On April 5, 2016, San Francisco became the first American jurisdiction to mandate fully paid parental leave for parents to bond with their child.  California already provided six weeks of partially paid leave through the state disability insurance program (55% of pay, up to $1,129 per week).  But the Paid Parental Leave Ordinance passed by the San Francisco Board of Supervisors compels employers to make up the difference, providing full pay for all six weeks of leave for most employees. The ordinance is effective January 1, 2017.

Why Does The Ordinance Only Apply To Most Employees? 

Employees must have been employed by their employer for at least 180 days before starting the leave period to be eligible.  Covered employees can be part-time or temporary employees, but they must spend at least 40% of their total weekly hours (and 8 hours per work week) for the employer within the geographic boundaries of San Francisco. Also, employees who qualify for the maximum state benefit are entitled only to a maximum benefit derived by dividing the state’s maximum benefit by the percentage of wage replacement under the California Paid Family Leave Law.  To be eligible for the supplemental compensation under the ordinance, employees must agree to allow their employer to apply up to two weeks of unused accrued vacation leave to help meet the employer’s obligation to provide supplemental compensation.

Which Employers Does The Ordinance Cover?

As of January 1, 2017, the ordinance will apply to all employers who regularly employ 50 or more employees, regardless of location.  Over the following year, the ordinance will be phased in until employers with just 20 employees or more must comply after January 1, 2018.

Where an employee works for more than one covered employer, the employers must contribute pro-rata based on the gross weekly wages received from each employer.  If an employer terminates an employee during the California Paid Family Leave period, then, under the ordinance, the employer must continue to pay supplemental compensation for the remainder of the leave period.

Note that rights under the ordinance can be waived through collective bargaining.

So What Happens Next?

Employers need to be aware that the ordinance includes notice and posting requirements, employer recordkeeping requirements, and anti-retaliation provisions.  The ordinance provides for regulatory implementation and enforcement by the San Francisco Office of Labor Standards Enforcement, as well as a private right of action.  Remedies include restitution, liquidated damages, and injunctive relief, plus attorneys’ fees.

Many larger employers already have leave policies that comply with the ordinance, but many other employers do not.  Employers need to make sure that they have compliant policies in place by the time the law goes into effect next year.  And employers not based in San Francisco, but who have employees who work there, must be especially careful not to run afoul of the new requirements.