What employers need to know about paid time off benefits for employees who are receiving state disability or paid family leave benefits
Published on Tue, 07/09/2019 - 9:57pm
When an employee goes out on medical or parental leave that is covered by either State Disability Insurance (SDI) or Paid Family Leave (PFL) benefits through the State, how are these benefits affected by employer- paid sick leave, vacation or other PTO benefits? This can be a tricky area because employees are only eligible for SDI or PFL benefits to the extent that they lose income due to the covered leave. Therefore, the employee’s receipt of paid time off benefits from the employer during the leave could reduce the employee’s eligibility for SDI/PFL benefits. Moreover, concurrent payment of SDI/PFL benefits plus paid time off through the employer could result in overpayment where the employee receives more than 100% of their normal wages. The Employment Development Department (EDD), which administers SDI and PFL benefits, places the responsibility on the employer and employee to ensure that during the leave the employee is not receiving total wages/benefits that exceed the employee’s normal wages. However, EDD can assist with compliance by offering the option of integration/coordination of SDI and PFL benefits.
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On July 1, 2019, several cities in California will see minimum wage increases for hourly employees. Companies with employees who perform at least two hours of work in a city are required to pay those employees the minimum wage of that city.
In January 2018, the U.S. Department of Labor (DOL) endorsed the primary beneficiary test for assessing whether interns qualify as employees under the Fair Labor Standards Act (FLSA). The test is a seven-factor test for determining interns’ status that was laid out by the Second Circuit in its 2015 ruling, Glatt v. Fox Searchlight Pictures Inc. as the way to distinguish employees from bona fide interns under the FLSA. Courts have analyzed the “economic reality” of interns’ relationship with their employer to determine which party is the primary beneficiary of the relationship. The standard has been applied in various cases where courts have ruled that interns in a variety of industries, as the primary beneficiaries of their internships, do not qualify as employees for FLSA purposes and cannot collectively pursue claims for misclassification and wage violations under that statute.
As we previously reported, in an effort to better address pay disparity issues based on gender and race, the Obama-era EEOC announced in February 2016 that it would seek to revise the EEO-1 data collection report that employers with 100 or more employees and certain federal contractors are required to file each year with sex, race and ethnicity data concerning their workforces. Specifically, the report would be expanded to contain a “Component 2” that would include data on employees’ W-2 earnings and hours worked. However, in August 2017, the current administration froze this new requirement in order to re-evaluate whether the burden it would impose on employers is justified. This resulted in litigation by groups who sought to have the proposed new requirements upheld. A federal district court agreed and ordered the EEOC to more forward with the new expanded EEO-1 reporting requirements.
The 2018 Dynamex v. Superior Court case radically modified California’s test for determining when a worker is an independent contractor or an employee and signaled further divergence between state and federal law. As businesses from strip clubs to delivery services to home-based cleaning services have struggled to determine how to apply the so-called “ABC Test” of Dynamex to their workplaces going forward, the Ninth Circuit Court of Appeals in May 2019 intensified the urgency of their situation when it ruled in Vazquez v. Jan-Pro Franchising Int’l that the Dynamex decision applies retroactively.
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The California Court of Appeal’s decision in Ward v. Tilly’s, Inc. is a warning that employees must be provided reporting time pay when an employer requires its employees to call in two hours before a potential shift to learn whether the employee is needed for work and the employee is told not to come into work that day. To be clear, “reporting to work” is not limited to the when the employee physically appears at work but is sent home early.