The New Parent Leave Act (SB 63) just signed into law in California has the potential to cause big headaches for small businesses, not just in the Golden State but nationwide.
It’s a big deal because businesses with 20-49 employees will now need to provide up to 12 weeks of unpaid parental leave. It has the potential to create havoc with small businesses that had flown under the radar of previous similar California laws making similar requirements for larger companies. There’s big potential for scheduling, staffing and production issues — especially with very small companies without the ability to cover easily for absent staff.
What the California New Parent Leave Act is About
Nicknamed the “California Baby Bonding Leave Act,” the legislation applies not just to child birth but to foster care and adoption as well. It supplements the California Family Rights Act which has been the law for businesses with 50 or more employees for years. Under state law, companies with 50 or more employees need to offer up to 12 weeks of unpaid job protected parental leave.
Small Business Trends spoke with Los Angeles employment attorney Eve Wagner about the new law, it’s implications for small businesses in that state and beyond. Wagner is the founding partner of Sauer & Wagner, a firm specializing in mediation, arbitration, advisement, training and human resources in the small business space.
“Before you could work for a company that had 20 employees and as soon as you were cleared by your doctor (after a pregnancy) to come back to work, you had to show up,” Wagner told Small Business Trends.“Now your employer needs to give you up to 12 weeks of unpaid leave.”
The new law is projected to add costs in overtime for small businesses who must now struggle to fill the gaps left by employees taking advantage of the new law with existing staff. The only alternative would be to hire temporary employees or freelancers to cover the time — another cost.
Beyond cost, there’s also the problem of replacing experienced staff even temporarily.
Wagner uses the example of a CPA firm with three accountants at the top.
“When one of those CPAs goes out, it’s difficult to bring in a temp to cover somebody at a higher level like that,” she explains.
Why it Matters to All Small Businesses
The legislation offers no exceptions for small businesses meeting the requirements of the law. And that’s not all. Employees could also use Pregnancy Disability Leave (PDL) to take off a total of seven months putting even more pressure on small employers.
But small businesses across the country need to pay attention for another reason. California is often bellwether for national movements.
“California is often a trendsetter,” Wagner explained. “There’s already noise among other states about doing the same thing.”
In a recent blog post, Health Affairs, a journal of health policy thought and research, provided an overview of similar initiatives across the country.
California State Capitol Photo via Shutterstock
Yes this new law can surely be a pain for small business owners. Is there any way out? so that it would be beneficial for both the new parent and also for the company.