New Legislation Makes San Francisco the First City to Mandate Fully Paid Parental Leave for Employees

San Francisco is now the first city in the nation to require nearly all private employers to provide employees with six weeks of fully paid parental leave.

Under California’s Paid Family Leave program (Unemployment Insurance Code Section 3300 et seq.), employees who contribute to the California State Disability Insurance (SDI) fund are currently entitled to six weeks of partial pay each year while taking time off from work to bond with a newborn baby, newly adopted child, or new foster child, or to care for a seriously ill family member. With the passage of the new ordinance, Article 33H of the San Francisco Police Code will now require employers to supplement the employee’s Paid Family Leave by providing the remaining portion of the employee’s normal gross weekly wage up to a current cap of $924 per week.

In addition to providing supplemental compensation, the ordinance requires employers to comply with certain notice, posting, and record retention requirements. It also forbids employers from retaliating against employees for exercising their rights under the ordinance, and includes an enforcement procedure that can result in steep administrative penalties and civil damages for non-compliance.

Before the Act takes effect on January 1, 2017, employers with employees working in San Francisco should make any necessary changes to their leave policies, employee handbooks, and posted notices to confirm full compliance with the ordinance, which is described in more detail below.

Covered Employers

The ordinance applies to private employers with 50 or more employees beginning January 1, 2017, to employers with 35 or more employees beginning July 1, 2017, and to employers with 20 or more employees beginning January 1, 2018. It does not apply to employers who already provide their employees with at least six consecutive weeks of fully paid parental leave within any twelve-month period.

Covered Employees

The ordinance entitles full and part-time employees to supplemental compensation if (1) they are eligible to receive Paid Family Leave compensation under the California Paid Family Leave law for the purpose of bonding with a new child; (2) have worked for the employer at least 180 days before the start of the paid leave period; (3) perform at least eight hours of work per week in San Francisco; and (4) at least 40 percent of the employee’s total weekly hours worked for the employer are in San Francisco.

Where a worker’s weekly work hours fluctuate from week to week, the determination will be based on an average of the hours worked during the quarter (three-month, six bi-weekly or semi-monthly, or twelve weekly pay periods) immediately preceding the paid leave period. This excludes any unpaid leave time, but in no case considers pay periods earlier than 26 weeks prior to the paid leave period.

If the Paid Family Leave weekly benefit amount is based on earnings from a calendar quarter during which the employee did not work for the employer, or during which the employee earned a higher weekly wage than at the time of his or her leave, the determination will be based on the employee’s wages in his or her current position at the time of his or her leave. However, as discussed below, a reduction in an employee’s wages within 90 days of the employee’s request or application for Paid Family Leave raises a rebuttable presumption that the reduction was done for the purpose of reducing the amount of supplemental compensation.

The ordinance does not apply to employees covered by collective bargaining agreements (CBA), if, after the effective date of the ordinance, any new or extended CBA expressly waives the requirements of the ordinance in clear and unambiguous terms. The ordinance does not apply to CBAs entered into before the effective date of the ordinance.

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