San Francisco Does It Again: First City to Mandate Fully Paid Parental Leave

On April 14, 2016 By Tevis

On April 5, 2016, the Board of Supervisors for the City and County of San Francisco (the City) passed the Paid Parental Leave Ordinance (PPLO), making San Francisco the first City in the United States to require fully paid parental leave for bonding with a new child. Effective as of January 1, 2017, Covered Employers must provide up to six weeks of paid leave during each calendar year to new parents. This Ordinance is subject to the Mayor’s signature, which is fully expected.

The new Ordinance supplements California’s Paid Family Leave (PFL) law, which provides employees with 55% of their weekly wages (capped at a maximum weekly benefit amount) to bond with a child or to care for a seriously ill family member. San Francisco’s new PPLO requires employers to pay the remaining 45% of an employee’s weekly wages during the six-week leave period when PFL is used to bond with a new child.

General Requirements

Effective Date. January 1, 2017 for employers with 50 or more employees; January 1, 2018 for employers with 20 to 49 employees.

Covered Employer. An employer with 20 or more employees, regardless of the employer’s situs. Exempt employers include the City or any other governmental entity.

Covered Employee. An employee (including part-time and temporary employees) who:

To meet the eight-hour and 40% threshold requirements for employees whose weekly work hours fluctuate, employers must use an average of the employee’s weekly hours worked for the Covered Employer during the three immediately preceding monthly pay periods (or six bi-weekly or semi-monthly pay periods, or 12 weekly pay periods).

Covered Leave. Up to six weeks of paid time off to bond with a new child. New child bonding means bonding with the Covered Employee’s minor child during the first year after birth or after placement of the child with the Covered Employee through foster care or adoption.

Wage Replacement Details

Compensation Amount. Covered Employers will be required to provide Wage Replacement Compensation (Compensation) in an amount that, combined with the PFL compensation the employee receives from the state, equals (but does not exceed) 100% of the employee’s gross weekly wages. Based on the current 55% wage replacement rate under state law, the Ordinance will require employers to pay the remaining 45% of the employee’s weekly wages during the leave period. If the state wage replacement rate were to change, the employer’s Compensation obligation would change accordingly. Its worth noting that AB 908, which was enrolled and presented to Governor Brown on March 31, 2016, will increase the percentage level and duration of PFL benefits available to Covered Employees beginning in 2018.

Cap on Maximum Weekly Benefit. PFL currently caps the 55% weekly benefit amount for higher-earning workers at $1,129 (55% of weekly wages for a person earning approximately $106,740 per year). In the case of these same higher-earners, an employer’s Contribution obligation under the City’s Ordinance would be proportionally capped by the state’s maximum ($924 per week based on the state’s current cap for high earners).

Use of Unused, Accrued Vacation Leave. Employers may require an employee taking parental leave under the Ordinance to use up to two weeks of unused, accrued vacation leave to help satisfy the employer’s obligation to pay Compensation during the leave period. Parenthetically, the state’s PFL program also allows an employer to require an employee to use up to two weeks of unused, accrued vacation as a precondition to the employee’s initial receipt of the PFL benefit. If the employer exercises that option under state law, the employee must first take two weeks of vacation before starting the six-week paid parental leave covered under the Ordinance, resulting in a total of eight weeks of leave.

Existing Paid Parental Leave Policies. Employers who already provide employees with at least six weeks of fully paid parental leave within any twelve-month period to bond with a new child do not need to comply with this Ordinance.

Termination of Employee. If an employer terminates an employee during the covered leave period, the employer is required to pay the Compensation for the remainder of the leave period.

Notice and Recordkeeping.

We expect OLSE will provide more guidance before the Ordinance goes into effect. We will keep you informed of developments.

Copyright © 2016 Alfred B. Fowler, Attorney at Law · All Rights Reserved. Reprint with permission only. This Benefits Alert is published as an information source for our clients and colleagues. It is general in its nature and is no substitute for legal advice or opinion in any particular case.

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