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San Francisco Paid Parental Leave: An Update and Potential Wave of the Future

Beginning July 1, 2017, employers with 35 or more total employees must comply with San Francisco’s Paid Parental Leave Ordinance (PPLO) regarding their eligible employees who work in San Francisco (at least eight hours per week and at least 40% of the time) and who are receiving California Paid Family Leave (PFL) wage replacement benefits from the State of California for new child bonding leaves of absence. Employers with 20 or more employees will need to begin complying on January 1, 2018. The PPLO has been in place for employers with 50 or more employees since January 1, 2017.

My Workplace Wave article, posted last year at http://joblaw.com/workplace-wave/from-salary-reviews-to-paid-parental-leave-a-mid-year-compliance-checklist/, covers the basic requirements under the PPLO. Since then, the ordinance has been clarified by the City in certain respects.

The PPLO does not explicitly require employers to provide leaves of absence to employees for new child bonding time. Employers with less than 50 employees are not covered by the federal Family and Medical Leave Act (FMLA) or the California Family Rights Act (CFRA), and thus are not required by these laws to provide job-protected leaves of absence for new child bonding time. However, the PPLO makes it unlawful for an employer to “interfere with, restrain, or deny” eligible employees’ exercise of their rights to paid parental leave. Thus, employers who are not covered by the FMLA/CFRA due to their total number of employees should seek specific legal advice as to appropriate policies to implement to be in compliance with the PPLO.

If the employee and employer are covered by the ordinance, the employer must provide supplemental compensation (i.e., paid parental leave) during the new child bonding leave of absence period in an amount that will generally equal 100% of the employee’s gross weekly wage to make up the difference with Paid Family Leave benefits the employee receives. This usually equates to 45% of employees’ salaries. However, since the Paid Family Leave benefits are capped at a specific maximum weekly amount, the paid parental leave obligation is also capped. For 2017, the current maximum total weekly benefits, combining the PFL benefits and the supplemental compensation from the employer, is $2,133.

Employees must either provide their employer with the Notice of Computation they receive from the Employment Development Department (EDD) regarding the actual PFL benefits they will receive or authorize their employer to obtain this information directly from the EDD. Employers will then have the specific information to determine the total amount of the supplemental compensation that is owed. The total amount must be paid within 30 days of the end of the employee’s leave period, provided the employer has received the requisite information from the employee regarding the PFL benefits.

As a condition of receiving the supplemental compensation, employers may require employees to use up to two weeks of accrued vacation leave to help satisfy the employer’s obligation. For example, if an employee’s two weeks of accrued vacation leave equates to $2,000, this amount would be deducted from the total supplemental compensation owed to the employee. Employers who have Paid Time Off policies may also require employees to use up to two weeks of accrued PTO so long as the accrued PTO bank is in excess of 72 hours (for example, if an employee has 80 hours of PTO, only 8 hours may be required to be applied whereas if an employee has 160 PTO hours, 80 hours may be applied). If the employee does not agree, then the employer is not required to pay the supplemental compensation. Paid sick leave may not be used to cover the required supplemental compensation. Employers need to notify employees in writing of requirements to use vacation leave or PTO and clarify the implications.

The San Francisco Office of Labor Standards Enforcement has provided helpful information on their website, including forms employers can use and various examples to demonstrate the rules to determine coverage for employers who have fluctuating workforce numbers, how to address employees who have fluctuating wages or second jobs, and other topics. See http://sfgov.org/olse/paid-parental-leave-ordinance.

Will the San Francisco PPLO become a model for other jurisdictions as the San Francisco Paid Sick Leave ordinance has?

Not yet, but time will tell. Notably, the California Senate has passed SB 63 which would expand the CFRA requirements regarding job protections for new child bonding leave to employers with 20 or more employees. This bill is currently pending in the California Assembly. Further, New York State has recently enacted a paid family leave law, following a handful of other states. City ordinances may fashion laws similar to the PPLO and thus, it is important for employers to stay up-to-date on the laws that apply to each of their work locations.

For more information or assistance with employment law compliance matters, please contact Ms. Topliff at topliff@joblaw.com.

Mary L. Topliff, Esq. ©2017 Mary L. Topliff. For more information, contact Mary at topliff@joblaw.com. This article may not be copied or reproduced without the express permission of Mary L. Topliff.