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Small Businesses May Demand Mediation of Family Leave Disputes

by Jennifer Brown Shaw and JR Riddel | The Daily Recorder | May 10, 2021

In April 2022, the Department of Fair Employment and Housing (“DFEH”) provided insight about its new pilot mediation program for certain claims under the California Family Rights Act (“CFRA”).  The program is a significant benefit to “small employers” subject to the CFRA.

The California Family Rights Act

Under the CFRA, eligible employees may take up to 12 weeks of unpaid, job-protected leave during a 12-month period for three main purposes:  (1) to care for their own “serious health condition;” (2) to care for a covered family member with a “serious health condition”; or (3) to bond with a child within 12 months of the child’s birth, adoption, or placement in foster care.  A “serious health condition” is an illness, injury, or physical or mental condition that involves either inpatient care or continuing treatment by a healthcare provider.

Employees returning to work from CFRA leave are entitled to their same or comparable position, among other job protections, such as continuous coverage under an employer’s group health plan.  To be eligible for CFRA leave, an employee must have been employed for a total of 12 months (not necessarily consecutively) and physically worked at least 1,250 hours during the 12 months preceding the CFRA leave.

Prior to 2021, CFRA did not apply to employers unless they had at least 50 employees.  However effective January 1, 2021, the Legislature expanded CFRA coverage to include employers with five or more employees.  To address small employers’ concerns (i.e., those with between five and 19 employees) about potential litigation arising from mistakes in their implementation and administration of CFRA, the Legislature mandated that the DFEH implement a “Small Employer Family Leave Mediation Pilot Program.”  As discussed more below, the program is intended to resolve common CFRA disputes without the cost of civil litigation.

Common CFRA Disputes

CFRA disputes frequently are related to an employer’s refusal to grant CFRA leave, failure to properly reinstate the employee following an authorized CFRA leave, or retaliation against an employee for taking CFRA leave, such as by terminating the employee during or after the leave.  Employers determined to have violated the CFRA may be required to reinstate an employee to their former position, provide back pay, and pay attorneys’ fees, damages for emotional distress, and administrative fines. CFRA cases are fact-specific, costly to litigate, and susceptible to significant jury awards.

Because the DFEH has jurisdiction over CFRA claims, employees who believe an employer has violated the CFRA must exhaust their administrative remedies through the DFEH.  There are two options to exhaust:  (1) file a complaint with the DFEH for investigation and receive a “right to sue” at the end of that process, or (2) request an “immediate right to sue.”  The latter option avoids any investigation by the DFEH, and allows the employee to file a civil claim without further action by the DFEH.  Under either option, employees pursuing claims against small employers must participate in the DFEH’s mediation program after receiving their right to sue notice.

The Small Employer Family Leave Mediation Program

The Legislature created the “Small Employer Family Leave Mediation Program” with Assembly Bill 1867, which became effective on January 1, 2021.  For various reasons, the implementation of the program was significantly delayed.  However, in April 2022, the DFEH released FAQS for the program.  The FAQs explain that after an employee receives their right to sue notice, they must initiate the mediation process by emailing the DFEH’s Dispute Resolution Division.  The employee must state whether they wish to mediate their CFRA claim.  Even if they elect not to mediate, the DFEH will notify the employer of the complaint and the employer’s right to request mediation.  If the employer wishes to pursue mediation, it must notify the DFEH within 30 days.

If either the employee or the employer requests mediation in a timely manner, then the mediation is mandatory and the DFEH will schedule a mediation session within 60 days.  What happens if the other party refuses to mediate?  If the employer refuses, then the applicant or employee may file their civil claim without further delay.  However, if the applicant or employee refuse to participate, then the employer has a powerful tool at its disposal.  It can stay any civil litigation pending the conclusion of the mediation process.

Once the DFEH initiates the mediation process, the employee cannot file a civil claim unless the dispute remains unresolved 30 days after commencing mediation, or all involved agree that mediation would be “fruitless.”

Of course, there is no guarantee that mediation will result in resolution of the CFRA dispute.  If mediation is successful, then both parties have avoided costly and protracted litigation.  Even if unsuccessful, however, mediation often is a beneficial tool to educate both sides regarding the strengths and weaknesses of their legal positions.

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