Pregnancy Leave Benefits must now be Maintained under CA Law

Last Updated: October 27, 2011


Governor Brown recently signed legislation that effective January 1, 2012 will require employers in California with as few as 5 employees to maintain health insurance benefits for up to a maximum of 4 months under a California Pregnancy Disability Leave (PDL).

Background

Existing California law, under the Fair Employment and Housing Act, requires employers with 5 or more employees to provide up to 4 months (88 days for full-time, pro-rated for part-time employees) of unpaid PDL for employees who are disabled by pregnancy, childbirth, or related medical conditions. Up until now, smaller employers have not been required to maintain health insurance benefits during a PDL leave, unless the employer provides benefit continuation for other non-pregnancy disability leaves. It is important to note that PDL only covers an employee during a period of disability where her doctor has established that she is physically unable to work. Once a doctor releases an employee to return to work – even if the employee elects and is allowed to take additional leave to stay at home with a new child – the protection under PDL ends. A pregnancy leave is therefore not automatically 4 months – it will be for the duration of disability as determined by a doctor up to a maximum of 4 months.
Until reaching 50 employees when federal Family Medical Leave (FMLA) would also apply, employers have had the discretion to decide the length of time, if any, that the company would continue to pay for medical benefits during a PDL leave. Some have opted to maintain benefits during a portion or all of the leave. Many employers, however, have elected to place employees who take PDL on COBRA where the employee then pays the full cost of her insurance during the leave.

New Rules

Effective January 1, 2012, all employers with 5 or more employees will be required to maintain benefits during a PDL leave for up to the maximum duration of leave (4 months) under the same terms and conditions as would apply if the employee had not gone out on leave. If the employer pays 100% of the cost of benefits, the company will need to continue to pay the full cost during PDL. If the employee contributes towards the cost of her coverage, she can be required to continue making these payment contributions during the leave. If the employee fails to return from a PDL leave, the employer may recoup the cost of the employer premiums paid during the leave, unless the reason for the employee’s failure to return is the result of a continuing disability, due to the employee taking additional protected leave under California Family Rights Act (CFRA), or other circumstance beyond her control

Leave Interaction

Larger employers who have over 50 employees are not only covered by California PDL law but also fall under the purview of the federal FMLA which currently does require employers to maintain benefits for up to 12 weeks in any 12-month period for leaves which include pregnancy disability leaves. Effective January 1, 2012, benefits continuation during a pregnancy disability leave that is also covered by FMLA can no longer be capped at 12 weeks.

CFRA is the state counterpart to FMLA, but oddly enough does not recognize pregnancy as a disability. As a result, an employee could take up to 4 months of unpaid pregnancy disability under PDL/FMLA, and could then qualify for an additional 12 weeks of unpaid leave under CFRA – not for disability, but now for “baby bonding” leave or what we more frequently refer to as “maternity” leave. This type of leave is not predicated upon the employee being disabled and unable to work, but rather results from the employee taking additional time off to stay at home and bond with a new child. When PDL/FMLA leave is then followed by a baby-bonding CFRA leave, the total possible leave is close to 7 months (up to 4 months of PDL followed by up to 12 weeks under CFRA). However, the maximum amount of time that benefits will be required to be kept in place will be the new 4-month rule – not the full 7 months of possible leave.

For a full review of the new law, see California SB 299.

What should employers do?

  • Perform a detailed review and update of your employee handbooks to reflect the new rules.
  • Review and update any internal forms, letters, or other notices that are used to administer pregnancy leaves.
  • Make sure you have established clear policies and procedures for employees to pay their share towards their benefits while they are out on leaves of absence./li>
  • Be sure to have sound COBRA administration services in place to ensure that the proper notices are sent to any employees who do end up staying on leave for longer than the law provides for benefit continuation.
  • Provide training and guidance to your supervisory, payroll, and leave administration employees.

As you can see from the above, leave administration can be very complicated in California. Please be aware that the above article is a brief and cursory discussion of these three types of protected leaves. The actual terms and conditions, eligibility, and benefits for each type of leave are complex and varied.
If you would like more information about how Vantaggio can help you with leave and/or COBRA administration, please call us or click here for details on some of the products we offer: Vantaggio HR’s Leave Administration Kit; Vantaggio HR’s COBRA Notice Kit.

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