Category Archives: Employee Benefits

Pregnancy Leave in California

California has what are probably the most generous pregnancy and parental leave laws in the country. Employees are entitled to take a “reasonable period” of leave — up to four months — during the time when they are disabled by pregnancy, childbirth, or related conditions. This time off might run concurrently with an employee’s 12 weeks of allowed leave under the federal Family and Medical Leave Act (FMLA). However, it does not run concurrently with an employee’s right to take parental leave under the California Family Rights Act (CFRA). Leave for pregnancy-related disability is not covered by CFRA. Although this might at first glance sound ungenerous, the effect is the opposite: An employee who uses all four months of pregnancy disability leave is still entitled to 12 weeks of CFRA leave for parenting after the child is born.

And, California is one of only a handful of states that pay employees for this time off. California’s temporary disability insurance program, which covers pregnancy-related disability, pays employees up to 55% of their usual wages while they are unable to work due to pregnancy and childbirth. Once the employee has her child and recovers from giving birth, California’s paid family leave  (part of the temporary disability insurance program) kicks in, to pay benefits for six weeks of parental leave.

Last week, the California Court of Appeal for the Second District issued an opinion that might stretch these rights even further. The Court found that an employee who has used up her four months of pregnancy disability leave may be entitled to yet more time off, as a reasonable accommodation for a disability related to pregnancy. In this case (Sanchez v. Swissport), the employee had a very high risk pregnancy. She was put on bed rest almost eight months before her due date. Therefore, when she used up her four months of pregnancy disability leave, she was still months away from giving birth and finally getting out of bed. Her employer fired her after she exhausted her pregnancy disability leave and used up all of her accrued time off.

Sanchez sued, claiming that her employer fired her because of her pregnancy and should have given her additional time off as a reasonable accommodation for her disability. Although the trial court threw her case out, the Court of Appeal reinstated it. Even though the employer gave Sanchez the full four months of pregnancy disability leave required by law, the Court found that this fact didn’t conclusively defeat her claims. The right to pregnancy disability leave and the right to a reasonable accommodation are distinct: Fulfilling one doesn’t necessarily satisfy the other. As the Court pointed out, California’s Fair Employment and Housing Commission recently amended its pregnancy discrimination regulations to address this issue. (The regulation states that an employee who has used up her four months of pregnancy disability leave may yet be entitled to leave as a reasonable accommodation for a disability, whether or not that disability is related to her pregnancy.)

The Court of Appeal didn’t determine that Sanchez was entitled to additional leave: It decided only that she might be, and that she should have the opportunity to present facts supporting her claims. Her employer will also have this opportunity: It can argue, for example, that allowing Sanchez to take additional time off would pose an undue hardship, or that such an accommodation wouldn’t be “reasonable” under the circumstances. However, at least in the Second District of California (which includes Los Angeles), employers can no longer assume that a pregnant employee’s time off can be capped at four months of pregnancy disability leave plus three months of CFRA leave following childbirth for parenting.

President Obama’s Proposed Minimum Wage Increase

In last week’s State of the Union address, President Obama spoke of many things. Not shoes and ships and sealing wax, but immigration reform, proposals to stop gun violence, climate change, and energy policy. The proposal that seemed to get the most press afterwards, however, was his call to raise the minimum wage to $9 (from the current rate of $7.25 an hour) and tie further increases to the cost of living.

Perhaps one reason this got the most press is that it’s so concise. Unlike, for example, immigration reform or steps to halt climate change, raising the minimum wage is simple and straightforward. The details of the proposal are clear. No comprehensive plan is necessary, and there aren’t a lot of moving parts. Of course, that doesn’t mean the proposal is without controversy. The Chamber of Commerce has long opposed increases in the minimum wage, and other business groups have come out against any increases.

What would be the practical effect of the President’s proposal? Currently, 19 states and the District of Columbia require employers to pay a higher minimum wage than the federal rate of $7.25 an hour. As of today, however, only one state — Washington — has a minimum wage of at least $9. As a practical matter, this means wages would go up in virtually every state if the rate were raised all at once. (Except in cities that have their own higher minimum wages. In San Francisco, for example, employers must pay at least $10.55 an hour; where I work, in Berkeley, vendors with the city must pay at least $13.03 an hour with medical benefits, or $15.20 an hour without.)

Farewell, CLASS Act — We Hardly Knew Ye

If you’ve gotten a paycheck since the beginning of 2013, you’ve no doubt noticed one effect of the fiscal cliff deal Congress reached last week: It did not extend the payroll tax holiday. Employees had been getting a break on their Social Security taxes, but now it’s over. The tax on Social Security went back up by 2% to its former level, resulting in lower paychecks for everyone.

I’ve fielded a few questions this week from people wondering if there’s anything else in the 11th hour deal that should interest them, given that they don’t earn enough to be affected by the expiration of the Bush tax cuts on very high earners. The answer, as always, is that it depends. There were certainly extensions and changes that trickle down to the 99%, starting with the extension of the Bush tax cuts for the rest of us. Here are a few of the job-related items:

  • If you are out of work, you no doubt know about this one: The federal government extended its emergency unemployment benefits program. For unemployed people who have exhausted the benefits available from their state, this program provides additional weeks of benefits. The program was set to expire at the end of 2012. 
  • Employees can continue to exclude from their income — and therefore,  not pay tax on — certain benefits paid by their employers, including educational assistance and adoption assistance. The bill also allows employers to continue claiming tax deductions or credits for certain benefits, such as child care.
  • The CLASS Act is gone. This program was part of the larger healthcare reform legislation. It created a long-term care insurance program to be paid by payroll withholding from employee paychecks, if employers opted to participate in the program. Critics claimed it was inadequate at both ends, from the funding to be paid in to the benefits to be paid out. I don’t know enough about it to weigh in, but no matter: The program got killed.

Finally, a very restricted group of employees — the ones who created this mess in the first place — got a pay freeze. So if you are a Senator or Congressperson, you will just have to continue living on your $174,000 annual salary. If you are the majority or minority leader of either house, you get $193,400. And if you are John Boehner, you will have to budget yourself to only $223,500 a year. Performance-based salaries? You be the judge.

Payroll Taxes Headed Back Up

The morning papers reported that our elected representatives “celebrated” New Year’s Eve a day early, staying up past midnight on December 30th trying to hammer out a deal to avoid the fiscal cliff. Despite making slow progress towards each other, the two sides so far haven’t managed to come up with just the right combination of continuing tax cuts, extension of unemployment benefits, tweaks to the formula for calculating how much Social Security benefits will increase for inflation, estate tax changes, fixes for the alternative minimum tax, tax increases for capital gains, and . . . wait, have I left anything out? As you can see, there are plenty of moving parts.

But deal or no deal, there seems to be one thing we can say for certain: Payroll taxes are going up. After enjoying a reduced rate for a couple of years, every wage earner in this country is going to have to pay an additional 2% of their income to the IRS to fund Social Security. We all use to fork over 6.2% of our paychecks to the IRS for Social Security; our employers had to pay the same amount per employee. In 2010, however, President Obama signed a law that reduced worker contributions to 4.2% (employers still had to contribute the higher amount). This temporary measure is expiring tomorrow, and one of the few things Republicans and Democrats seem to agree on is that they aren’t planning to extend it. Given that it was a fairly obvious example of robbing (future retiree) Peter to pay (still working) Paul, this seems like a sensible choice, if an unhappy one for all of us working stiffs.

FMLA and State Employers

Last week, the Supreme Court decided a case involving a state employee who sued for violation of the Family and Medical Leave Act (FMLA), Coleman v. Court of Appeals of Maryland. The arguments in the case were about federalism: how far one sovereign (the federal government, acting through Congress) can go in imposing liability on another (a state government). However, in reaching its decision — against the employee — the Court missed the entire point of the FMLA.

The facts are pretty basic: Daniel Coleman asked his employer, the Maryland Court of Appeals, for sick leave. His employer denied his request and told him he would be fired if he didn’t resign. Coleman sued for violation of the FMLA, charing that his employer failed to grant him time off for his own serious health condition as required by the law. His employer defended itself by saying that it was immune from suit because Congress didn’t have the right to subject it to money damages for violating the FMLA.

In our federal system of government, there are limits on the obligations Congress can impose on the states. At issue in this case was Congress’s right to enforce the guarantees of the Equal Protection Clause of the Constitution, which the federal government has used to remedy discrimination by the states (originally, race discrimination against the newly freed slaves). To subject a state to monetary damages under a federal law, that law must clearly indicate that intent; must be tailored to remedy or prevent Equal Protection violations; and must impose remedies that are proportional to that goal. In this case, what everyone disagreed about was whether or not the provisions allowing leave for an employee’s own serious health condition was intended to address sex discrimination, which violates the Equal Protection Clause.

The Supreme Court decided years ago that the FMLA’s provision allowing leave to care for family members was intended to remedy sex discrimination, and so could properly be enforced against the states for money damages. Because women are still the primary care providers in our society, the Court had no trouble finding that the caregiver provision was aimed at sex discrimination. In the Coleman case, however, the Court found that the self-care provision — the allowance of time off for the employee’s own serious health care condition — addressed discrimination based on illness, not discrimination based on gender. Therefore, the Court found that Congress didn’t have the right to require states to pay money damages for violating this section of the law.

Unfortunately, in parsing the case so finely, the Court ignored the history and purpose of the FMLA. The FMLA was born of disputes over pregnancy leave. Women’s rights advocates were divided as to how to address this fundamental difference between the sexes in the workplace. Fighting for pregnancy leave and time off to recover from childbirth seemed necessary to safeguard women’s right to workplace equality; yet it also created a fundamental difference in the way employers were to treat men and women, with the possible outcome that employers would discriminate against women to avoid having to provide this benefit. The FMLA — and specifically, the right to time off for one’s own serious health condition, the category of leave that includes pregnancy and childbirth — was the eventual solution. By making the right to leave gender-neutral, advocates hoped to frame pregnancy as just one of the many reasons why an employee might need time off, and thereby diminish the likelihood of sex discrimination among employers while also protecting the right to leave. By allowing parental and caregiving leave for men and women equally, the FMLA also sought to break the sex-based stereotype of women as primary caregivers. The whole law as a package, and particularly the provision allowing leave for one’s own serious health condition, was intended precisely to combat sex discrimination. Justice Ginsberg’s dissent explains this history and intent clearly, as does the amicus brief of the National Partnership for Women & Families, the group that was instrumental in drafting and advocating for the law decades ago.

Adding Insult to Injury: States Cut Unemployment Benefits

 

In what seems to be a recurring theme these days, a number of states have decided that the best way to solve a financial crisis is to cut spending on those who need it the most. According to a report issued earlier this month by the National Employment Law Project (NELP), ten states cut unemployment benefits in their 2011 legislative sessions, despite continued high jobless rates nationwide. Here are some of the changes states have made (you can view the whole report, “Unraveling the Unemployment Insurance Lifeline,” at NELP’s website):

  • Six states (Arkansas, Florida, Illinois, Michigan, Missouri, and South Carolina) have cut the length of state benefits. Previously, all 50 states provided benefits for at least 26 weeks; a few states have now cut the maximum to 20 or 25 weeks. Florida has tied benefit cuts to the unemployment rate, with benefits lasting a maximum of 23 weeks when unemployment is highest, and only 12 weeks once unemployment falls to 5% or less. (The silver lining: There’s no danger of Florida reaching that number any time soon. Florida’s unemployment rate is more than 10.5%.) The federal government currently supplements state benefits, so that claimants in states with high unemployment rates are eligible for up to 99 total weeks. The additional federal benefits are calculated as a percentage of state benefits, however, so claimants in these six states will see significant changes. In a state that has cut benefits from 26 to 20 weeks, for example, the total state and federal benefit will be cut from 99 to 76 weeks.
  • A few states have also cut benefit amounts, by changing the formula for calculating benefits or capping the maximum benefit amount. In Indiana, for example, benefits will be based on the worker’s weekly earnings over an entire year, rather than in the highest paid quarter of that year. According to NELP’s report, this change will drop the average weekly benefit amount by $63.
  • Some states have adopted more restrictive eligibility and administrative requirements. Mostly, these have taken the form of making it more difficult for workers to qualify for benefits if they quit or are fired (rather than being laid off solely for economic reasons). A couple of states have also increased their earnings requirements (the minimum amount an employee must have earned during the base period) to qualify for benefits.

Insolvency is running high in state unemployment programs. According to NELP, the majority of states are borrowing from the federal government — to the tune of $40 billion — to continue paying benefits; interest payments on all of this debt will fall due next month. Continuing another nationwide fiscal trend, states have been generally unwilling to increase the unemployment tax rate on employers to close the gap. This might mean we can expect to see even more states getting even stingier with benefits as the cycle deepens.

Connecticut Becomes First State to Require Paid Sick Leave

Last week, Connecticut passed a law requiring private employers to give paid sick days to service employees. Currently, San Francisco and Washington, D.C. mandate paid sick leave; a handful of other states are considering similar legislation. But Connecticut is the first to impose this requirement statewide. The New York Times reports that the new law will cover an estimated 200,000 to 400,000 employees in the state.

Here are some details about the law, Connecticut Public Act 52:

  • It applies only to companies with at least 50 employees. Manufacturers aren’t subject to the law, nor are nationally chartered nonprofits that provide recreation, child care, and education services. Employers that already provide employees with at least 40 hours of paid time off each year that can be used as sick leave (such as sick days, personal days, or vacation time) don’t have to provide any additional time off under the law.
  • Only service workers are covered. This includes those employed in the retail, hospitality, food preparation and service, administrative, health care, janitorial and cleaning, claims processing, and a number of other industries. (You can find the full list of covered job categories in the law, at the link above.) Independent contractors, day laborers, and temporary workers aren’t covered.
  • Services workers are covered only if they are entitled to earn minimum wage and overtime. In other words, exempt employees aren’t covered by the law; only nonexempt employees are protected.
  • Covered employees will accrue one hour of paid sick leave for every 40 hours worked, up to a maximum entitlement of 40 hours per year. Employees may also carry over up to 40 hours into the next year.
  • Employees may use the time off for their own illness, injury, or health condition; for a spouse’s or child’s illness, injury, or health condition; or to handle certain medical, legal, and practical issues stemming from family violence or sexual assault.

The law goes into effect on January 1, 2012.

Supreme Court Refuses to Step in on Healthcare Reform . . . for Now

This morning, the Supreme Court denied the state of Virginia’s request to hear a case on the constitutionality of the healthcare reform law. (You can read about this morning’s decision, and find the briefs and order in the case, at scotusblog.) This isn’t the end of the issue: Virginia asked the Supreme Court to allow it to jump the usual line of appellate review and go straight from the district (trial) court to the Supreme Court, without waiting for the federal Court of Appeals to hear the case and issue its own decision. In today’s order, the Supreme Court declined to hear the case before the Court of Appeals had a chance to deal with it. After the Court of Appeals issues a judgment, however, either party could once again ask the Supreme Court to hear the case.

There have been a handful of cases around the country challenging the constitutionality of various parts of the healthcare reform law, and these decisions conflict with each other. In the Virginia case, the district court found that the “minimum essential coverage provision” — the individual mandate, which requires everyone to have health insurance by 2014 or pay a penalty — was unconstitutional. The Obama administration argued that Congress had the right to enact this provision by virtue of the Commerce Clause, which gives Congress the right to regulate commerce among the states. Ultimately, the district court sided with Virginia on this claim, finding that Congress’s right to regulate existing commerce did not confer the right to force people to engage in commerce (by requiring them to purchase health insurance).

The federal Court of Appeal for the Fourth Circuit is scheduled to hear the Virginia case next month, and the other cases that have challenged the law across the country are also finding their way to other circuit courts. As these appeals are decided — and we march inexorably toward the effective dates of the most controversial parts of the healthcare reform law — the Supreme Court will undoubtedly be asked again to decide whether the law is constitutional.