California’s New Paid Family Leave Law: Key Changes for Employers Effective January 2025

California’s New Paid Family Leave Law: Key Changes for Employers Effective January 2025

Effective January 1, 2025, California Assembly Bill 2123 will prohibit employers from requiring employees to exhaust earned vacation before accessing Paid Family Leave (PFL) benefits. An article by the law firm Ervin Cohen & Jessup says this amendment to the Unemployment Insurance Code simplifies the PFL application process and removes barriers to accessing benefits. Previously, employers could mandate up to two weeks of vacation usage before PFL eligibility, which helped manage extended absences. This option will no longer be allowed for any disability period starting on or after January 1, 2025.

California’s PFL program provides wage replacement for employees caring for seriously ill family members, bonding with new children, or assisting military family members deployed overseas. While the new law limits employer control, it allows employees to “top off” state PFL benefits by using accrued vacation to supplement wages. Employers may deduct employee benefit contributions from vacation pay with written authorization, avoiding collection issues upon an employee’s return.

According to the article, this change creates operational challenges but offers a silver lining. Encouraging employees to use vacation pay to supplement PFL can simplify compliance with benefits maintenance requirements, such as healthcare contributions. Employers should revisit their policies on leave, vacation, and benefits deductions to align with AB 2123 and minimize disruptions.

To mitigate compliance risks, the article suggests employers should ensure their policies reflect this legislative change, update employee handbooks, and effectively communicate options for “topping off” PFL benefits. These proactive steps can help navigate the shift in leave management while maintaining compliance.