How Employers Can Help During the California Wildfires

01.16.2025

Countless Los Angeles area employees have been seriously impacted by the deadly wildfires in Southern California this month, and employers want to know how they can help. Below are options employers can offer employees experiencing the loss of their homes or loved ones, physical or mental health conditions, or other hardships associated with this disaster.

Employees Struggling with the Mental and Physical Effects of the Fires

Regardless of whether they have lost their homes or loved ones, the widespread damage caused by the fires may have a mental or physical effect on employees, their family members, neighbors, or close friends. Employers can advise employees of the following options for time off from work:

Paid Sick Leave
Vacation or Paid Time Off (PTO)
Bereavement leave (if a family member has passed)
Family and Medical Leave Act (FMLA)/California Family Rights Act (CFRA) leave (if the employee, family member, or designated person has a serious health condition).

Note that FMLA/CFRA leave is unpaid, but the employee may be eligible for partial wage replacement through State Disability Insurance (SDI) or Paid Family Leave (PFL), both administered by the California Employment Development Department (EDD).

Americans with Disabilities Act (ADA)/California Fair Employment and Housing Act (FEHA) Accommodations (if the employee has a physical or mental condition resulting in work limitations, including physical injuries, respiratory conditions, depression, anxiety, or post-traumatic stress).

Employers are required to engage in the interactive process and provide reasonable accommodation, including an unpaid leave of absence or reduced work schedule, even if an employee does not meet eligibility requirements for FMLA/CFRA leave. Employers should consider remote work as an accommodation if that would enable the employee to perform the essential functions of their position. Employees may be eligible for partial wage replacement through SDI.

School and/or Childcare Closure Leave

Employers with more than 25 employees must offer employees up to 40 hours of unpaid time away from work per year due to a qualifying “childcare provider or school emergency,” which can include closure due to natural disaster such as fire.

Emergency Services Leave

Time off, with guaranteed reinstatement rights, may also be available to volunteer firefighters, reserve peace officers, and emergency rescue personnel, as well as those who are called to military service in order to assist with the relief effort.

Personal Leave

Employers may provide personal leave under their existing policies, or voluntarily, to assist affected employees. Employers should check with their group health insurance broker to confirm health insurance continuation if they are not on a protected leave of absence.

Online Donation Campaigns

Many employees have organized online donation campaigns for themselves, their families, and their coworkers. While employers are advised not to directly encourage participation, as it may create the appearance of pressure to participate, employees can be permitted to distribute information about the campaign over Company email, during their non-working time. Employees should be careful to communicate that the Company does not sponsor the campaign.

Financial Assistance and Other Aid Options

If a 401(k) plan does not permit hardship withdrawals or more than one loan, employers can contact their plan administrator to determine if there is flexibility regarding withdrawal or loan options.

Consider permitting employees to cash-out unused PTO or vacation time. When allowing employees to cash-out unused PTO or vacation time, keep in mind that the IRS has specific requirements which must be followed with respect to the structure of cash-out plans. If those requirements are not followed, an employer risks making PTO or vacation pay benefits immediately taxable to the employees when the benefits are accrued.

Consider permitting employees to share PTO banks with their affected coworkers under a leave donation program. If this type of a leave-sharing program is properly structured to comply with IRS requirements, the employees donating the leave will not recognize any taxable income with respect to the donated leave.

Consider donating disaster relief money directly to affected employees. If your disaster relief arrangement is properly structured as a qualified disaster relief plan under Internal Revenue Code Section 139, it can have favorable tax consequences in that the relief payments may be excludable from the gross income of the employee.

Employers should consult with an experienced tax professional to evaluate potential tax consequences and how financial assistance and leave donations programs can be structured to qualify as tax exempt.

The attorneys at AALRR are happy to assist employers in evaluating each of these options, including developing and assessing a vacation or PTO cash-out plan that meets all IRS requirements, and/or preparing Section 139 disaster relief plans. Contact your usual employment counsel or the authors of this article for more information. Our hearts go out to everyone affected by this tragedy.