P A G E | 0 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. P A G E | 1 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. About Jackson Lewis Founded in 1958, Jackson Lewis is dedicated to representing management exclusively in workplace law. With 800 attorneys practicing in major locations throughout the U.S. and Puerto Rico, Jackson Lewis is included in the AmLaw 100 and Global 100 rankings of law firms. The firm’s wide range of specialized areas of practice provides the resources to address every aspect of the employer/employee relationship. Jackson Lewis has one of the most active employment litigation practices in the world, with a current caseload of over 6,500 litigations and approximately 650 class actions. Jackson Lewis is a founding member of L&E Global Employers’ Counsel Worldwide, an alliance of premier employment law boutique firms and practices in Europe, North America, and the Asia Pacific Region. Additional information about Jackson Lewis can be found at www.jacksonlewis.com. This Special Report is designed to give general and timely information on the subjects covered. It is not intended as advice or assistance with respect to individual problems. It is provided with the understanding that the publisher, editor or authors are not engaged in rendering legal or other professional services. Readers should consult competent counsel or other professional services of their own choosing as to how the matters discussed relate to their own affairs or to resolve specific problems or questions. This Special Report may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome. Copyright: © 2015 Jackson Lewis P.C. P A G E | 2 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. Amendments to the California Family Rights Act (“CFRA”) regulations (http://www.dfeh.ca.gov/res/docs/FEHC/Final%20Text%20(1).pdf), effective July 1, 2015, are meant to clarify a number of uncertainties, align the CFRA regulations more closely with the federal Family and Medical Leave Act (“FMLA”) regulations (where the laws are consistent), and ensure employers and employees have a clear understanding of their rights and duties under the CFRA. We highlight key provisions of the amendments. The definition of “covered employer” is revised to include successors in interest of a covered employer and joint employers. Where two or more businesses exercise some control over an employee’s work or working conditions, those businesses may be joint employers. The regulations do not provide any criteria for determining whether a joint employer relationship exists; rather, the regulations instruct that the relationship “is to be viewed in its totality based on the economic realities of the situation.” The amendments indicate that a joint employer relationship generally will be considered to exist where: there is an arrangement between employers to share an employee's services or to interchange employees; one employer acts directly or indirectly in the interest of the other employer in relation to the employee; or the employers share control of the employee, directly or indirectly, because one employer controls, is controlled by, or is under common control with the other employer. Under the amended regulations, an employee is eligible for CFRA leave if he or she has worked for the employer “at least” 12 months (52 weeks) at any time before the leave begins and has actually worked at least 1,250 hours during the 12-month period immediately prior to the date on which leave begins. The amendments address what happens if an employee meets the 12-month length-of-service requirement while on leave. In those circumstances, the time off after the employee’s anniversary date should be designated as CFRA leave. If an employee has no fixed worksite, the worksite to which the employee is assigned is his or her home base. The regulations give the following example: “If a salesperson works from home in California, but reports to and receives assignments from her corporate headquarters in New York, the New York headquarters, not her home, would constitute the worksite from which there must be 50 employees within a 75-mile radius in order for the P A G E | 3 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. salesperson to be eligible under the CFRA.” This interpretation is particularly significant where CFRA and FMLA leave rights differ. For example, in the case of bonding leave following pregnancy disability or leave to care for a registered domestic partner with a serious health condition. If an employee has a joint employment relationship with two or more employers, the employee’s worksite is the primary employer’s office from which the employee is assigned. However, if the employee has worked for at least one year at the secondary employer’s facility, the employee’s worksite is that of the secondary employer. Further, the secondary employer must count that employee when determining CFRA eligibility for its other employees. The amendments also clarify several other definitions. For example, the “reason of the birth of a child” includes bonding with a child after birth. “Inpatient care” no longer requires an overnight stay at a health care facility; rather, a person is considered an “inpatient” when he or she is admitted with the expectation of remaining at least overnight, even if the person later can be discharged (or transferred) without remaining overnight. “Spouse” includes registered domestic partners and same-sex partners in marriage. The amendments extensively revise the provisions regarding key employees. To determine whether an employee is a key employee, among the highest paid 10 percent of the employer’s employees, within 75 miles of the worksite where the employee is located at the time of the leave request, employers must compare the year-to-date wages of its employees within 75 miles of the requesting employee’s worksite, divided by the number of weeks worked (including weeks in which paid leave was taken). The amendments also state that there is no “precise test” for determining whether reinstatement of a key employee will cause “substantial and grievous economic injury.” If reinstatement would threaten the employer’s “economic viability,” that would constitute substantial and grievous economic injury. Also, a substantial “longterm economic injury” likely would be sufficient. However, “minor inconveniences” and ordinary business costs would “certainly” not constitute substantial and grievous economic injury, the regulations state. The amendments detail the type of notice to be given to a key employee if the employer intends to deny reinstatement. The employer must inform the employee in writing, at the time the employee notifies the employer of the need for leave or as soon as practicable, if the employer must first determine whether the employee is a key employee. The employer also must inform the employee of the potential consequences with respect to reinstatement and health benefits if the employer determines reinstatement will result in substantial and grievous economic injury to its operations. If the employer fails to provide the required notice, it will lose its right to deny reinstatement to the key employee. Once the employer has determined that substantial and grievous economic injury to its operations will result if it reinstates a key employee who has given notice of the need for CFRA leave (or who is on CFRA leave), the employer must notify the employee in writing that it intends to deny reinstatement on completion of the leave. The employer must serve the notice either in person or by certified mail. The notice must explain the basis for the employer’s finding that substantial and grievous economic injury will result, and, if leave has commenced, must provide the employee a reasonable time in which to return to work, taking into account the circumstances, such as the duration of the leave and the urgency of the need for the employee to return. P A G E | 4 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. If a key employee on CFRA leave does not return to work in response to the employer’s notification of its intent to deny reinstatement, the employee remains entitled to maintenance of health benefits coverage, and the employer may not recover its cost of health benefit premiums. Also, a key employee may request reinstatement at the end of CFRA leave even if he or she did not return to work in response to the employer’s initial notice. The employer must determine whether reinstatement will result in substantial and grievous economic injury, based on the facts at that time. If the employer’s determination is unchanged, it must notify the employee in writing (in person or by certified mail) of the denial of reinstatement. The amended regulations include a provision that denies job restoration and maintenance of health benefits to employees who fraudulently obtain or use CFRA. The employer has the burden of proving that an employee committed the fraudulent conduct. The amendments provide that “twelve workweeks” of leave means the equivalent of 12 of the employee’s normally scheduled workweeks. Accordingly, if an employee works fewer than five days per week or has an alternative work schedule, the number of days of leave is calculated on a pro rata or proportional basis. If an employee’s schedule varies from week to week such that the employer cannot determine how many hours the employee would have worked during leave, the employer should calculate the weekly average of the employee’s hours scheduled over the 12 months prior to the leave to determine the employee’s leave entitlement. If an employee normally would be required to work overtime, but is unable to do so because of a CFRAqualifying reason, the employee may use intermittent or a reduced schedule leave for those overtime hours. For example, if an employee normally would work 48 hours in a particular week, but due to a serious health condition the employee works 40 hours, the employer can and should designate eight hours of CFRA leave in lieu of the overtime. The amendments permit an employee to take intermittent or reduced work schedule leave for absences where the employee or family member is incapacitated due to a chronic serious health condition, even if he or she does not receive treatment from a health care provider. The amendments also address situations where it is physically impossible for an employee using intermittent or reduced work schedule leave to begin or end work midway through a shift, such as where a flight attendant or railroad worker is scheduled to work on a plane or train. In these cases, the entire period that the employee is absent is designated as CFRA leave. However, the employer must permit the employee to return to work if he or she is able to perform other aspects of the work that are not physically impossible, such as administrative duties, and thereby shorten the time designated as CFRA leave. The amended regulations address situations where an employee’s request for CFRA leave can be unclear. For example, if an employee asks for vacation or other paid time off or offers to resign and informs the employer that the reason for the request is CFRA-qualifying, the employer is permitted to ask employees about the need P A G E | 5 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. for leave. In this case, the amended regulations direct the employer to inquire further of the employee to determine whether CFRA leave is being sought by the employee and to obtain the necessary information concerning the leave (i.e., commencement date, expected duration, and other permissible information). The employee has an obligation to respond to an employer’s questions. The employee’s failure to respond may result in denial of CFRA protection if the employer is unable to determine whether the leave is CFRA-qualifying. The amendments expand the types of situations where paid leave may be substituted for unpaid CFRA leave. For example, an employee may elect to use, or an employer may require an employee to use, accrued sick leave for CFRA leave for the employee’s own serious medical condition or any other reason, if the employer and employee mutually agreed to do so. Consistent with the updated FMLA regulations, an employer and employee may also agree that partial wage replacement benefits received during CFRA leave (such as state disability insurance, paid family leave benefits, and workers’ compensation benefits) may be supplemented with vacation, paid time off, or sick time, unless otherwise prohibited by law. Similar to the federal FMLA, an employee may designate short- or long-term disability leaves to run concurrently with unpaid CFRA leave for the employee’s own serious medical condition. The amended regulations provide that an employee receiving any form of disability payments is not on “unpaid leave”; therefore, an employer may not require the employee to use paid time off, sick leave, or accrued vacation. Similarly, an employee receiving Paid Family Leave to care for the serious health condition of a family member or to bond with a new child is not considered to be on “unpaid leave”; therefore, an employer may not require the employee to supplement the benefits by using available paid time off, sick leave, or accrued vacation. The amended regulations also clarify that employers may make deductions from an exempt employee’s salary when the employee takes intermittent leave under CFRA. If an employee has a serious health condition that also constitutes a disability as defined by the California Fair Employment and Housing Act (FEHA) and he or she cannot return to work at the conclusion of CFRA leave, the employer has an obligation to engage the employee in an interactive process to determine whether an extension of that leave would constitute a reasonable accommodation under the FEHA. An employer may not require an employee to undergo a fitness-for-duty examination as a condition of an employee’s return. After an employee returns from CFRA leave, any fitness-for-duty examination must be jobrelated and consistent with business necessity. Employers must maintain group health plan coverage for an employee on CFRA leave until: the employee’s CFRA leave entitlement is exhausted; the employer can show the employee would have been laid off and the employment relationship terminated for lawful reasons during the period of the CFRA leave; or the employee provides unequivocal notice of his or her intent not to return to work. P A G E | 6 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. If an employer requires its employees to pay premiums for health coverage, the employer must provide the employee taking CFRA leave with advance written notice of the terms and conditions under which premium payments must be made. If CFRA leave is paid, the employee’s share of premiums must be paid by the method normally used during any paid leave (typically, as a payroll deduction) unless the employer and the employee agree otherwise. If CFRA leave is unpaid, the employer may require that payment be made to the employer or to the insurance carrier, but no additional charge may be added to the employee’s premium payment for administrative expenses. If an employee’s premium payment is more than 30 days late, an employer’s obligation to maintain coverage under the CFRA ends. However, before terminating coverage, the employer must provide to the employee written notice, at least 15 days before the coverage will end, that the coverage will terminate on a date at least 15 days after the date of the written notice, unless payment is received by that date. If an employer terminates an employee’s coverage for non-payment of premiums and fails to restore such coverage upon the employee’s return to work, the employer may be liable for lost benefits, for actual damages, and equitable relief. The amendments significantly expand protections against interference with protected rights and retaliation. Interference is defined to include refusing to authorize CFRA leave, discouraging an employee from using such leave, and taking actions to avoid responsibilities under CFRA. In addition, transferring employees from one worksite to another for the purpose of reducing worksites, or to keep worksites below the 50-employee threshold for employee eligibility under CFRA, would constitute “interference” with CFRA rights. Other examples include: changing essential job functions to preclude the taking of leave; reducing an employee’s hours available to work to avoid employee eligibility; or terminating an employee when it anticipates an otherwise eligible employee will be asking for a CFRA leave in the future. Interference also includes discriminating or retaliating against a current or prospective employee for having exercised or attempted to exercise CFRA rights or giving information or testimony regarding his or her CFRA leave, or another person’s CFRA leave. Employers cannot use the taking of CFRA leave as a negative factor in employment actions, such as hiring, promotions, or disciplinary actions; neither can CFRA leave be counted against an employee under an employer’s attendance policies. Employees cannot waive, and employers may not induce employees to waive, their prospective rights under CFRA. However, this does not prevent the settlement or release of CFRA claims by employees based on past employer conduct without the approval of a court. This also does not preclude an employee from taking a light duty assignment while recovering from a serious health condition. Further, an employee’s acceptance of a light duty assignment does not constitute a waiver of the employee’s right to be reinstated to the same position held at the time the CFRA leave commenced or to a comparable position. All individuals, not merely employees who are CFRA-qualified, are protected from retaliation under CFRA. P A G E | 7 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C. The amendments permit electronic posting of CFRA notices and require an employer to translate the CFRA notice into every language spoken by at least 10 percent of its workforce. Finally, the revised regulations include an updated poster and CFRA Certification of a Health Care Provider form. California employers should review the amended regulations and consult with experienced counsel regarding the changes. Employers also should review and revise their CFRA policies, posters, handbooks, and forms as may be necessary to conform to the amended regulations. In addition, employers should train their human resources personnel or managers responsible for administering CFRA leave requests about these changes to the California requirements. Jackson Lewis attorneys are available to answer inquiries regarding the amendments and assist employers in achieving compliance with the regulations requirements. Our California Offices: 725 South Figueroa St. Los Angeles, CA 90017 (213) 689-0404 5000 Birch St. Newport Beach, CA 92660 (949) 885-1360 801 K St. Sacramento, CA 95814 (916) 341-0404 225 Broadway San Diego, CA 92101 (619) 573-4900 50 California St. San Francisco, CA 94111 (415) 394-9400 P A G E | 1 A M E N D E D C A F A M I L Y R I G H T S A C T R E G U L A T I O N S Jackson Lewis P.C.