Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

California pregnancy disability coverage extended

16-week coverage extension requirement may violate ERISA

Reprints
California pregnancy disability coverage extended

SACRAMENTO, Calif.—A new California law will require employers to extend health insurance coverage for up to 16 weeks to employees classified as disabled due to pregnancy, childbirth or related medical conditions.

The measure, S.B. 299, which Gov. Jerry Brown signed into law last week with a Jan. 1, 2012, effective date, mandates that employers continue health care coverage for up to 16 weeks to disabled pregnant employees on the same basis as prior to the employee taking disability leave.

The California pregnancy measure got little attention as it moved through the state Assembly and Senate.

“This one fell under the radar screen,” said Robin Weideman, a partner with law firm Carlton DiSante & Freudenberger L.L.P. in Sacramento, Calif.

In certain ways, the California law mirrors the 1993 U.S. Family and Medical Leave Act, but there are several key differences. The federal law mandates that health care coverage be continued for up to 12 weeks, rather than the 16 weeks mandated in the California law.

In addition, the FMLA applies to employers with at least 50 employees. The California law applies to employers with as few as five employees.

Some observers say, though, that the California law may not pass legal muster.

Specifically, they say, the law runs afoul of the 1974 Employee Retirement Income Security Act, which pre-empts state and local rules that relate to employee benefit plans. The intent of that provision was to prevent multistate employers from having to comply with myriad state benefit laws, which could discourage them from offering benefit plans.

“There may be a viable basis for challenges by self-insured plans,” said Nicole Diller, a partner in the San Francisco office of Morgan, Lewis & Bockius L.L.P.

But whether a challenge would succeed is another matter. In a 2005 advisory opinion letter, the Department of Labor said a reading of the FMLA makes it clear that neither the FMLA nor ERISA was intended to pre-empt more generous state leave laws.

Still, past regulatory conclusions, which involved paid leave programs rather than the longer extension of health care benefits under the California law, do not, “going forward, guarantee similar answers,” said Andy Anderson, a partner at Morgan, Lewis & Bockius in Chicago.

Whether employers will challenge the California law remains to be seen.

“There may not be a lot of appetite for fighting the good fight,” said Laura Paszkiewicz, director of health and productivity in the Santa Ana, Calif., office of Buck Consultants L.L.C.

In fact, employers unsuccessfully battled a San Francisco law requiring organizations to spend a certain amount of money on employees' health care coverage. But a three-judge panel of the 9th U.S. Circuit Court of Appeals ruled in 2008 that the law was not pre-empted by ERISA. Nothing in the San Francisco statute required an employer to set up a benefit plan or interfered with the uniformity of ERISA regulation, the appeals court panel ruled.

In addition, employers might be reluctant to challenge a law extending additional health care coverage for pregnant employees or employees who have given birth, due to the potential for public relations problems, said Richard P. Asensio, a vp with Aon Hewitt Inc. in Los Angeles.