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California created the first Paid Family Leave (“PFL”) law 20 years ago.  Now, California’s new PFL benefits expand leave benefits and gradually increase the amount paid to lower-wage employees who use the benefits.  The new law phases in an increase in benefits.  By 2025, workers earning less than the state’s average wage could receive up to 90 percent of their regular wages while taking leave.  Currently, low wage earners may be eligible for 70 percent of their regular wages under the programs.

Although PFL is a state benefit, private company employees can apply for the benefits while on unpaid leaves, such as under the California Family Rights Act (“CFRA”) and the Family Medical Leave Act “(FMLA”).  This increase in the state benefits formula will mean a less significant loss of income for workers.  Advocates for the legislation; a coalition of gender equity, child, and maternal health and anti-poverty groups say the California program has fallen behind other states and California doesn’t provide enough to allow low-income workers to take the leave.  These expanded benefits will change that.

PFL is currently funded through a 1.1% tax on workers’ paychecks.  This new law pays for the increased benefits by increased contributions on payroll taxes for Californians earning above $145,600.  So, it is funded entirely by the increased payroll taxes on higher wage earners.

While the bill does not directly provide for any changes for employers, California employers should review their policies and prepare to comply with the Paid Family Leave law as an increased number of employees may choose to take advantage of this benefit.

Here at Epps & Coulson, LLP we understand (AB 951) may be confusing.  We are available to advise and help you implement policies to protect you.  Contact Dawn at:

Information contained in this Memo is intended for informational and educational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.  It is considered advertising under laws of some states.  Epps & Coulson, LLP encourages you to call to discuss these

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