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New parental leave law in California could cause big headaches for small businesses

The new Parental Leave Act (SB 63) has just been promulgated in California and could cause big headaches to small businesses, not just in the Golden State, but throughout the country.

This is a big problem because companies with 20 to 49 employees will now have to offer up to 12 weeks of unpaid parental leave. It has the potential to wreak havoc with small businesses that have been flying under the radar of previous similar California laws making similar requirements for larger companies. There is great potential for planning, staffing, and production issues – especially for very small businesses that do not have the ability to easily cover absent staff.

About the California New Parents Leave Act

Nicknamed the California Baby Bonding Leave Act, the law applies not only to the birth of children, but also to protection and adoption. It complements 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 must offer up to 12 weeks of unpaid and protected parental leave.

Small Business Trends spoke with Eve Wagner, a lawyer specializing in labor law in Los Angeles, about the new law, its implications for small businesses in that state and beyond. Wagner is the founding partner of Sauer & Wagner, a company specializing in mediation, arbitration, consulting, training and human resources in the small business area.

"Before you could work for a company that had 20 employees and as soon as your doctor (after pregnancy) allowed you to come back to work, you had to introduce yourself," Wagner told Small Business Trends. Now your employer must grant you up to 12 weeks of unpaid leave. "

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It is anticipated that the new legislation will add overtime costs to small businesses that are now struggling to fill the gaps left by employees who are benefiting from the new law with existing staff. The only alternative would be to hire temporary employees or freelancers to cover the time – another cost.

Beyond the cost, there is 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 these APCs has expired, it's hard to bring someone to a higher level like that," she explains.

Why this is important for all small businesses

The legislation provides no exception 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 be careful for another reason. California is often the flag bearer of national movements.

"California is often a trendsetter," said Wagner. "There is already some noise among other states about doing the same thing."

In a recent blog post, Health Affairs, a review of health policy thinking and research, provided insights into similar initiatives across the country.

California Capitol Photo via Shutterstock