Spotlight on Legislation: AB 2123 and Paid Family Leave
We previously reported on various newly enacted bills of interest to employers, signed last month by California Governor Gavin Newsom, most of which take effect at the start of the new year. One of these bills was Assembly Bill 2123, authored by Assemblymember Diane Papan relating to use of accrued vacation hours for paid family leave. Let’s now take a closer look at this piece of legislation.
Summary: AB 2123 sunsets provisions in law authorizing an employer to require employees to take two weeks of vacation leave before accessing their benefits under California’s Paid Family Leave (PFL) program.
Effect: Starting January 1, 2025, employers can no longer require their employees to use their accrued vacation before accessing PFL benefits.
Background on the PFL Program: PFL was enacted in 2002 as an expansion to the State Disability Insurance (SDI) program to extend disability compensation to individuals who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a new minor child. California was the first state in the country to implement a PFL benefit, with benefit payments beginning on July 1, 2004. Effective January 1, 2021, the PFL scope was expanded to include employees taking time off work to assist a military family member under covered active duty or call to covered active duty. PFL provides up to eight weeks of the 60-70% wage replacement. Starting January 1, 2025, workers will be eligible for 70-90% wage replacement.
An employer is currently allowed to require an employee to use two weeks of accrued vacation time before they can access PFL benefits, which are funded by employees through payroll withholding. By deleting the provision allowing employers to require employees to use vacation leave before accessing PFL benefits, this bill leaves the decision of whether to use vacation benefits (full wage replacement) before accessing their PFL benefits (partial wage replacement) entirely with the employee.
Now is a good time to start thinking about updating those employee handbooks and to assess workplace policies for any needed changes to leaves of absence, vacation/PTO and employee contributions to benefits. Please contact Rosasco Law Group for more information on AB 2123 or any of the other newly enacted employment laws and for all of your workplace compliance needs.
