California Extends COVID-19 Supplemental Paid Sick Leave Through 2022, Makes Small Amendment and Offers Grants for Smaller Employers

On September 29, 2022, California’s governor signed Assembly Bill (AB) 152, which immediately extends the obligation of employers with 26 or more employees to provide COVID-19 supplemental paid sick leave (“CA 2022 SPSL”) through December 31, 2022, amends standards for when employees use CA 2022 SPSL because they test positive for COVID-19, and creates the California Small Business and Nonprofit COVID-19 Supplemental Paid Sick Leave Relief Grant Program.

CA 2022 SPSL Extension: Originally, California Labor Code sections 248.6 and 248.7 required covered employers to provide CA 2022 SPSL through September 30, 2022. Of importance, the new three-month extension does not require a new bank of leave. Instead, the potentially up to 80 hours of CA 2022 SPSL that employees could have used between January 1, 2022 and the original expiration date must continue to be available through the remainder of 2022 (and possibly slightly beyond 2022 if an employee begins a covered absence at the end of 2022 that continues, uninterrupted, into 2023). Accordingly, if employees have used all their available CA 2022 SPSL hours before October 1, 2022, and experience another qualifying absence sometime between October and year-end, they will need to use another pay or wage replacement benefit (e.g., non-COVID paid sick leave, vacation, California Disability Insurance) to receive payment and/or other leave laws (or leave-related provisions) for job protections to attach to the absence (e.g., Healthy Workplaces Healthy Families Act, California Family Rights Act, or Cal-OSHA COVID-19 Prevention Emergency Temporary Standards).

Conversely, if employees have not used any, or have used only a portion, of their 2022 CA SPSL, they will have access to this paid leave for the remainder of 2022 if they experience a qualifying need for leave. The extension is relevant not only for state law purposes, but also for employers with 100 or more employees worldwide who must comply with San Francisco’s permanent Public Health Emergency Leave Ordinance (“SF PHELO”) that takes effect on October 1, 2022. Under SF PHELO, employers will be able to count any CA 2022 SPSL an employee uses between October 1 and December 31, 2022 against their obligation to provide potentially up to 40 hours of public health emergency leave during that time period.

On a related note, employers should remember that additional local SPSL ordinances remain in effect in Long Beach, the City of Los Angeles, unincorporated Los Angeles County, and Oakland.  As a result, they may also need to contend with compliance obligations under those local laws.

CA 2022 SPSL Amendments: Currently, if an employee uses CA 2022 SPSL because they test positive for COVID-19 – from their “COVID-positive” bank if an employer uses a two-bank setup or generally if the employer uses a single-bank setup – an employer can require the employee to take a diagnostic test on or after the fifth day after the initial test and provide documentation of those results. As amended, the law additionally provides that, “[i]f the diagnostic test is positive, the employer may also require the employee to submit to a second diagnostic test within no less than 24 hours.”

Currently, state law says employers need not provide CA 2022 SPSL if an employee refuses an employer’s request to provide documentation of the test results. As amended, employers can also deny CA 2022 SPSL to an employee who refuses to submit to a diagnostic test.

Grants for Small Employers Providing CA 2022 SPSL: Under AB 152, certain private employers and registered non-profits that began operating before June 1, 2021, are currently active and operating, with a physical presence in California and 26 to 49 employees may be eligible for a grant of up to $50,000 to cover the actual costs incurred for providing CA 2022 SPSL. Moreover, any grant they receive will not count as “gross income” for state tax purposes. Keep in mind that there are exceptions concerning which entities the law considers a “qualified small business or nonprofit.”

Next Steps: Given the extension of CA 2022 SPSL to year’s end, any plan to wind down a “bonus” COVID paid leave program needs to be revisited for an employer’s California operations. Additionally, covered employers should consider what effect, if any, the CA 2022 SPSL extension and/or “positive test” amendments have on their existing COVID paid leave policies and procedures. Further, smaller employers and non-profits might want to consult knowledge tax counsel about whether they qualify for the new grant and how a grant could affect their federal taxes. Finally, covered employers should continue to monitor the CA 2022 SPSL FAQs from California’s Division of Labor Standards Enforcement for updates.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.