News from: CalChamber

Following up on his January commitment to expanding California’s Paid Family Leave (PFL) program, Governor Gavin Newsom outlined steps toward that goal in the budget plan he released last week.

PFL, a component of the State Disability Insurance (SDI) program, currently allows workers to take up to six weeks of paid leave annually to care for a seriously ill family member or to bond with a newborn or newly adopted child, with wage replacement of up to 70% of salary based on income level.

The PFL program is funded through state-required employee payroll deductions. The contribution rate is adjusted each year based on a statutory formula designed to collect revenues sufficient to fund benefits and program administration, as well as to maintain a reserve to accommodate fluctuations in fund revenue or disbursements.

Goal: 6 Months

The Governor’s budget proposal commits to expanding California’s PFL program “with the goal that all newborns and newly adopted babies could be cared for by a parent or close family member for the first six months.”

The budget plan cites research showing “a strong connection between providing this duration of care with positive health and educational outcomes for children and enhanced economic security for parents.”

Moreover, “given the high cost of infant child care, making it possible for children to be with their parents during this period is cost-effective for both families and taxpayers,” the budget plan asserts.

As a “down payment” on its commitment to broaden PFL, the administration proposes to expand the maximum duration of a PFL benefit claim from six weeks to eight weeks for all bonding and care-giving claims, effective July 1, 2020.

The proposal also will allow claimants to take a full eight weeks to help a family member for military deployment, in keeping with legislation adopted last year (SB 1123; Jackson; D-Santa Barbara; Chapter 849, Statutes of 2018), when that bill takes effect on January 1, 2021.

To deliver this expanded benefit, the Governor’s budget proposes reducing the minimum reserve in the SDI fund by 15%. According to the budget proposal, that reduction still maintains an adequate reserve that “will be sufficient to absorb fluctuations in revenues due to future economic downturns as well as increased use of benefits.”

The reserve rate change will take effect starting July 1, 2019.

Task Force

The administration also plans to convene a task force soon to consider different options to phase in and expand PFL to meet the administration’s goal that all babies be cared for by a parent or a close relative for up to six months.

According to the budget plan, the task force also “will evaluate important policy considerations such as aligning existing worker protections and non-retaliation protections for employees’ use of the program, as well as adjustments to the wage replacement rate.”

The task force is to issue recommendations by November for consideration in the 2020–21 Governor’s budget.

The Legislature has until June 15 to act on the budget. The new fiscal year begins July 1.