As a reminder, if a self-insured employer employs at least one employee who resides primarily in California, the employer is subject to file copies of federal Forms 1094/1095-C with the California Franchise Tax Board annually. The current 2022 tax year’s filing is due on March 31, 2023. However, no penalty will apply if the filing is done on or before May 31, 2023, according to the state site.

For fully insured plans, the plans’ medical insurers are responsible for filing Form(s) 1095-B on behalf of the employers.

The main objective of this state reporting is for the state to enforce its Individual Mandate requirement by verifying that each resident had health coverage in the prior year. Failure to report can result in a $50 per person penalty.

Affected employers should be aware of these developments.

CA Site »
California Instructions for Filing Federal Forms 1094-C and 1095-C »
California Instructions for Filing Federal Forms 1094-B and 1095-B »

The California Employment Development Department (EDD) has published the 2023 weekly benefits maximum for the state’s disability insurance (SDI) and paid family leave (PFL) effective January 1, 2023.

The maximum weekly benefit increases from $1,540 to $1,620.

As indicated in our December 6, 2022, article, the 2023 employee contribution rate for SDI and PFL decreased from 1.1% to 0.9%. The taxable wage base from which the contributions are taken increased from $145,600 in 2022 to $153,164 in 2023.

EDD Announcement »

The Employment Development Department (EDD) recently announced that the 2023 employee contribution rate for State Disability Insurance and Paid Family Leave will decrease from 1.1% to 0.9%. The taxable wage base from which the contributions will be taken will increase from $145,600 in 2022 to $153,164 in 2023.

Employers should be aware of this change in rates and limits, and they should work with their payroll provider to adjust employee contributions.

EDD Announcement »

The San Francisco Health Care Security Ordinance (HCSO) requires covered employers to satisfy an employer spending requirement by making healthcare expenditures for their covered employees, among other reporting and notice requirements. The healthcare expenditure rate varies depending on the size of the employer and increases incrementally each year.

As of January 1, 2023, the healthcare expenditure rate for large employers with 100 or more employees increases to $3.40 per hour payable (up from $3.30 per hour in 2022). For medium-sized employers with 20 to 99 employees and for nonprofit employers with 50 to 99 employees, the expenditure rate will rise to $2.27 per hour payable (up from $2.20 per hour payable in 2022). Employers with fewer than 20 employees and nonprofit employers with fewer than 50 employees are exempt.

If an employee is a managerial, supervisorial or confidential employee earning $114,141 per year ($54.88 per hour) or more, that employee is exempt from the HCSO. This represents an increase from last year’s threshold of $109,643 per year ($52.71 per hour).

All covered employers will be required to post the revised notice in all workplaces and job sites, when the poster becomes available.

2023 HCSO Announcement »

On September 29, 2022, Gov. Newsom signed AB 1041 into law. The new law expands the definition of “family member” under CFRA and California Paid Sick Leave to include a “designated person” identified by the employee. Effective for leaves starting on or after January 1, 2023, eligible employees may take leave under CFRA to care for a designated person, which is defined as any individual related by blood or whose association with the employee is the equivalent of a family relationship. An employer may limit the employee to one designated person per 12-month period.

AB 1041 »

California’s SB 1008 requires fully insured health plans and health insurance policies that provide dental benefits coverage in California to use a standardized form (called the Summary of Dental Benefits and Coverage Disclosure Matrix or SDBC) to report and disclose each plan’s dental benefits, such as cost-sharing, exclusion and examples of commonly used benefits. Like the ACA’s Summary of Benefits and Coverage requirement, which applies for medical plans, SB1008 requires insurers and employers to utilize SDBCs to assist eligible employees and individuals to help them understand and compare each dental plan.

For group plans, dental insurers subject to the requirement will complete SDBCs and provide the completed SDBCs to plan sponsors (generally, employers) for each dental plan. Insurers are required to provide the applicable SDBCs to the plan sponsors upon delivery of the policies and provide them at the same time the insurers provide other disclosure materials, including the applicable evidence of coverage. Then, plan sponsors are required to distribute SDBC copies to their eligible employees and other individuals prior to their enrollment, and other specified time indicated in the law.

A plan sponsor can provide a SDBC using one of the following methods:

• Mail
• Email (and notify the individual that a paper copy is available free of charge)
• Direct the individual to the insurer’s website for a copy of SDBC (and notify the individual the availability of a paper copy upon request)

Employers should discuss with their dental insurers the applicability of SDBC and distribute SDBC to their eligible employees and other individuals timely.

SB 1008: Chapter 933 »

On September 29, 2022, Gov. Newsom signed AB 1949 into law. The new law adds an entitlement to bereavement leave to the state’s existing California Family Rights Act (CFRA). Employers with five or more employees will be required to provide at least five days bereavement leave for employees experiencing the death of the following family members: spouse, child, parent, sibling, grandparent, grandchild, domestic partner or parent-in-law. Employees will be eligible after 30 days of employment. The leave must be taken within three months of the family member’s death.

The entitlement is separate from and in addition to CFRA’s existing 12-week entitlement. The question of whether the leave is paid or unpaid is dependent upon the employer’s existing bereavement leave policy. The leave may be paid or unpaid, but it should be consistent with the employer’s policy. For example, if the employer has an existing bereavement leave policy in which employees are paid for three days, the employee must receive paid bereavement up to the employer’s existing allowance (three days) and any remaining days out of the five (two days) may be unpaid.

The new law is effective January 1, 2023. Employers should work to revise their leave policies as necessary. The CFRA poster is expected to be revised.

AB 1949 »

On September 30, 2022, Gov. Newsom signed SB 951 into law. The new law will increase benefit amounts payable under the state’s Disability and Paid Family Leave programs. Effective for leaves beginning on or after January 1, 2025, benefits will be paid at 90% of the employee’s wages (up to the annual maximum limit) when the employee’s wages (during the base period) were higher than $722.50, but equal to or lower than 70% of the state average quarterly wage. If the employee’s wages were more than 70% of the state average quarterly wage, benefits would be paid at 70% of the employee’s wages (up to the annual maximum limit).

Employers who supplement the state’s benefits or allow employees to integrate paid time off should be aware of the upcoming change and revise payroll systems and leave policies as necessary.

SB 951 »

After a two-year break, San Francisco Health Care Security Ordinance employer reporting has resumed this year. Employers who are subject to the San Francisco Health Care Security Ordinance (HCSO) or the Fair Chance Ordinance (FCO) must submit the 2021 Employer Annual Reporting Form by May 2, 2022.

The HCSO applies to employers with 20 or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. The ordinance requires the employer to meet a certain spending threshold for each San Francisco employee related to health care. Employers must report the number of employees covered by the ordinance per quarter in 2021 and detail the health care expenditures made each quarter (payments for health insurance, contributions to the City Option or irrevocable expenditures to a reimbursement account).

The FCO applies to employers who have five or more total employees worldwide and at least one employee who performs work within the city or county of San Francisco. Additionally, employers who have a service contract with the City of San Francisco are also subject to the ordinance, regardless of the number of employees. The FCO ordinance prohibits employers from asking about arrest or conviction records on a job application. Employers must report whether their employment application in San Francisco asks about arrest or conviction information; and whether they conducted background checks on conviction or arrest records before a live interview (including telephonic).

Failure to comply with the annual reporting may result in a penalty of $500 per quarter assessed against the employer.

Covered employers should ensure that they retain supporting records to establish compliance with the spending requirements and FCO requirements. For 2022 compliance, covered employers should ensure that they displayed the posters for the 2022 HCSO Notice and FCO Poster in their workplaces or job site. Covered employers should also contribute the 2022 minimum healthcare expenditures for the San Francisco employees and satisfy all other requirements under those ordinances during 2022.

Reporting Form »
Reporting Instructions »
San Francisco HCSO Main Site »

The California Department of Industrial Relations published FAQs related to the 2022 COVID-19 Supplemental Paid Sick Leave (SPSL), which was originally discussed in the March 1, 2022, edition of Compliance Corner.

The SPSL requirement applies to employers with 26 or more employees. The new guidance clarifies that employers must include all employees nationwide to determine size. Employees are eligible for the leave if they work in California and are unable to work (including telework) due to their own COVID-19 related symptoms or are caring for a family member with COVID-19 related symptoms, they or a family member is receiving the vaccine, or they or a family member is experiencing vaccine related side effects. Independent contractors are not eligible for SPSL.

The law appeared to require employers to establish two different banks of leave: 40 hours for leave related to quarantine and the vaccine and an additional 40 hours if the employee or family member tested positive for COVID-19. The new guidance clarifies that an employer may alternatively have a single bank of up to 80 hours for any of the qualifying reasons.

Lastly, the law required employers to identify on the paystub the amount of COVID-19 SPSL used by the employee. Employers are not required to add separate lines for each 40-hour bank and may instead report a single line for the 80-hour 2022 SPSL. This requirement was effective for the payday related to the first full pay period starting after February 19, 2022.

Employers should adjust their policies and documentation accordingly based on the new guidance.

Department of Industrial Relations, 2022 COVID-19 SPSL FAQs »