On November 7, 2006, San Francisco voters passed a new ordinance, entitled the "Sick Leave Ordinance," which requires that private sector employers provide paid sick leave to their employees. The Ordinance is effective February 5, 2007 and applies to all "employers" who employ any person within the geographic boundaries of the City and County of San Francisco, including part-time and temporary employees.

Under the Ordinance, employees who began working for their employer on or before February 5, 2007 will begin to accrue paid sick leave on February 5, 2007. Employees who are hired by an employer after February 5, 2007 will begin to accrue paid sick leave 90 days after the commencement of their employment. After such paid sick leave begins to accrue, employees will accrue one (1) hour of "paid sick leave" for every 30 hours worked. Paid sick leave accrues only in hour-unit increments and there will be no accrual of fractions of an hour of paid sick leave. The Ordinance provides a cap of 40 hours of accrued paid sick leave for employees of "small businesses" (defined as employers which employ fewer than ten persons, including full-time, part-time or temporary employees) and a cap of 72 hours of accrued paid sick leave for employees of all other employers. The Ordinance further provides that accrued paid sick leave carries over from year to year, but the Ordinance does not require that employers pay an employee for accrued but unused paid sick leave upon the employee's separation of employment.

The Ordinance provides that "[a]n employee may use [all or any percentage of his or her] paid sick leave not only when he or she is ill or injured or for the purpose of the employee's receiving medical care, treatment, or diagnosis, as specified more fully in California Labor Code §233(b)(4), but also to aid or care for the following persons when they are ill or injured or receiving medical care, treatment or diagnosis: Child; parent; legal guardian or ward; sibling; grandparent; grandchild; and spouse, registered domestic partner under any state or local law, or designated person." If the employee does not have a spouse or registered domestic partner, he or she may use their paid sick leave to aid or care for one "designated person" of their choice. The employee must choose this designated person upon request by the employer in advance, and may change such designation on an annual basis, in conformity with the provisions of the Ordinance.

Employers may require employees to provide "reasonable notification" prior to using paid sick leave, and may take only "reasonable measures" to verify that an employee's use of paid sick leave is lawful. In addition, the Ordinance prohibits retaliation against employees for exercising their rights under the Ordinance and prohibits counting paid sick leave under the Ordinance as an absence under any "absence control policy" that could lead to disciplinary or other adverse actions against the employee.

Pursuant to the Ordinance, the Office of Labor Standards Enforcement will publish a notice in several languages informing employees of their rights to paid sick leave. Employers must post the notice as specified in the Ordinance. The Ordinance also requires that employers retain certain records regarding hours worked by employees and paid sick leave taken by employees for four (4) years.

Notably, the Ordinance states that "[i]f an employer has a paid leave policy, such as a paid time off policy, that makes available to employees an amount of paid leave that may be used for the same purposes as paid sick leave under [the Ordinance] and that is sufficient to meet the requirements for accrued paid sick leave as stated in the Ordinance], the employer is not required to provide additional paid sick leave." Accordingly, employers in San Francisco should review whether their existing paid time off or sick leave policies satisfy the minimum requirements of the Ordinance or whether they should implement new policies in accordance with the Ordinance.