Law Updates for California Employers: COVID Sick Leave Obligations, Meal-Period Rules, COBRA Benefits
New legislation and a recent court decision have significant implications for California employers. Certain California employers must now provide supplemental paid sick leave to employees who miss work for specified reasons related to the COVID pandemic, must comply with new notice and payment obligations under COBRA, and are precluded from rounding time for their employees’ meal period time punches. As detailed below, California employers should assess their policies and practices to comply with these new rules.
New Sick Leave Obligations
On March 19, California Governor Gavin Newsom signed Senate Bill 95, which provides up to 80 hours of supplemental paid sick leave for eligible workers for reasons related to COVID-19. The new law is retroactive to January 1, 2021 and provides benefits through September 30, 2021.
Under the new law, employers with more than 25 employees must provide supplemental paid sick leave to employees for specified reasons related to the COVID-19 pandemic, including where the employee is subject to a quarantine or isolation period related to COVID-19 or has been advised by a healthcare provider to quarantine due to COVID-19; is experiencing symptoms of COVID-19 and seeking a medical diagnosis; is caring for a family member that is subject to a quarantine or isolation period related to COVID-19 or has been advised by a healthcare provider to quarantine due to COVID-19; is caring for a child whose school or place of care is closed or unavailable due to COVID-19 on the premises; or is attending a vaccine appointment or unable to work due to vaccine-related symptoms.
Employees that took unpaid time off for a covered reason earlier in 2021 may request retroactive payment for the unpaid time. Full-time employees are eligible for 80 hours of supplemental paid sick leave, and part-time employees are entitled to the total number of hours they typically work during a two-week period.
The Division of Labor Standards Enforcement has created a poster that must be displayed in a conspicuous location or disseminated through electronic means. That poster can be found here: https://www.dir.ca.gov/dlse/2021-COVID-19-Supplemental-Paid-Sick-Leave.pdf
New Changes to Meal-Period Rules
In Donohue v. AMN Services LLC, the California Supreme Court recently issued two holdings that make meal period violation claims more challenging for employers: (1) employers are not allowed to round up even in small increments to reach the 30-minute meal period requirement; and (2) time records showing non-compliant meal periods raise a rebuttable presumption of meal period violations.
Rounding Time Punches for Meal Periods is Impermissible
Under California law, employers must provide employees with an uninterrupted 30-minute meal period that begins before the end of the fifth hour of work and a second 30-minute meal period that begins before the end of the tenth hour of work. If the employer provides a late or short meal period, the employee is entitled to a one-hour meal-period premium.
In Donohue, the employer used a timekeeping system that rounded its employees’ time punches – including those for meal periods – to the nearest 10-minute increment. When, after rounding, the meal period was 30 minutes or more, the employer would not pay a meal-period premium, even if the actual meal period spanned fewer than 30 minutes.
The Court held that such a policy violated the Labor Code, stating that “rounding is inappropriate in the meal period context.” The Court declined to address whether rounding was appropriate for regular and overtime wage calculation purposes, reasoning that regardless of the legality of rounding generally, the statutory framework and legislative history preclude meal period rounding. So, California law currently continues to permit rounding outside of meal periods as long as the policy is neutral on its face and as applied.
Burden Falls on Employers to Rebut Time Records
The Court also held that when an employee’s time records show a missed, short, or late meal period, a rebuttable presumption arises that the employee was not relieved of duty and is entitled to a meal-period premium. Thus, once an employee’s time records show an inadequate meal period, the employer bears the burden to prove that it adequately relieved the employee from duty. Employers can rebut the presumption – by presenting evidence such as representative testimony, surveys, or other documentary evidence – that it either provided a compliant meal period or paid a premium. But, as the burden lies with the employer, it will be more difficult for employers to obtain summary judgment for meal period claims.
Employers should review their timekeeping protocols to ensure their systems do not round time for meal periods.
Additionally, although the Donohue decision explicitly declined to address time-rounding outside the meal period context, the Court suggested that technological advances could undermine the justification for any rounding. So, though currently still permissible, California employers should evaluate whether the rounding benefits outweigh the potential for future liability.
Finally, as they now bear the burden to rebut time records, employers should consider timekeeping systems that help rebut the presumption of a Labor Code violation. For example, the Donohue Court suggested that requiring employees, whenever an inadequate meal period occurs, to certify whether the employee voluntarily skipped, shortened, or delayed the meal period, could help rebut the presumption.
New COBRA Benefits
The American Rescue Plan Act of 2021 included a number of changes to the COBRA program, including federal subsidies for COBRA premiums due April 1 through September 30, 2021. Only employees who were involuntarily terminated or lost insurance coverage due to a reduction in hours are eligible for the subsidy.
If an eligible employee elects COBRA coverage, the employer must pay the premiums, and can then apply for tax credits against payroll taxes. Eligible employees and their dependents must receive updated COBRA notices by May 30, 2021, and all COBRA notices during the eligibility period must be revised to reflect these changes. Employers should coordinate with their plan administrators to contact eligible employees and provide the new required notice.