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California paid family leave: {beginning July 1, employees are allowed six weeks off—with partial pay—to care for a newborn or other family member. Here's how employees & employers can prepare}

California CPA, May, 2004 by David A. Wimmer, Jeffrey W. Mayes

Bob has worked full time for his employer for a little more than five years. It's Aug. 1, 2004 and his wife calls and tells him the bad news--their son has cancer. The doctors are confident they can treat the disease, but treatment must begin immediately--and someone will have to care for their son and administer the medications during the ongoing treatment. Since Bob's wife makes more money than he does, they decide he will take time off from work. The problem is that without his salary, there is no way for them to afford the rent. He wonders how they will manage, but remembers a posting he saw in the break room at his office about something called paid family leave.

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In 2002, Gov. Davis signed SB 1661--which created the nation's first state governed the paid family leave entitlement. At its core, the Paid Family Leave Act gives eligible employees up to six weeks (within a 12-month period) of partial wage replacement when taking a leave for one of the following:

* To care for a seriously ill child, spouse, parent or domestic partner. (Note, however, that paid family leave is not available for an employee's own serious health condition);

* To bond with a newborn child; or

* To bond with a minor child in connection with the adoption or foster-care placement of that child.

For an employee like Bob to qualify for paid family leave because of a family member's serious illness, the family member must have a certified illness, injury, impairment or physical or mental condition that involves inpatient care in a hospital, hospice, residential health care facility, or continuing treatment or continuing supervision by a health care provider.

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HOW IT WORKS

Paid family leave is administered by the state Employment Development Department's Disability Insurance branch. Employees taking leave for one of the above specified reasons can apply for the program by completing an EDD claim form. The forms were scheduled to be available April 2004.

In this example, since Bob's leave is to care for a seriously ill family member, he also must have his son's health care provider complete a certification form--signed by the provider and the employee--which includes information about the illness' severity and the expected duration of the family member's need for physical or emotional support from the employee.

Besides physicians, the state also allows the following health care providers to certify paid family leave: licensed medical or osteopathic surgeons; authorized medical officers of a U.S. government facility; chiropractors; podiatrists; optometrists; dentists; psychologists; and religious practitioners.

If Bob's leave was for bonding with a newborn, adopted or foster care-placed child, no certification form is necessary, but employees will have to submit the claim form.

After the required forms are received, the EDD is estimating a one- to two-week delay before it can process an employee's forms and declare an employee eligible for paid family leave.

Besides this administrative wait, employees have a seven-day period before they will receive benefits. Thus, employees who obtain the full six weeks of wage replacement will begin to receive their benefits in the second week of leave and be paid through their seventh week of leave.

Employees must be off work at least eight calendar days to receive paid family leave benefits.

Employees may use all six weeks of paid family leave at once, or break it up over a 12-month period. For example, if employees need to take a short leave to care for a spouse, they can use only part of their paid family leave allotment. The unused portion still will be available, if needed, but must be taken with the 12-month period.

At the start of the next 12-month period, employees again have six weeks of paid family leave available.

Employees are ineligible for paid family leave if they receive State Disability Insurance, Unemployment Compensation Insurance or Workers' Compensation; are not working or looking for work at the time they begin their family leave; are not suffering a loss of wages; are in custody due to a criminal conviction; or the need for care is not supported by the certificate of a treating physician or practitioner.

WHERE DOES THE MONEY COME FROM?

Bob and every other California employee pays for paid family leave through a payroll deduction. This year, the EDD increased the employee contributions for State Disability Insurance by 0.28 percent from last year's employee contribution. Consequently, California employees now contribute 1.18 percent of their paycheck to pay for SDI, inclusive of the .08 percent used to fund California's paid family leave program. The SDI taxable wage limit also has increased to $68,829 per employee, which means the maximum withheld is $812.18.

Employees obtain wage replacement based on past quarterly earnings, with the range of the benefit spanning from $50 per week at the lowest, up to $728 per week for employees earning $68,734.56 or more. The maximum weekly amount will increase to $840 for claims starting in 2005.

Financial Services Industry

California paid family leave: {beginning July 1, employees are allowed six weeks off—with partial pay—to care for a newborn or other family member. Here's how employees & employers can prepare}

California CPA, May, 2004 by David A. Wimmer, Jeffrey W. Mayes

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