Beginning in June 2022, California businesses with between 1 and 100 employees may qualify to receive grants of up to $2,000 for each employee who is off work for a reason covered by California’s Paid Family Leave (“PFL”) program. The intent of the PFL Small Business Grant program is to help small businesses offset some of the expenses they incur while complying with their PFL obligations.
What is “Paid Family Leave?”
Paid Family Leave is a component of the State Disability Insurance (SDI) program that provides partial wage replacement benefits to California workers who take time off work to care for a seriously ill child, parent, parent-in-law, grandparent, grandchild, sibling, spouse, or registered domestic partner. Benefits also are available to new parents who need time off work to bond with a new child through birth, adoption, or foster care placement.
The California Employment Development Department administers PFL wage replacement through employees’ payroll deductions. However, employers bear the increased costs associated with facilitating employees’ use of PFL, such as training and upskilling existing and temporary staff to cover the duties of employees who are off work.
PFL benefits have gradually expanded in recent years. Initially, only six weeks of PFL benefits were available during a 12-month period. Then, in 2020, the Legislature expanded the maximum benefits to eight weeks. In January 2021, the PFL program expanded through the addition of a new claim called “Military Assist.” Military Assist provides PFL benefits to workers who take time off work to participate in a qualifying event resulting from a spouse, domestic partner, parent, or child’s military deployment to a foreign country.
Under the current PFL program, eligible employees receive wage reimbursement payments of up to 70% of their regular compensation, subject to applicable caps. However, a new bill aims to boost and extend PFL wage replacement rates. Under Senate Bill 951, more workers would qualify for wage replacement at the 70% level. In addition, workers who make 70% or less of the State’s average wage would receive wage replacement at the 90% level. The Legislature approved SB 951 on August 24, 2022. It currently is on the Governor’s desk awaiting his veto or signature. Last fall, he vetoed a similar bill that would have increased wage replacement pay for lower paid workers, citing costs not included in the budget and higher disability contributions that would be paid by employees. If he signs the current legislation into law, SB 951 will become effective on January 1, 2023.
Paid Family Leave is Not Leave
Unfortunately, the name of the PFL program has created confusion for employers and employees. PFL is not an entitlement to leave. It simply provides wage replacement benefits to employees who otherwise are entitled to take time off for reasons covered under PFL. Of course, employees’ jobs may be protected under various leave laws, such as the federal Family Medical Leave Act and the California Family Rights Act.
The Paid Family Leave Small Business Grant
California’s Employment Training Panel administers the PFL Small Business Grant Program, which provides up to $2,000 for covered employers. The actual amount of each grant depends on the employer’s size. Businesses with between 51 and 100 employees may receive up to $1,000 per employee using PFL wage reimbursement, while employers with between 1 and 50 employees may receive up to $2,000 per employee using PFL wage reimbursement. Note however that small businesses that use a Professional Employer Organization for payroll services are ineligible for the grant program.
The grant application is available at https://californiapfl.com/. The application requires the following information: employer identity, contact information, industry classification, number of full time employees, the intended use of the funds (hiring new employee and/or upskilling/cross training an existing employee), and information related to the employee utilizing PFL (name, dates of PFL, gender, and nature of leave). It will take about 15 minutes to complete the application.
Eligible employers should submit their applications as soon as an employee begins receiving PFL benefits after June 1, 2022. This round of grants is limited to $1,000,000, and applications will be accepted only through May 31, 2024, or until funding is exhausted.