Recently, California put a new piece of legislation into law that will require businesses with 25 employees or more to give additional paid sick leave for their employees, specifically for covid. The new law went into effect on February 19th of 2022. The law SB 114 will also retroactively apply back until January 1st of 2022. Currently, this law is only expected to remain in effect until September of this year. The new bill will provide up to 80 hours of paid leave for employees if they prove a covid-19 exposure or infection.
The bill will also provide an additional 40 hours of paid leave for employees with a positive covid-19 test. While other pieces of legislation attached to this bill will set up California to have some future defenses against covid, the paid leave the bill is creating will be the employer's responsibility. Effectively California business owners or employers are financially responsible for up to 120 hours of paid sick leave for each employee, specifically regarding covid. We have decided to make you, our readers, aware of this because here at Interactive Accountants, we know that this legislation may spread across the U.S.A.
To give some background, labor unions have been lobbying California legislators to renew the state's sick leave that was provided in 2021. This California policy includes many of its old components in the event of another major covid outbreak or the possibility of another new strain making it into the public. The law passed through California of the legislation relatively easily given the predominantly Democratic makeup of that region. Acknowledging that most of the burden of these potential costs will be on employers and businesses, California has provided an additional 1.9 billion dollars to its state budget to address testing vaccination and Hospital surges specifically.
While you personally may not live in California, it is still important to keep track of this because we have already seen in our research the likely probability of these practices being implemented in other states. Democrats in both New York State and Washington D.C. have expressed an interest in mirroring this new law. For the time being, businesses are allowed to require employees to submit proof of a positive test by themselves, or someone may have been exposed to it within the first 40 hours of their absence. The bill will also require workers to report within 24 work hours if they are out due to vaccination, again either of themselves or people they have been exposed to or support.
At the moment, the only real thing to do is to watch or read the news and stay updated with the possible changes regarding paid sick leave and covid. Here at interactive accountants, we have clients in California, New York, New Jersey, Florida, and even a few international clients, so we are extra careful to be aware of what's going on in the world around us. If your business has more than 25 employees, excluding the business owner, now is the time to pay attention. As we advance, it is likely that the Democratic parties in the states we previously mentioned and especially in the capital will push for similar covid relief. As we all know, the days of covid stimulus packages seem to be behind us.
If this bill passes and other states, you as a business owner will need to know if you will fall into the range required to supply covid relief to your employees. There are still many details to work out, such as different states may have different requirements for employee numbers on whether or not a business is required to provide extra pay leave. Additionally, the laws may be even more convoluted for multi-state and multinational companies. Since there is the potential that the business owner is not being held accountable to a rate of a home office; rather, it may change depending on each state. For example, here at interactive accountants, we have employees all over the place, especially since covid started.
What is important to take away from this analogy would be that we have employees more than once. Say this bill is passed nationally, a company like ours would potentially be responsible for not only a Florida rate of where our home office is located, but companies like ours may be subject to more than one rate simultaneously. These uncertainties can create some Financial fears given that miss practice is currently only in one state but is already being discussed on a national level. Whether or not the legislature chooses to focus on the employee or the employer is what will be the determining factor for such scenarios.
Some other changes are also on the way, with employers in the state of New York that don't sponsor their own retirement plans will soon being required to do so. Recently, Gov. Kathy Hochul signed into law an amendment requiring private employers to offer retirement plans to their employees to assist employees who do not already have access to an employer-sponsored retirement savings plan. This new law applies to all employers within N.Y. State with ten or more employees. The law applies to nonprofit and for-profit employers in New York state that meet the following requirements. First, the employer has not already offered their employees a qualified retirement plan including, but not limited to, a 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or 457(b) plan, in the last two years. Second, the employer has at least ten employees in the state over the previous calendar year at all times. Third, the employer has been in business for a minimum of two years.
Employers that currently offer and sponsor tax-qualified retirement plans (e.g., 401k, 403b, profit sharing, or pension/cash balance plans, SIMPLEs, or SEP plans) are already compliant with this new law. Employers that meet the above criteria, and do not have retirement plans in place, will be required to offer qualified retirement plans to their employees from private financial services sources or through N.Y. State's Secure Choice Savings Program. More information about N.Y. State Secure Choice Savings Program can be found here.
The biggest piece of advice we can offer is to stay informed. Issues regarding covid and business often go back and forth for a while before a final decision is made. However, that does not stop you from being proactive in such events.
We here at Interactive Accountants take the time and effort to understand the changes in the business world and how they will impact both employees and business owners. Small or independent businesses are a cornerstone of our work, and we want to really send home the message that we are here to answer your questions and create a game plan.
Individually we would love to consult with you and your business to help create an effective business strategy to address your individual concerns and help you succeed. Here at Interactive Accountants, assisting businesses to grow and succeed financially is our number one goal. We are here to help because the better you do, the better we all do! If you're still not convinced yet to give us a call, feel free to look at our other blogs regarding the help we offer various businesses and offices.
If you are a professional in any field that these tips apply to, schedule a free consultation here with our owner Matthew Shiebler, CPA. He's been practicing accounting for over 25 years now and is a business owner, just like you!