California Governor Signs Paid Family Leave Law

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California Gov. Gray Davis, a Democrat, last week signed S.B. 1661, a bill that makes California the first state to require affected employers to provide paid time off for employees who take time off work to care for a new child or a sick or injured family member.

The bill, introduced by state Sen. Sheila Kuehl, D-Santa Monica, expands the states existing disability insurance program by creating the Family Temporary Disability Insurance Program.

Starting July 1, 2004, employees of companies with 50 or more workers who can show that they need to take time off to care for family members or to attend to the birth, adoption or foster care placement of a child will be eligible for up to six weeks of paid leave per year.

Employers can require employees to use up to two weeks of unused vacation time before receiving paid leave, and, in the year the new law takes effect, payments will be capped at a maximum of 55% of wages.

Davis issued a statement arguing that the new law will make a big difference in many employees lives.

“Californians should never have to make the choice between being good workers and being good parents,” the governor said. “This bill will help millions of California workers meet their responsibilities to both their families and their employers. It sends a message around the world that California is pro-worker, pro-employer and pro-family.”

Under the current law, the state disability insurance program provides disability payments only for employees who are unable to work due to pregnancy, illness or off-the-job injuries.

Employers will be responsible mainly for holding employees jobs open while they are on leave. Employees themselves will fund the new benefits through the state disability insurance system, according to California officials. Employees now pay a premium equal to 0.9% of their wages, up to $46,300 per year, to participate in the program.

State officials estimate the new law will cost employees who participate in the program about $73 million in increased disability contributions during the first 12 months the program is in effect.

The state disability insurance program covers a majority of the states workers, or about 13 million, according to a report prepared by the California Office of Senate Floor Analyses. Employees who are exempt include employees of nonprofit agencies, employees of religious institutions and many government employees. Some other employees are covered through private disability plans that are required by state law to offer benefits that are comparable to or richer than those offered by the state program.

Many large labor, religious and advocacy groups supported S.B. 1661, but the California Chamber of Commerce, Sacramento, and other large employer groups opposed it, arguing it will drive up costs for employers and workers at a time when the job market is already shaky.

The state Senate passed an early version of the bill 22-15. The Assembly passed the bill 46-31.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 30, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.