Staying true to form, earlier this month San Francisco passed the nation’s first fully-paid parental leave law known as the Paid Parental Leave for Bonding with New Child Ordinance (“Paid Parental Leave Ordinance”). California’s Paid Family Leave (“PFL”) program currently provides six weeks of partially-paid leave at 55 percent of an employee’s pay, up to $1,129 per week. The Paid Parental Leave Ordinance mandates that employers pay the difference up to a weekly maximum, meaning most employees will receive six weeks of bonding leave at full pay. Unlike PFL, which is funded through employee contributions to state disability insurance, benefits under the Paid Parental Leave Ordinance are employer-funded.

The Ordinance takes effect on January 1, 2017, with a phase-in schedule based on employers’ total number of employees regardless of location. Under the schedule, employers will be required to comply as follows: January 1, 2017 – 50 or more employees; July 1, 2017 – 35 or more employees; and January 1, 2018 – 20 or more employees.

The Paid Parental Leave Ordinance covers eligible employees, including part-time and temporary employees, who qualify to receive PFL for baby bonding. To be eligible for fully-paid parental leave, employees must have worked for the employer for at least 180 days before starting the leave. Employees also must work for the employer in San Francisco at least eight hours per week and at least 40 percent of their total weekly work hours.

During the six-week leave period, employers will be required to pay an employee an amount that, together with PFL, equals 100 percent of the employee’s normal pay. Based on PFL’s current 55 percent wage replacement rate, employers would be required to pay the remaining 45 percent.

In a related recent development, Governor Jerry Brown just signed AB 908, which will expand PFL wage replacement rates to either 70 percent or 60 percent for high earners, effective January 1, 2018. So in San Francisco, an employer’s percentage will drop to 30 or 40 percent by 2018.

Under the Paid Parental Leave Ordinance, employers may require employees to use up to two weeks of accrued unused vacation prior to receiving PFL or may apply up to two weeks of accrued unused vacation to help meet the employer’s obligation under the Ordinance. Where an employee works for multiple employers, employers are only required to pay pro-rata based on the gross weekly wages from each employer. If an employer terminates a covered employee during the six-week leave period, it must continue to pay supplemental compensation through the remainder of the leave period.

Not surprisingly, the Paid Parental Leave Ordinance imposes notice, posting, and record keeping requirements. The Ordinance also creates a rebuttable presumption of retaliation if an employee is fired within 90 days of requesting paid parental leave. Employees may, however, be required to reimburse the employer for the full supplemental compensation amount if the employee resigns within 90 days after the end of the leave.

The Office of Labor Standards Enforcement’s overview of the Ordinance can be found here.

San Francisco continues to keep things interesting and challenging for employers in the city and, as the recent minimum wage hike and PFL expansions have shown, the state is not far behind.