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On Wednesday, Gov. Gavin Newsom signed a law that requires large employers in California to offer workers up to 80 hours of COVID-related paid sick leave.
But there’s a catch: The bill, which the Legislature passed on Feb. 7, doesn’t apply to small employers with 25 or fewer workers. That exemption -- which California’s 2021 COVID sick leave law also included -- applies to more than 90% of companies in California and leaves at least one in four workers without access to the new paid leave, according to data from California’s Employment Development Department.
Without additional leave, most workers in California are legally entitled to just three paid sick days. Early in the pandemic, the federal government was reimbursing employers for COVID sick leave, including small employers. But in September 2021, both the state law and the federal reimbursements for additional paid COVID leave lapsed.
“Both state and federal leaders are to blame here for being short-sighted and not anticipating the need for additional paid leave,” said Kristin Schumacher, senior policy analyst for California Budget and Policy Center.
California Department of Public Health guidelines say that workers who are exposed to COVID or test positive should quarantine or isolate for at least five days.
“When people don’t have paid sick days, they will work sick -- and that’s a real danger,” said Jenya Cassidy, director of California Work and Family Coalition, which advocates for paid leave policies. This new law is the product of compromise, she said, and it will wind up helping a lot of workers.
But, she said, “obviously if we’re trying to do this for public health and for the health and well-being of workers and their families, then why would anybody be exempted? Nobody should be exempted.”
“This employee threshold was part of finding compromise with employer organizations and legislators concerned about the economic impact of the pandemic on small businesses,” said Senate President Toni Atkins, a San Diego Democrat, in a statement.
Bad for small business workers
The vast majority of businesses in California have four or fewer employees according to data from California’s Employment Development Department. Workers at smaller companies earn lower wages, on average, than employees at larger firms, according to data from the Bureau of Labor Statistics.
That’s concerning because nationally, workers with household incomes under $25,000 were 3.5 times as likely to miss a week of work due to COVID-19 compared to workers with household incomes of $100,000 or more, according to analysis from the Economic Policy Institute.
Good for small business owners
Small businesses have been buffeted around by closures, staffing issues, and supply chain snafus. Business plans have been upended with each new wave of the virus, and while companies like Amazon, Apple, Tesla and UPS have seen their stock soar during the pandemic, profit margins for many small businesses have worn thin.
Larger employers generally have more cash on hand and easier access to credit, so they might have an easier time adapting to new costs, said David Nelson, director of public policy for California Asian Pacific Chamber of Commerce.
“If the exemption was not put in place for small businesses, a mandate like that likely could have been the death knell for many small businesses, especially minority small businesses,” said Nelson. He estimates that the average Asian American and Pacific Islander-owned business in California has between four and 12 employees.
But leaving small businesses out entirely wasn’t the only option lawmakers had to soften the impact.
California will have a $21 billion surplus for the coming budget year, based on the Newsom administration’s projections. Seemingly everyone involved in California state politics has their own idea for how to spend it. That includes small business advocates, who say the state could have reimbursed small business owners for providing additional paid sick leave to workers.
“We recognize, especially with another historic surplus in the budget, that there are ways that the administration could make this place that small business owners are in much easier,” said Bianca Blomquist, California policy director for the advocacy group Small Business Majority.
Other small business groups opposed the law, despite the exemption for small employers.
“There’s this assumption by the progressives in the Capitol that employers are not doing their part,” and making leave available, said John Kabateck, California state director for the National Federation of Independent Businesses.
“California is rich with employee leave programs,” he said, pointing to a list of leave programs, many of which do not apply to workers exposed to COVID-19, such as time to serve on a jury, or for victims of domestic violence to file restraining orders.
Jim Relles, a florist in Sacramento, is glad the new leave requirement won’t affect his business. He’s got 19 employees and said it’s been hard to keep up with shifting requirements during the pandemic. A new paid leave policy would mean more bookkeeping and another rule to stay on top of.
What other COVID protections do small business workers have?
Small business employees who are exposed to COVID at work have significantly more protections than workers who get exposed or sick outside of work.
Under California’s COVID-19 workplace rules, workers who get sick due to a workplace exposure are supposed to be sent home with full pay until they’re able to return to work. If an employer offers more sick days than the minimum of three that workers are granted by state law, then they can ask workers to use those additional sick days to quarantine or recover.
Workers who are sure they were exposed to COVID outside of work don’t have the same pay protection, but they might be eligible for other programs, such as disability insurance. The state has a website to help workers figure out what sort of leave they’re eligible for based on their situation.
Cassidy, from the Work and Family Coalition, said she hopes small business owners are working paid sick leave for COVID into their budgets: “It really seems like being able to support workers should be a very basic cost of doing business.”
CalMatters.org is a nonprofit, nonpartisan media venture explaining California's policies and politics. Read more state news from CalMatters here.