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SB299 amends California's Pregnancy Disability Leave (PDL) law mandating employers to provide paid healthcare for up to four months of leave.



legal updates

November 2011 Update

Amended California Pregnancy Disability Leave Mandates Employer Healthcare

By Christopher W. Olmsted

California’s Pregnancy Disability Leave law has been amended by SB 299. The amended law mandates that employers provide paid healthcare for up to four months of leave. The amended law has its biggest impact on small businesses not already covered by the FMLA.

Overview of PDL

The California pregnancy disability leave law (“PDL”), found in California Government Code section 12945, is part of the California Fair Employment and Housing Act (FEHA). PDL requires employers of five or more employees to provide female employees up to four months of leave for disability due to an employee's pregnancy, childbirth or related medical conditions.

An employer must provide a leave of absence for up to four months, so long as the woman is actually disabled by pregnancy. The four month leave can be taken intermittently or on a reduced work schedule if medically advisable.

PDL does not provide time off merely because the employee is pregnant. The leave only applies when the employee is medically disabled on account of pregnancy. Moreover, PDL does not provide time off for the care of the baby. That privilege is given under the FMLA or CFRA, if the employer is covered by those statutes.

The law also requires employers to transfer pregnant employees to less strenuous or hazardous position if medically advisable and the employer can reasonably accommodate the request.

Mandated Healthcare

Effective January 1, 2012, the amended law requires the employer to pay its regular share of group healthcare during the PDL leave.

The law states that an employer must “maintain and pay for coverage for an eligible female employee who takes leave . . . for the duration of the leave, not to exceed four months over the course of a 12-month period, commencing on the date the leave . . . begins.”

Where the group health plan requires an employee to contribute towards the premium, the employee must continue to do so during the leave at the same level she normally would have paid, had she not taken the leave.

Amendment Impacts Small Employers

This amendment impacts small businesses the most. The reason is that larger employers (those with 50 or more employees) were already covered by healthcare provisions in the FMLA. Under the FMLA, large employers were already required to pay for healthcare for up to 12 weeks of covered leave. The amended PDL law requires payment for four months. Accordingly, larger employers are now mandated in California to pay for an additional month of healthcare.

Employers with 50 or fewer employees were not previously required to pay for healthcare during PDL. The exception would be where they did so for employees taking other types of leave. The PDL regulations state that employers may not discriminate between employees taking pregnancy disability leaves and employees taking unpaid leaves for other temporary disabilities with respect to “health plans, employee benefit plans, including life, short-term and long-term disability or accident insurance, pension and retirement plans, and supplemental unemployment benefit plans.”

Cost Recovery Permitted

The amended law permits an employer to recover from the employee the costs of healthcare in some circumstances.

The law states: “An employer may recover from the employee the premium that the employer paid as required for maintaining coverage for the employee under the group health plan if both of the following conditions occur:

(i) The employee fails to return from leave after the period of leave to which the employee is entitled has expired.

(ii) The employee's failure to return from leave is for a reason other than one of the following: (1) The employee taking leave under the Moore–Brown–Roberti Family Rights Act [California Family Rights Act / CFRA]. (2) The continuation, recurrence, or onset of a health condition that entitles the employee to leave under paragraph (1) or other circumstance beyond the control of the employee.”

For example: Mary Smith becomes medically disabled on account of pregnancy and takes a four month leave under PDL. She works for a small company employing 10 employees. During that time period, the company pays 75% of the healthcare premium, and Mary pays 25%, which is the standard allocation under the plan. At the end of the four month period, Mary delivers the baby and is medically able to return to work. However, Mary voluntarily decides to stay home to care for the baby rather than return to work. The company may recover the 75% premium contribution it made for Mary during the four month leave.

On the other hand, if the company has 50 or more employees, the result could be different. In that case, the company is covered by the California Family Rights Act. On top of the four month leave for pregnancy-related medical disability, Mary is entitled to take up to 12 weeks of additional leave to care for the baby, during which time the company must continue to pay its share of healthcare.

The second exception noted above is where the employee is medically unable to return to work. If after four months of leave, Mary cannot come back to work because she continues to be medically disabled, the company would not be entitled to recover healthcare premiums from her. This exception is similar to one already found in the FMLA and CFRA.

The amended law would also prohibit an employer from recovering the premium where the employee does not return to work on account of an “other circumstance beyond the control of the employee.” The law does not define what those “other circumstances” may be, and therefore employers will need to carefully consider such circumstances and seek legal advice before seeking to recover the premium cost.

Note to state employers: the amended law states: “If the employer is a state agency, the collective bargaining agreement shall govern with respect to the continued receipt by an eligible female employee of the healthcare coverage.”

Next Step: Amend Policies

California employers should review and update PDL policies in their employee handbooks.

Additionally, employers need to update any notices given to employees at the time of pregnancy disability leave. The notices should include information regarding the payment of healthcare, and also notify the employee under what circumstances the employee may be required to reimburse the employer for the premium.

Additional Resources

Read the text of SB 299

Leaves of Absence Chart by Barker Olmsted & Barnier, APLC
Email Chris Olmsted at cwo@barkerolmsted.com

This article is intended as a brief overview of the law and are not intended to substitute as legal advice. Any questions or concerns regarding any statute or case law should be addressed to a licensed attorney. Copyright © 2011 by Barker Olmsted & Barnier, APLC. San Diego, California. All rights reserved.

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