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Starting January 1st, a new law will change the way employers may apply vacation and California Paid Family Leave (PFL). How did this happen?
On September 29, 2024, Assembly Bill 2123 was written into law. Come January 1, 2025, employers will lose the ability to require employees to use up to two weeks of earned but unused vacation before receiving PFL.
Businesses must comply starting January 1, 2025, to avoid penalties and liability.
Businesses had benefited from requiring employees to use their vacation before PFL, thereby placing a limit on employees’ time off. However, that might not be possible anymore.
AB 2123 continues the path California has been following to increase PFL benefits, including removing the ceiling on taxable wages for employee contribution purposes, increasing the monetary benefits an individual might receive, and expanding PFL from six weeks to eight weeks in some scenarios.
What your business should do
Because AB 2123 doesn’t come into effect until January 1, 2025, now is the right time to review and plan.
What are your current PTO policies?
What are your employees’ current contributions?
How will this impact your future operations?
What changes can you make that might offset some of this impact?
For further advice and a plan, contact us.