth-West-15_web

The PFL program provides up to six (6) weeks of wage replacement benefits to employees who are on an authorized statutory or discretionary leave of absence to care for a seriously ill child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner, or to bond with a minor child within one year of the birth or placement of a child in connection with foster care or adoption. Currently, the “weekly benefit amount” for purposes of the PFL program means the amount of benefits available to qualified disabled individuals under California’s unemployment compensation disability insurance law. In summary, the law currently provides that for an individual who has quarterly base wages of greater than $1,749.20, the weekly benefit is calculated by multiplying base wages by 55% and dividing the result by 13.

AB 908 revises the formula for determining benefits for periods commencing after January 1, 2018 but before January 1, 2022, to provide weekly benefit amounts as follows:

When the amount of wages paid to the employee for his/her highest income quarter is less than $929 – the weekly benefit is $50.00
When the amount of wages paid to the employee for his/her highest income quarter is $929 or more, but less than one-third of the amount of the state average quarterly wage – the weekly benefit is 70% of the amount of wages paid during such quarter divided by 13.
When the amount of wages paid to the employee for his/her highest quarter is one-third of the amount of the state average quarterly wage or more – the weekly benefit is the greater of:
23.3% of the state average weekly wage; or
60% of the amount of wages paid to the individual for employment by employers during the employee’s highest quarter divided by 13.
Also, the requirement that an eligible employee must meet a 7-day waiting period before collecting PFL benefits will become inoperative as of January 1, 2018.

Finally, after January 1, 2022, if an employee meets the eligibility requirements (e.g. has quarterly base wages of greater than $1,749.20) and is on an authorized leave to care for a seriously ill family member or bond with a baby or placed foster or adopted child, the weekly benefit amount shall again be equal to 55% of the employee’s wages during the highest income quarter divided by 13, but not exceeding the maximum workers’ compensation temporary disability indemnity weekly benefit amount established by California’s Department of Industrial Relations (“DIR”) pursuant to Labor Code section 4453.