OP-ED: New CA Law Unfairly Punishes Employers during Pandemic

On February 9, Governor Gavin Newsom signed Senate Bill (SB) 114 into law, which requires businesses with 26 or more employees to provide workers with up to 80 hours of COVID paid leave.

It is retroactive to January 1, 2022, and will stay in effect through September. 

Existing California law already requires employers to provide paid leave to employees who get COVID on the job site or are required to quarantine due to COVID exposure at work. 

The new law, SB 114, requires employers to provide additional COVID paid leave for employees who, specifically, did not get it at work, and (unlike last year’s COVID Paid Leave Mandate, where employers received a tax credit through the FFCRA) it saddles employers with the heavy costs.

Unfair Burden

While SB 114 provides narrowly crafted tax relief (for R&D and Net Operating Loss) for businesses (a win for Pharma, Tech, and Hollywood), it provides no meaningful tax relief for thousands of union-signatory construction firms and other businesses. 

In fact, the bill mandates that our employers must provide employees up to $511 a day for up to two weeks without any financial relief or assistance from the state. 

As the state swims in a historic budget surplus -- and determines how to allocate more than $20 billion up for grabs -- saddling California employers with the cost of COVID paid leave is a gut punch to our union-signatory contractors who have done everything right throughout the pandemic.

The well-intentioned law aims to ensure that California workers who must stay home for any number of COVID-related reasons do not lose wages. But the details just don’t add up: not only is there no minimum amount of time of employment, but employees do not have to be vaccinated to access funds. 

Double the Cost

The bill also makes no exemption for multi-employer industries like union construction. And it disregards the fact that union contractors have already negotiated higher wages to supplement time off. 

SB 114 effectively requires union contractors to pay their employees twice.

For example, one small business construction contractor reported spending $38,000 for COVID Paid Leave for a two-week period. The contractor also had to replace every employee out on COVID paid leave to meet strict and required contractual deadlines, effectively doubling her costs. 

The Easy Fix

United Contractors applauds the Newsom Administration for protecting Californians from lost wages due to the pandemic.

We just shouldn’t punish employers to do so.

Instead, the state should utilize funds already earmarked for COVID issues or utilize the largest fiscal surpluses in state history to pay for it. 

Just as the federal government previously provided under SB 95, the state should provide a state tax credit for businesses to offset the costs of employee leave. This ensures workers can stay home without unfairly burdening employers with the costs of paid leave. At a minimum, the tax credit should be made available to California employers, such as union-signatory contractors, who pay their employees premium wages.

The last two years have been incredibly challenging for Californians – families, employees, and businesses alike. We are proud of our members for their extraordinary efforts to keep workers and communities safe while delivering the essential infrastructure projects that keep our state moving forward. To severely financially punish them now (for something they have no control over) is untenable.

Providing tax relief to premium wage employers in the construction industry for COVID Paid Leave is a fair solution that protects both workers and employers during the pandemic.

Contact: Emily Cohen, Executive Vice President - ecohen@unitedcontractors.org

______

United Contractors represents more than 500 union-signatory heavy civil engineering and associated firms across the state. Our contractors employ more than 30,000 tradespeople and perform the vital infrastructure work of our state: roads, bridges, highways, water infrastructure, schools, utilities, and more. As essential businesses throughout the pandemic, our member companies have worked tremendously hard to keep their workforce safe while meeting the regulatory and cost burdens of running their businesses through an unprecedented health crisis.

______

For more information: 

COVID-19 Supplemental Paid Sick Leave FAQ - What Contractors Need to Know about SPSL

Grassroots Action Center - Send Your Position Directly to Elected Officials on SPSL