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California Employers May Be Required to Subsidize Backup Childcare

by | Mar 16, 2021 | Uncategorized |

The Healthy Workplaces, Healthy Families Act of 2014, embodied in Labor Code Sections 245-249, requires employers of all sizes to provide paid sick days to eligible employees, among other requirements.  Eligible employees who work in California for 30 or more days are eligible to accrue paid sick days as of the date their employment begins, at the rate of one hour for every 30 hours worked.  Employers may limit an employee’s use of paid sick days to 24 hours or three days in each year of employment, calendar year, or 12-month period.

The global pandemic has brought issues of childcare for working parents to the forefront, especially as childcare centers and schools remain closed and employees exhaust their available sick leave.  The Legislature introduced AB 1179 ostensibly to alleviate the burden on working parents by requiring “paid backup childcare” as a direct benefit to eligible employees, but in a manner that potentially stands to further burden employers already grappling with emergency coronavirus legislation and other business obstacles.

The Legislature declared that parents with children under 14 years of age make up almost one-third of the country’s workforce.  Prior to the pandemic, the Legislature estimated that the average working parent missed eight days a year due to childcare issues.  The pandemic has only exacerbated these issues and led to an increased need for additional childcare, notwithstanding the extended family and sick leave benefits now available under federal and California law.

AB 1179 would apply to employers with 1,000 or more employees, as well as state and local municipalities.  It would not apply to employees covered by a valid collective bargaining agreement that offers similar benefits, to employees in the construction industry covered by a collective bargaining agreement providing for regular hourly pay of not less than 30% of the state minimum wage, certain airline employees, or government retirees receiving retirement benefits.

AB 1179 would enable eligible employees to accrue paid backup childcare benefits at the rate of not less than one hour per every 34 hours worked, beginning at the commencement of employment.  Covered employers may provide the backup childcare benefit by (i) contracting with a licensed childcare provider and providing direct payments to the licensed provider for the hours used by the employee; (ii) directly paying a qualified backup childcare provider upon receipt of an invoice detailing the number of hours used by the employee; or (iii) reimbursing the employee for up to 60 hours for backup childcare paid by the employee.  Or, covered employers could frontload that 60 hours and make it available for use at the beginning of each year of employment.  The bill does not require employers to provide additional paid backup childcare benefits under the new law if the employer has a paid childcare policy that makes available an equivalent amount of paid childcare benefits under the same conditions as set forth in the bill.

If this legislation becomes law, accrued paid childcare shall carry over to the following year of employment, but an employer may limit an employee’s use of accrued paid backup childcare benefits to 60 hours in each year of employment, calendar year, or 12-month period.  Accrued, but unused, paid childcare benefits are generally not paid out upon separation of employment.

Importantly, the legislation would also impose a three-year recordkeeping requirement and a requirement that information regarding an employee’s available paid backup childcare benefits be set forth on a wage statement or other writing provided on designated pay days.